Executive Summary

Q1 2025 delivered solid top-line and margin expansion: revenue rose 7.2% to $581.9M; operating margin expanded 250 bps YoY to 19.6%; adjusted operating margin rose 290 bps YoY to 23.3% . PitchBook (+10.9% reported) and Morningstar Credit (+21.1% reported) were the key growth drivers .
EPS dynamics: GAAP diluted EPS was $1.82 (+22.1% YoY) and adjusted diluted EPS was $2.23 (+28.9% YoY). Versus S&P Global consensus, adjusted EPS beat by ~$0.17 and revenue modestly missed by ~$3.9M; limited sell-side coverage (2 estimates) . Consensus values marked with an asterisk are from S&P Global.
Strategic actions and capital deployment: acquisitions (Lumonic, DealX) extend private credit/structured finance capabilities; buybacks accelerated to $109.6M; net debt increased $105.1M; dividends paid $19.5M .
Management tone: supportive of growth but more cautious on macro/volatility; segment reporting updated (renamed Morningstar Data & Analytics to Morningstar Direct Platform) to reflect strategic evolution .
Near-term stock narrative catalysts: sustained Credit momentum (structured finance strength), PitchBook user growth (+13.6% YoY), active buybacks, and ongoing public-private market convergence initiatives; offset by Sustainalytics softness and a non-recurring Retirement expense impacting margin .

What Went Well and What Went Wrong

What Went Well

PitchBook growth and profitability: revenue +10.9% (reported) and adjusted operating income +30.8%; licensed users +13.6% YoY; margin expanded 480 bps to 31.9% . “Growth in PitchBook and Morningstar Credit contributed to a strong start to 2025,” — CEO Kunal Kapoor .
Morningstar Credit strength: revenue +21.1% (reported); adjusted operating income +74.0%; strong activity in CMBS/ABS; margin +890 bps to 29.3% .
Margin expansion and cash earnings: operating margin up to 19.6%; adjusted operating margin up to 23.3%. Despite lower operating cash flow due to higher bonus payments, cash earnings and working capital improved .

What Went Wrong

Sustainalytics softness: lower ESG Risk Ratings/licensed-ratings revenue amid vendor consolidation and streamlining; Corporate & All Other adjusted operating impact remained negative ($39.2M) .
Retirement margin headwind: adjusted operating margin fell 560 bps to 44.4% due to a non-recurring client account correction expense and higher compensation costs .
Direct Platform margin compression: adjusted operating income -4.5% and margin -270 bps to 43.7%, driven by higher compensation, sale of Commodity & Energy Data, and increased depreciation from prior capitalized software .

Financial Results

Metric	Q1 2024	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$542.8	$569.4	$591.0	$581.9
GAAP Diluted EPS ($)	$1.49	$2.77	$2.71	$1.82
Adjusted Diluted EPS ($)	$1.73	$2.00	$2.14	$2.23
Operating Margin (%)	17.1%	20.3%	28.5%	19.6%
Adjusted Operating Margin (%)	20.4%	22.9%	20.6%	23.3%

Segment	Q1 2024 Revenue ($M)	Q1 2025 Revenue ($M)	YoY	Q1 2024 Adj. Op Margin (%)	Q1 2025 Adj. Op Margin (%)
Morningstar Direct Platform	$196.7	$199.2	+1.3%	46.4%	43.7%
PitchBook	$147.6	$163.7	+10.9%	27.1%	31.9%
Morningstar Credit	$60.3	$73.0	+21.1%	20.4%	29.3%
Morningstar Wealth	$59.0	$61.3	+3.9%	(9.5%)	(1.3%)
Morningstar Retirement	$28.4	$32.9	+15.8%	50.0%	44.4%
Corporate & All Other	$50.8	$51.8	+2.0%	N/A	N/A (Adj. OI impact: -$41.3M vs -$39.2M)

KPIs	Q1 2024	Q1 2025
Investment Management AUMA ($B)	$57.6	$63.8
Retirement AUMA ($B)	$235.9	$277.6
Asset value linked to Morningstar Indexes ($B)	$190.2	$208.7
Average AUMA ($B)	$289.7	$339.8
Morningstar Direct licenses (count)	18,680	18,799
PitchBook licensed users (count)	111,199	126,285

Estimates vs Actual (S&P Global)	Q1 2025 Consensus	Q1 2025 Actual
Revenue ($M)	585.84*	581.90
Primary EPS (Adjusted) ($)	2.06*	2.23
# of Estimates (EPS/Revenue)	2 / 2*	N/A

Values with an asterisk (*) retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Formal revenue/EPS guidance	FY/Q1 2025	Not provided	Not provided	Maintained (no formal guidance)
Dividend rate (per share)	2025	$0.405 (2024 quarterly)	$0.455 quarterly for 2025	Raised (announced Dec. 2024)
Dividends paid ($M)	Q1 2025	$17.3 (Q4 2024)	$19.5	Higher payout (absolute $)
Share repurchases ($M)	Q1 2025	$11.6 (Q4 2024)	$109.6	Raised significantly
Segment reporting	Q1 2025	“Morningstar Data & Analytics”	Renamed “Morningstar Direct Platform”	Implemented

Earnings Call Themes & Trends

Morningstar does not hold analyst earnings calls; investors submit written questions; communications are via press releases, shareholder letters, and supplemental decks .

Topic	Previous Mentions (Q3 2024 and Q4 2024)	Current Period (Q1 2025)	Trend
Public–private market convergence	CEO emphasized convergence, PitchBook enhancements, sale of Commodity & Energy Data to focus core	Continued expansion via Lumonic/DealX; Direct Platform schema update; Unicorn 30 Index referenced broader initiatives (news)	Strengthening
PitchBook product/client mix	Core investor/advisor segments strong; corporate segment softness; licenses +16–19% YoY; margin expansion	Similar drivers; licenses +13.6% YoY; margin +480 bps; corporate softness persists	Stable-positive
Structured finance/credit ratings	Strong growth across CMBS/RMBS/ABS; Canada/US/EMEA momentum	Continued strength; Credit revenue +21.1%; margin +890 bps	Positive
Sustainalytics	Vendor consolidation, licensed-ratings streamlining; softness	Continued softness; revenue down; negative adjusted OI contribution	Negative
Retirement AUMA/margins	AUMA +24% YoY; margin ~53%	AUMA +17.7% YoY; margin down to 44.4% on one-time correction expense	Mixed (AUMA up, margin down)
Advisor platform strategy	TAMP sale and integration with SS&C Black Diamond; retirement of Morningstar Office (Q4 letter)	Sunsetting Morningstar Office led to severance costs impacting opex	Execution progressing

Management Commentary

“Growth in PitchBook and Morningstar Credit contributed to a strong start to 2025… expanding our private credit and structured finance offerings with the acquisitions of Lumonic and DealX.” — CEO Kunal Kapoor .
“Operating margin was 19.6%, and adjusted operating margin was 23.3% in the first quarter of 2025” (margin expansion YoY) .
“We remain focused on generating durable growth… more cautious in our approach” (macro tone) .

Q&A Highlights

Morningstar’s process uses written investor Q&A rather than live calls .

Structured finance outlook: Management acknowledged forecasts for potential issuance declines later in 2025 and discussed margin-preservation levers within Credit (surveillance/recurring services and cost discipline) .
PitchBook AI roadmap: Enhancements include AI earnings call transcript summaries, expanded third-party equity research, and AI-driven document summaries to improve client workflows .

Estimates Context

Q1 2025 results vs S&P Global consensus: Adjusted EPS $2.23 vs $2.06* (beat); Revenue $581.9M vs $585.8M* (slight miss). Coverage was thin (2 estimates on EPS and revenue). Values with an asterisk () retrieved from S&P Global.
Potential estimate revisions: Continued Credit momentum and PitchBook margin expansion support upward EPS/margin trajectories; Sustainalytics softness and macro caution may temper top-line revisions in license-based ESG offerings .

Key Takeaways for Investors

Mix shift toward Credit and PitchBook is accretive to margins; Q1 adjusted margin at 23.3% reflects strong operational leverage in growth engines .
Adjusted EPS beat vs consensus despite higher bonus payments and a one-time Retirement expense; cash earnings solid, with active buybacks ($109.6M) underpinning capital returns .
PitchBook remains resilient in core segments; continued product innovation and AI tooling position it well for public-private convergence despite persistent corporate-segment softness .
Morningstar Credit’s structured finance activity remains robust across CMBS/ABS/RMBS and corporates; watch issuance trends and surveillance revenue to gauge sustainability .
Sustainalytics still a drag; vendor consolidation and offering streamlining could prolong pressure—monitor recovery signals and demand in licensed ESG ratings .
Advisor platform rationalization (TAMP sale; Office sunset; Black Diamond integration) should enhance profitability in Wealth over time, notwithstanding near-term severance/transition effects .
Near-term trade: Lean long-bias on margin strength and buybacks; hedge for macro volatility and structured finance issuance risk. Medium-term thesis: durable growth from PitchBook/Credit, with upside from private-market index and ratings initiatives; execution on ESG/Wealth streamlining can improve consolidated mix .

Morningstar, Inc. (MORN)·Q1 2025 Earnings Summary