Morningstar, Inc. · NASDAQ:MORN
Morningstar — Q2 2022 Earnings Presentation
25 slides from Morningstar's earnings presentation, Jul 28, 2022
Slide 1: Second Quarter 2022 Supplemental Presentation
Second Quarter 2022 Supplemental Presentation July 27, 2022
Slide 2: Forward-looking statements
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations about future events or future fnancial performance. Forward-looking statements by their nature address matters that
Slide 3: Q2 2022 Financial Performance
Q2 2022 Financial Performance ($mil) $53.9 $47.2 22 21 $73.4 ＋13.2% ＋14.2% –23.9% 22 21 $470.4 $415.4 22 21 $96.4 $37.0 –65.9%*** 22 21 $108.5 Adjusted operating income is a non-GAAP measure and excludes intangible amortization expense and all mergers and acquisitions (M&A)-related expenses from ope
Slide 4: Q2 2022 Revenue Walk
Q2 2022 Revenue Walk *Organic revenue excludes revenue from acquisitions for a period of 12 months upon completion of the acquisition, accounting changes, and the efect of foreign currency translations. 13.2% Reported Revenue Growth Impact of M&A, Accounting Changes, and Currency 15.8% 2.6% Contribu
Slide 5: Quarterly Revenue Growth Trend
Quarterly Revenue Growth Trend ($mil) Bars represent reported revenue. Percentages represent YOY organic revenue growth, which is a non-GAAP measure. 11.8% 10.7% 11.1% 10.5% 10.8% 10.1% 10.0% 10.6% 12.1% -2.5% 9.2% 8.6% 10.8% 18.0% -0.9% 1.3% 6.0% 5.8% 3.7% 5.6% -6.8% -15.2% -17.2% -46.3% 6.8% 0.7%
Slide 6: Q2 2022 Revenue Drivers: License-Based Revenue Growth
Q2 2022 Revenue Drivers: License-Based Revenue Growth ($mil) +18.1% Reported +20.3% Organic 22 21 License-Based Revenue Drivers: PitchBook (+46.7%), Morningstar Sustainalytics (+47.4%), Morningstar Data (+11.7%) and Morningstar Direct (+10.2%) were the primary contributors to organic revenue growth
Slide 7: License-Based Quarterly Trends: PitchBook, Morningstar Data
License-Based Quarterly Trends PitchBook ($mil) 47.5% 53.0% 42.9% 40.2% 36.8% 32.6% 33.6% 36.0% 61.8% 61.4% 59.7% 67.5% 53.2% 48.3% 42.5% 38.5% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% $0.0 $15.0 $30.0 $45.0 $60.0 $75.0 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 PitchBook Revenue YO
Slide 8: License-Based Quarterly Trends: Morningstar Direct, Sustainalytics
License-Based Quarterly Trends 6.5% 5.5% 6.5% 6.5% 6.5% 5.5% 6.5% 6.9% 7.3% 6.2% 5.8% 3.9% 4.0% 4.0% 3.0% 3.1% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Morningstar Direct Revenue YOY Organic Revenue Growth YOY Lic
Slide 9: License-Based Quarterly Trends: Advisor Workstation
License-Based Quarterly Trends Advisor Workstation ($mil) -4.3% -1.7% 3.2% -2.4% -1.3% -1.7% 3.2% 3.9% -5.0% -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Advisor Workstation Revenue YOY Organic Revenue Growth
Slide 10: Q2 2022 Revenue Drivers: Asset-Based Revenue Growth
Q2 2022 Revenue Drivers: Asset-Based Revenue Growth ($mil) Bars represent reported revenue. Organic revenue growth is a non-GAAP measure. Asset-Based Organic Revenue Drivers: Morningstar Indexes (+31.1%) was the largest contributor to organic revenue growth in this part of the business in Q2 2022, a
Slide 11: Asset-Based Quarterly Trends: Investment Management
Asset-Based Quarterly Trends: Investment Management ($bil) Investment Management AUM/A: Investment Management assets increased 2.0% versus the prior year, due to the addition of roughly $4.0 billion of AUM acquired with the close of the Praemium UK and international business acquisition. Excluding t
Slide 12: Asset-Based Quarterly Trends: Workplace Solutions
Asset-Based Quarterly Trends: Workplace Solutions ($bil) Workplace Solutions Q1 2022 AUM/A: Workplace Solutions assets were relatively fat, increasing 0.2% over the prior year quarter. Despite a challenging economic environment, increased interest in personalized retirement strategies drove an incre
Slide 13: Q2 2022 Revenue Drivers: Transaction-Based Revenue Growth
Q2 2022 Revenue Drivers: Transaction-Based Revenue Growth ($mil) Bars represent reported revenue. Organic revenue growth is a non-GAAP measure. Transaction-Based Organic Revenue Drivers: DBRS Morningstar organic revenue growth of 3.1% benefted from continued strong issuance volume for commercial mor
Slide 14: DBRS Morningstar Revenue Growth by Geography
Quarterly Transaction-Based Trends: DBRS Morningstar Revenue Growth by Geography ($mil) 5.1% 6.7% 17.6% 15.4% 34.6% 29.4% 3.3% --16.6% 52.0% $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 EMEA Canada USA DBRS Morningstar Q2 2022 Organic Revenue Drivers: Orga
Slide 15: DBRS Morningstar Revenue by Asset Class
Quarterly Transaction-Based Trends: DBRS Morningstar Revenue by Asset Class ($mil) DBRS Morningstar Q2 2022 Organic Revenue Drivers: Category mix in Q2 2022 was 65% Structured Finance v. 35% Fundamental Ratings. Recurring revenue represented 38.4% of total DBRS revenue. *Fundamental Ratings (Corpora
Slide 16: Q2 2022 Operating Margins
Q2 2022 Operating Margins Operating Margin Drivers: Expense growth adjusted for M&A-related expenses outpaced revenue growth in the quarter. Key drivers of expense growth: Compensation costs increased $4.0 million, or $30.6 million excluding the impact of the M&A-related earnout payment in the prior
Slide 17: Quarterly Operating Margin Trends
Quarterly Operating Margin Trends Adjusted operating margin is a non-GAAP fnancial measure. 19.1% 18.5% 15.8% 11.9% 13.7% 18.7% 12.4% 17.1% 17.1% 21.1% 21.0% 20.4% 17.1% 18.9% 24.3% 25.6% 22.3% 23.6% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Operat
Slide 18: Q2 2022 Cash Flow and Capital Allocation
Q2 2022 Cash Flow and Capital Allocation ($mil) 2 ($mil) M&A 639.8 Share Repurchases 91.9 CapEx 31.7 Investments in Unconsolidated Entities 25.6 Dividends 15.4 Q2 22 Q2 22 $68.7 $37.0 Operating Cash Flow Free Cash Flow* Capital Allocation Free cash fow is a non-GAAP measure and is defned as cash pro
Slide 19: Appendix
Appendix
Slide 20: Sustainalytics Acquisition
Sustainalytics Acquisition ($mil) The following tables provide additional detail on how the Sustainalytics acquisition impacted our fnancial statements from Q2 21 to Q2 22. The Sustainalytics acquisition closed on June 30, 2020 and was structured with an initial cash payment (Tranche I) at closing a
Slide 21: Reconciliation from Reported to Organic Revenue Growth by Revenue Type
Reconciliation from Reported to Organic Revenue Growth by Revenue Type 21 21
Slide 22: Reconciliation from Reported to Organic Revenue Growth by Product Area
Reconciliation from Reported to Organic Revenue Growth by Product Area 22 22
Slide 23: Reconciliation from Reported to Organic Revenue Growth by Product Area
Reconciliation from Reported to Organic Revenue Growth by Product Area 23 23
Slide 24: Reconciliation from Operating to Adjusted Operating Margin
Reconciliation from Operating to Adjusted Operating Margin 24 24
Slide 25: Morningstar
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