Morningstar, Inc. · NASDAQ:MORN
Morningstar — Q3 2021 Earnings Presentation
25 slides from Morningstar's earnings presentation, Oct 28, 2021
Slide 1: Third Quarter 2021 Supplemental Presentation
Third Quarter 2021 Supplemental Presentation October 27, 2021
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: Q3 2021 Financial Performance
Q3 2021 Financial Performance ($mil) $ 67.8 $44.3 21 20 $83.5 ＋20.1% ＋53.0% – 8.4% 21 20 $428.9 $357.2 21 20 $91.2 $92.4 ＋30.5% 21 20 $70.8 Adjusted operating income excludes intangible amortization expense and all mergers and acquisitions (M&A)-related expenses from operating income. Free cash fow
Slide 4: Q3 2021 Revenue Walk
Q3 2021 Revenue Walk *Organic revenue excludes revenue from acquisitions for a period of 12 months upon completion of the acquisition, and the efect of foreign currency translations. 20.1% Reported Revenue Growth Impact of Currency and M&A 18.6% 1.5% Contributors of Organic Revenue Growth License-Ba
Slide 5: Quarterly Revenue Growth Trend
Quarterly Revenue Growth Trend ($mil) Bars represent reported revenue. Percentages represent YOY organic revenue growth, which is a non-GAAP measure.
Slide 6: Q3 2021 Revenue Drivers: License-Based Revenue Growth
Q3 2021 Revenue Drivers: License-Based Revenue Growth ($mil) +18.2% Reported +16.9% Organic 21 20 License-Based Revenue Drivers: PitchBook (+47.2%), Morningstar Data (+11.4%), and Sustainalytics (+43.6%) were the primary contributors to license-based organic revenue growth in Q3 2021. PitchBook had
Slide 7: License-Based Quarterly Trends: PitchBook
License-Based Quarterly Trends PitchBook ($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 $75.0 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 PitchBook Revenue YO
Slide 8: License-Based Quarterly Trends: Advisor Workstation and Morningstar Data
License-Based Quarterly Trends Advisor Workstation ($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 $25.0 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Advisor Workstation Revenue YOY Organic Revenue Growth
Slide 9: Q3 2021 Revenue Drivers: Asset-Based Revenue Growth
Q3 2021 Revenue Drivers: Asset-Based Revenue Growth ($mil) Bars represent reported revenue. Organic revenue growth is a non-GAAP measure. Asset-Based Revenue Drivers: Workplace Solutions (+30.5%) and Morningstar Indexes (+83.2%) were the primary contributors to asset-based organic revenue growth in
Slide 10: Asset-Based Quarterly Trends: Investment Management
Asset-Based Quarterly Trends: Investment Management ($bil) Investment Management Q3 2021 AUM/A: Investment Management assets increased 17.2% year over year in aggregate, primarily driven by market performance in Morningstar Managed Portfolios. The drop from Q4 2019 to Q1 2020 in Managed Portfolios—N
Slide 11: Asset-Based Quarterly Trends: Workplace Solutions
Asset-Based Quarterly Trends: Workplace Solutions ($bil) Workplace Solutions Q3 2021 AUM/A: Workplace Solutions Assets grew 22.3% year over year, driven by market performance and further penetration of our Managed Accounts oferings. Within Managed Accounts, Morningstar Retirement Manager was the pri
Slide 12: Q3 2021 Revenue Drivers: Transaction-Based Revenue Growth
Q3 2021 Revenue Drivers: Transaction-Based Revenue Growth ($mil) Bars represent reported revenue. Organic revenue growth is a non-GAAP measure. Transaction-Based Revenue Drivers: DBRS Morningstar’s 18.9% growth stemmed primarily from robust commercial mortgage-backed securities issuance and ongoing
Slide 13: DBRS Morningstar Revenue Growth by Geography
Quarterly Transaction-Based Trends: DBRS Morningstar Revenue Growth by Geography ($mil) DBRS Morningstar Q3 2021 Revenue Drivers: DBRS Morningstar experienced strong growth in the U.S. and EMEA in constant currency terms. Revenue grew 10.6% in EMEA on strong CMBS issuance and ongoing expansion in th
Slide 14: DBRS Morningstar Revenue by Asset Class
Quarterly Transaction-Based Trends: DBRS Morningstar Revenue by Asset Class ($mil) DBRS Morningstar Q3 2021 Revenue Drivers: Category mix in Q3 2021 was 68% Structured Finance vs 32% Fundamental Ratings. Momentum in Canadian corporate debt issuance slowed in Q3 2021 following record levels in 2020.
Slide 15: Q3 2021 Operating Margins
Q3 2021 Operating Margins Adjusted Operating Margin Operating Margin 21 20 ＋15.8% ＋19.4% 21 20 Adjusted operating margin is a non-GAAP fnancial measure. ＋12.4% ＋25.6% Operating Margin Drivers: Excluding the impact of Sustainalytics earn-outs in both reported periods, operating expense increased 28.1
Slide 16: Quarterly Operating Margin Trends
Quarterly Operating Margin Trends Adjusted operating margin is a non-GAAP fnancial measure.
Slide 17: Q3 2021 Cash Flow and Capital Allocation
Q3 2021 Cash Flow and Capital Allocation ($mil) 2 ($mil) Acquisitions 24.6 CapEx 30.2 Dividends 13.6 Equity Method Investments 1.3 Q3 21 Q3 21 $122.6 $92.4 Operating Cash Flow Free Cash Flow Capital Allocation
Slide 18: Appendix
Appendix
Slide 19: Reconciliation from Reported to Organic Revenue Growth
Reconciliation from Reported to Organic Revenue Growth *License-based revenue grew 9.9% in Q3 2019 when excluding a $10.5 million non-recurring revenue beneft from prior period results. **Sustainalytics is excluded from the reporting of organic revenue growth between Q3 2020 and Q2 2021. ***DBRS Mor
Slide 20: Reconciliation from Reported to Organic Revenue Growth
Reconciliation from Reported to Organic Revenue Growth
Slide 21: Reconciliation from Reported to Organic Revenue Growth
Reconciliation from Reported to Organic Revenue Growth
Slide 22: Reconciliation from Operating to Adjusted Operating Margin
Reconciliation from Operating to Adjusted Operating Margin
Slide 23: Reconciliation from Consolidated Operating Income to Adjusted Operating Income
Reconciliation from Consolidated Operating Income to Adjusted Operating Income
Slide 24: Reconciliation from Cash Provided by Operating Activities to Free Cash Flow
Reconciliation from Cash Provided by Operating Activities to Free Cash Flow
Slide 25: Morningstar
MORNINGSTAR