Morningstar, Inc. · NASDAQ:MORN
Morningstar — Q4 2022 Earnings Presentation
30 slides from Morningstar's earnings presentation, Feb 24, 2023
Slide 1: Fourth Quarter 2022 Supplemental Presentation
Fourth Quarter 2022 Supplemental Presentation Feb. 23, 2023
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 financial performance. Forward-looking statements by their nature address matters tha
Slide 3: Q4 2022 Financial Performance
Q4 2022 Financial Performance ($mil) $74.8 $35.5 21 22 $66.4 ＋2.8% –52.5% –27.2% 21 22 $462.2 $475.0 21 22 $91.2 $67.4 –36.2% 21 22 $105.7 Revenue Operating Income Adjusted Free Cash Flow** Operating Income* * 3 3 Adjusted operating income is a non-GAAP measure and excludes intangible amortization e
Slide 4: 2022 Financial Performance
2022 Financial Performance ($mil) $257.0 $167.8 21 22 $298.9 ＋10.1% –34.7% –17.7% 21 22 $1,699.3 $1,870.6 21 22 $363.4 $168.3 –51.7% 21 22 $348.1 Revenue Operating Income Adjusted Free Cash Flow** Operating Income* * 4 4 Adjusted operating income is a non-GAAP measure and excludes intangible amortiz
Slide 5: Q4 2022 Revenue Walk
Q4 2022 Revenue Walk Organic revenue, a non-GAAP measure, excludes revenue from acquisitions for a period of 12 months upon completion of the acquisition, accounting changes, and the effect of foreign currency translations. ＋2.8% Reported Revenue Growth Impact of M&A, Accounting Changes, and Currenc
Slide 6: Quarterly Revenue Trend
Quarterly Revenue Trend ($mil) Bars represent reported revenue. Percentages represent YOY organic revenue growth (decline), which is a non-GAAP measure. 6 6 10.6% 12.1%
Slide 7: YTD Organic Revenue Walk
YTD Organic Revenue Walk* ($ mil) 7 7 Q4 2021 YTD Revenue M&A, accounting changes, and foreign exchange adjustments PitchBook Morningstar Sustainalytics Morningstar Data Morningstar Direct Morningstar Indexes Morningstar Advisor Workstation Investment Management DBRS Morningstar Workplace Solutions
Slide 8: Q4 2022 Revenue Drivers: License-Based Revenue Trend
Q4 2022 Revenue Drivers: License-Based Revenue Trend ($mil) +16.0% Reported +14.9% Organic 21 22 License-Based Organic Revenue Drivers: PitchBook (+30.7%), Morningstar Sustainalytics (+25.9%), Morningstar Direct (+12.1%), and Morningstar Data (+6.9%) were the primary contributors to organic revenue
Slide 9: Quarterly Product Trends: PitchBook and Morningstar Data
Quarterly Product Trends PitchBook ($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 YOY Orga
Slide 10: Quarterly Product Trends: Morningstar Direct and Sustainalytics
Quarterly Product 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 $50.0 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Morningstar Direct Revenue YOY Organic Revenue Growth YOY License G
Slide 11: Quarterly Product Trends: Morningstar Advisor Workstation
Quarterly Product Trends Morningstar Advisor Workstation ($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 $25.0 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Advisor Workstation Revenue YOY Organic Revenue G
Slide 12: Q4 2022 Revenue Drivers: Asset-Based Revenue Trend
Q4 2022 Revenue Drivers: Asset-Based Revenue Trend ($mil) Bars represent reported revenue. Organic revenue is a non-GAAP measure. Asset-Based Organic Revenue Drivers: Downturns in global markets drove organic revenue declines for Investment Management (-18.9%) and Workplace Solutions (-4.4%). Organi
Slide 13: Quarterly Product Trends: Investment Management
Quarterly Product Trends: Investment Management ($bil) Investment Management Q4 2022 AUM/A: Investment Management assets declined 2.5% versus the prior-year period, reflecting the downturn in global markets and softer net flows. Excluding the $4.4 billion in assets related to the second quarter acqu
Slide 14: Workplace Solutions Quarterly Product Trends
Workplace Solutions Q4 2022 AUM/A: Workplace Solutions assets under management and advisement declined 8.6% versus the prior-year period, reflecting the downturn in global markets. Quarterly Product Trends: Workplace Solutions ($bil) Managed Accounts includes Retirement Manager and Advisor Managed A
Slide 15: Q4 2022 Revenue Drivers: Transaction-Based Revenue Trend
Q4 2022 Revenue Drivers: Transaction-Based Revenue Trend ($mil) Bars represent reported revenue. Organic revenue growth (decline) is a non-GAAP measure. Transaction-Based Organic Revenue Drivers: DBRS Morningstar revenue declined 35.3% on an organic basis, reflecting depressed levels of global credi
Slide 16: DBRS Morningstar Revenue Trend by Geography
Quarterly Product Trends: DBRS Morningstar Revenue Trend by Geography ($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 $70.0 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 EMEA Canada USA DBRS Morningstar Q4 2022 Organic Revenue Drivers: Organic revenue
Slide 17: DBRS Morningstar Revenue by Asset Class
Quarterly Product Trends: DBRS Morningstar Revenue by Asset Class ($mil) DBRS Morningstar Q4 2022 Organic Revenue Drivers: Category mix in Q4 2022 was 60% Structured Finance v. 40% Fundamental Ratings. Recurring revenue, which is derived primarily from surveillance, research, and other transaction-r
Slide 18: Q4 2022 Operating Margins
Q4 2022 Operating Margins Operating Margin Drivers: Operating expense included $5.6 million of costs related to the Company’s significant reduction and shift of its China operations, which are excluded from adjusted operating income. Key drivers of expense growth included: Compensation costs increas
Slide 19: Adjusted Operating Income Walk 2021 to 2022
Adjusted Operating Income Walk 2021 to 2022* ($ mil) Adjusted operating income, a non-GAAP measure, excludes intangible amortization expenses, all mergers and acquisitions (M&A)-related expenses (including M&A earn-outs), and items related to the significant reduction and shift of the Company's oper
Slide 20: Quarterly Operating Margin Trends
Quarterly Operating Margin Trends Adjusted operating margin is a non-GAAP measure. 20 20
Slide 21: 2022 Cash Flow and Capital Allocation
2022 Cash Flow and Capital Allocation ($mil) 2 $297.8 $168.3 Operating Cash Flow Free Cash Flow* Capital Allocation** Free cash flow, a non-GAAP measure, is defined as cash provided by or used for operating activities less capital expenditures. ** Total capital deployed in 2022 was higher than opera
Slide 22: Appendix
Appendix
Slide 23: Reconciliation from Reported to Organic Revenue Change by Revenue Type
Reconciliation from Reported to Organic Revenue Change by Revenue Type 23 23 Organic revenue is a non-GAAP measure. Going forward, the Company will provide a reconciliation of reported to organic revenue that details the impact from M&A and accounting changes and from currency effects.
Slide 24: Reconciliation from Reported to Organic Revenue Change by Revenue Type
Reconciliation from Reported to Organic Revenue Change by Revenue Type 24 24 Organic revenue is a non-GAAP measure. Going forward, the Company will provide a reconciliation of reported to organic revenue that details the impact from M&A and accounting changes and from currency effects.
Slide 25: Reconciliation from Reported to Organic Revenue Change by Product Area
Reconciliation from Reported to Organic Revenue Change by Product Area 25 25 Organic revenue is a non-GAAP measure. Going forward, the Company will provide a reconciliation of reported to organic revenue that details the impact from M&A and accounting changes and from currency effects.
Slide 26: Reconciliation from Reported to Organic Revenue Change by Product Area
Reconciliation from Reported to Organic Revenue Change by Product Area 26 26 Organic revenue is a non-GAAP measure. Going forward, the Company will provide a reconciliation of reported to organic revenue that details the impact from M&A and accounting changes and from currency effects.
Slide 27: Reconciliation from Reported to Organic Revenue Change by Product Area
Reconciliation from Reported to Organic Revenue Change by Product Area 27 27 Organic revenue is a non-GAAP measure. Going forward, the Company will provide a reconciliation of reported to organic revenue that details the impact from M&A and accounting changes and from currency effects.
Slide 28: Reconciliation from Operating Margin to Adjusted Operating Margin
Reconciliation from Operating Margin to Adjusted Operating Margin 28 28 Adjusted operating margin is a non-GAAP measure.
Slide 29: Key Contributors to Effective Tax Rate Q4 and FY 2022
Key Contributors to Effective Tax Rate Q4 22 and FY 2022 29 29 Tax rate excluding above items is a non-GAAP measure. Reconciliation to reported effective tax rate is shown above.
Slide 30: Morningstar
MORNINGSTAR