Slides
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2025 Annual Shareholders Meeting May 9, 2025
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Welcome Joe Mansueto Executive Chairman
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T oday’s presentations contain forward-looking statements. All statements made that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. Please refer to our most recent earnings release and our most recent Form 10-Q or 10-K for more information on the factors that could cause actual results to differ. T oday’s presentations also contain non-GAAP financial measures. Please refer to the slides at the end of the presentations for a reconciliation to the applicable GAAP measures.
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Business of Annual Meeting Management Presentations Questions & Answers
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Virtual Meeting Access Instructions Broadridge Platform: www.virtualshareholdermeeting.com/MORN2025 Allows shareholders to vote during the meeting, submit written questions, and view and listen to the live webcast Enter the 16-digit control number found next to the label “Control Number” on your Notice of Internet Availability, proxy card, or voting instruction form, or in the email sending you the proxy statement For technical support please call 1-844-986-0822 (toll free) or 303-562-9302 (international) Zoom Platform: Allows any participant to submit questions and view and listen to the live webcast Register to receive a link to the webinar and information regarding technical support
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Proposal 1 Joe MansuetoCaroline Tsay Doniel Sutton Bill Lyons Gail Landis Kunal Kapoor Steve Kaplan Steve Joynt Cheryl Francis Robin Diamonte Election of Directors
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Proposals 2 & 3 Joe Mansueto Chairman of the Board Kunal Kapoor Chief Executive Officer Advisory Vote to Approve Executive Compensation of the Company’s Named Executive Officers Daniel Dunn Chief Revenue Officer Jason Dubinsky* Former Chief Financial Officer *Former CFO, required per SEC rules Ratification of the Appointment of Independent Registered Public Accounting Firm for 2025
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Voting Instructions Voting Online Use the ‘vote here’ button on the lower right portion of the Broadridge portal to vote your shares Voting In Person Raise your hand now and our inspector of election will bring you a paper ballot If you have already sent in your proxy card or voted by phone or online, your shares have been voted accordingly
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Thank You!
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Empowering Investor Success Kunal Kapoor Chief Executive Officer
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Values Champion the Investor Dream Big, Drive Change Execution is Everything Growth Mindset One Team Empowering Investor Success Mission Principles Transparency Independence Long-Term Focus
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Our Investor-Focused Model We strive to communicate with candor and tell you the unvarnished truth about our business. Our goal is to communicate equally with all shareholders, without special treatment for large shareholders or research analysts. We do not host quarterly earnings calls and our executives do not generally participate in one-on-one meetings with institutional shareholders; encouraging a focus on short-term results is inconsistent with our mission to empower investor success over the long-term.” “
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M orningstar, Inc. Annual Report 2005 2 Morningstar,Inc.Annual Report2006 2 2007 Annual Report Morningstar, Inc.2007Annual Report Morningstar, Inc. 2008Annual Report 2008 Annual Report 2009 Annual Report 2009Annual ReportMorningstar,Inc. 2010 Annual Report 2010Annual ReportMorningstar,Inc. 2011 Morningstar,Annual Report Inc. Morningstar,Inc.2012Annual Report 2012 Annual Report Morningstar,Inc. Annual Report2013 Morningstar, Inc.2014 Annual Report 605040 2015Annual ReportMorningstar, Inc. 2017Annual ReportMorningstar, Inc. Dear Morningstar Shareholders, What had started like a benign 2018 ended with a bang. Al-most-forgotten volatility returned with a vengeance, and pundits lined up to predict the end of the strong economic tailwinds that have characterized the past decade. Or, as early 2019 demonstrated, maybe not! As we’ve grown, Morningstar’s success has become more inextrica-bly linked to the global financial markets, but we strive to build a resilient business, for good times and bad. As a mission-driven organization, we’re dedicated to empowering investor suc-cess, and we make it a habit of being ever-present when individual investors and financial advi-sors are under the most stress. Our customer-service proposition is rooted in empathy. And our management philosophy is long-term oriented; we’re fans of the squirrel that stocks up on nuts for winter. This approach allowed us to celebrate some milestones in 2018 and begin 2019 con-fident that regardless of the market environment, investors still need plenty of help. The oppor-tunity for Morningstar to grow is meaningful. Lately, I’ve been thinking about the significance of Morningstar becoming a $1 billion-revenue company. While it’s simply one milestone on a path to building a larger and more impactful Morningstar, crossing the $1 billion mark is mean-ingful for two reasons. The first is that it is a measure of our own financial success, which we’re proud to share with the long-term shareholders who have been our partners. Secondly, reach-ing this milestone would have never happened without the collective efforts of a great team of people who believe that when investors succeed, so does Morningstar. Our mission of empow-ering investor success isn’t based on some esoteric philosophy of investing. Rather, it is rooted in making a difference in the lives of investors. Whether it’s declining costs, friction-reducing technology, the portability of investments, the rise of open-architecture platforms, the move to defined-contribution plans, or other factors that create choice, investors have enjoyed many vic-tories over the past few decadesable investors might struggle to discern, and plenty of private Annual Report Morningstar, Inc. 2018 success advocacy independence empower investor integrity 2019Annual Report Morningstar, Inc. 2020Annual ReportMorningstar, Inc. 2021Annual ReportMorningstar, Inc. 2022Annual Report 2023 Annual Report 2023Annual ReportMorningstar, Inc. 2024Annual ReportMorningstar, Inc.
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Morningstar Today Data as of Dec. 31, 2005 and Dec. 31, 2024. 2 4,100 Analysts 2,400 Technologists 160 Designers Operating IncomeRevenue $484.8$46.5 2405 $2,275.1$227.1 2405 ＋902% ＋943% ($mil) 11,085 Employees 1,130 in 2005
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Our Clients Data as of Dec. 31, 2024. *Advisor counts include direct and estimated indirect reach. 3.8 milRetirement Plan Participants 425,000Financial Advisors 3,300Corporates 69Regulators 4,300Debt Issuers 125,500Private Market Participants 4.8 milIndividual Investors 2,600Institutional Investors 1,000Redistributors Asset Managers 3,100 150Media Companies Retirement Plan Sponsors 275,000 2005 Financial AdvisorsIndividual Investors Institutions 2024 *
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Large and Growing Market Opportunity Source: Morningstar estimates, Burton-Taylor, Cerulli Associates. *Data as of April 7, 2025. All other data as of Dec. 31, 2024. $11.1 Bil Estimated Market Size– PitchBook 26.2% Growth YOY* $44.3 Bil Global Spend on Financial Data/Analysis 6.4% Growth YOY $6.6 Tril Estimated Market Size AUMA— Morningstar Retirement 13.6% Growth YOY $13.8 Tril Managed Account Market Size AUMA–Morningstar Wealth 20.0% Growth YOY $6.4 Bil Global Indexes Industry Revenue 12.8% Growth YOY $11.1 Bil Global Credit Ratings Industry Revenue 35.4% Growth YOY
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Our strategy is to deliver insights and experiences that make us essential to the investor workflow
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Strategic Priorities Talent Build an amazing culture that drives exceptional talent engagement and development Insights Deliver differentiated insights across asset classes to public and private market investors Scale Drive operational excellence and scalability to support growth targets AI Leverage advances in AI to drive innovation across internal and external products and services
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Three Forces Shaping Investing Expanding Choice Data and Technology Personalization
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Growth of Global Managed Products Data as of March 31, 2025 0 200,000 400,000 600,000 800,000 1,000,000 03 05 07 09 11 13 15 17 19 21 23 25 Open-End Fund VA Subaccount Insurance Product Fund VL Subaccount Exchange-Traded Fund UK LP Subaccount Hedge Fund Separate Account Unit Investment Trust Closed-End Fund Collective Investment Trust Model Money Market Fund Global Restricted Fund Open-End Fund VA Subaccount Insurance Product Fund VL Subaccount Exchange-Traded Fund UK LP Subaccount Hedge Fund Separate Account Unit Investment Trust Closed-End Fund Collective Investment Trust Model Money Market Fund Global Restricted Fund
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Expanding Private Markets US Public Markets Capitalizations vs. Global Private Fund AUM ($tril) 15 25.1 Source: PitchBook and Sibler Research. *As of June 30, 2024. 16 17 18 19 20 21 22 23 24* 5.7 27.4 6.4 31.8 7.3 30.4 8.3 33.9 9.5 40.7 11.2 52.3 14.4 40.5 14.9 50.8 15.2 55.3 15.5 US Public Markets Cap Global Private Fund AUM
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Booming Private Credit Private Debt AUM ($ tril) 15 Source: PitchBook. *”Debt Other” includes bridge financing, credit special situations, infrastructure debt, real estate debt, and venture debt. **As of June 30, 2024. 16 17 18 19 20 21 22 23 24** Debt Other* Mezzanine Distressed Debt Direct Lending 0.6 0.7 0.9 1.0 1.1 1.4 1.6 1.7 1.8 1.8
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Medalist Ratings for Semiliquid Strategies
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2019–2024 Our Data Growth 139% Deals 65% Separate Accounts, Pooled Funds 192% Strategies 56% Closed-End Funds 33% Hedge Funds 95% Private Market Participants 161% Private Companies 14% 529 College Savings Plans 108% Annuities 24% Mutual Funds 15% Indexes 6.8 mil Fixed Income* 54,900 Leveraged Loan Debts 31% Public Companies 72% Exchange Traded Funds 12% Retirement Plans Data as of Dec. 2024. *Data provided by a third-party. 38% Collective Investment Trusts 40% Model Portfolios New
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Our Data Coverage 10,800 closed-end funds 28,000 ETFs 54,900 leveraged loan debts 5,200 model po rtfolios 11,300 unit investment trusts 40,000 public companies *ESG Risk Rating data as of April 7, 2025. All other data as of Dec. 31, 2024. 5,700 state-sponsored college savings plans16,200 separate accounts 300,000 mutual fund share classes280,900 variable annuities/ life sub-accounts, policies and insurance funds 4.1 million securities with an ESG Risk Rating* 5.2 million privately held companies
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Research-Driven IP qrtyu wiopa esdf qrtyu wiopa esdf qrtyu wiopa esdf
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AI-Enabled Product Innovation PitchBook Morningstar Direct Direct Advisory Suite
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Our Business The size of the rectangles represents 2024 reported revenue. The color of the rectangles represents 2024 organic revenue growth compared to 2023. *The operating segments of Morningstar Sustainalytics and Morningstar Indexes have been combined and presented as part of Corporate and All Other, which is not a reportable segment.**See definitions and reconciliation tables in the appendix of this presentation. 40% -40% Organic Revenue Growth** Morningstar Direct Platform Morningstar Credit Morningstar Wealth PitchBook Corporate and All Other* Morningstar Retirement
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Morningstar Direct Platform Organic revenue and adjusted operating income/margin are non-GAAP measures. See definitions and reconciliation tables in the appendix of this presentation. 2024 Adjusted Operating Income $355.4 mil 45.1 % Margin 2024 Revenue Trend 5.5 % Reported 5.8 % Organic Q1 2025 Revenue Trend 1.3 % Reported 4.2 % Organic Morningstar Data Morningstar Direct Morningstar Direct Advisory Suite (Morningstar Advisor Workstation)
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PitchBook PitchBook Platform Direct Data 2024 Adjusted Operating Income $186.4 mil 30.1 % Margin 2024 Revenue Trend 12.0 % Reported 12.1 % Organic Q1 2025 Revenue Trend 10.9 % Reported 11.1 % Organic Organic revenue and adjusted operating income/margin are non-GAAP measures. See definitions and reconciliation tables in the appendix of this presentation.
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Morningstar Credit Morningstar DBRS Morningstar Credit (Credit data and analytics) 2024 Adjusted Operating Income $75.6 mil 26.0 % Margin 2024 Revenue Trend 35.1 % Reported 35.3 % Organic Q1 2025 Revenue Trend 21.1 % Reported 23.2 % Organic Organic revenue and adjusted operating income/margin are non-GAAP measures. See definitions and reconciliation tables in the appendix of this presentation.
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Morningstar Wealth Morningstar Model Portfolios (Managed Portfolios) Morningstar Investor International Wealth Platform 2024 Adjusted Operating Income –$9.3 mil –3.7 % Margin 2024 Revenue Trend 8.0 % Reported 8.1 % Organic Q1 2025 Revenue Trend 3.9 % Reported 7.9 % Organic Organic revenue and adjusted operating income/margin are non-GAAP measures. See definitions and reconciliation tables in the appendix of this presentation.
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Morningstar Retirement Managed Accounts 2024 Adjusted Operating Income $65.6 mil 51.6 % Margin 2024 Revenue Trend 15.0 % Reported 15.0 % Organic Q1 2025 Revenue Trend 15.8 % Reported 15.8 % Organic Organic revenue and adjusted operating income/margin are non-GAAP measures. See definitions and reconciliation tables in the appendix of this presentation.
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Corporate and All Other 2024 Revenue Trend 29.3 % Reported 29.1 % Organic Q1 2025 Revenue Trend 15.0 % Reported 15.7 % Organic Organic revenue is a non-GAAP measure. See definitions and reconciliation tables in the appendix of this presentation. The operating segments of Morningstar Sustainalytics and Morningstar Indexes have been combined and presented as part of Corporate and All Other, which is not a reportable segment. Morningstar Indexes 2024 Revenue Trend –0.8 % Reported –0.9 % Organic Q1 2025 Revenue Trend –6.5 % Reported –4.9 % Organic Morningstar Sustainalytics
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Our mission is to empower investor success
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Financial Highlights Michael Holt Chief Financial Officer
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The first rule of compounding is to never interrupt it unnecessarily.” Charlie Munger “
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Revenue Growth 05 24 $2,275.1 $227.1 $236.5 Revenue 2005-2024 ($mil)
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$484.8$230.6 2423 $493.8 +110.2% +51.2% 2423 $2,275.1$2,038.6 2423 $326.5 $448.9 +127.5% 2423 $197.3 2024 Financial Performance Operating Income Free Cash Flow*Revenue ($mil) –5.2% Adjusted Operating Income* +11.6% reported +11.8% organic* Adjusted operating income, organic revenue, and free cash flow are non-GAAP measures. See definitions and reconciliation tables in the appendix of this presentation. *
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Q1 2025 Financial Performance Operating Income Free Cash Flow*Revenue ($mil) Adjusted Operating Income* $114.1$92.6 2524 $135.4 +23.2% +22.2% 2524 $581.9$542.8 2524 $110.8 $58.8 –1.2% 2524 $59.5 +7.2% reported +9.1% organic* *See definitions and reconciliation tables in the appendix of this presentation.
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Realizing Margin Expansion Adjusted Operating Margin* Operating Margin 20 21 22 23 24 22.8% 15.5% 21.3% 15.1% 16.0% 9.0% 11.3% 21.3%16.0% 21.7% Q1 25 23.3% 19.6% Adjusted operating margin is a non-GAAP measure. See definitions and reconciliation tables in the appendix of this presentation.*
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Quarterly Performance Trends Reported Revenue Growth % Adjusted Operating Expense Growth %* Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 5.0% 7.3% 10.1% 13.2%13.4% 13.3% 10.5% 9.7% 14.3% 9.6% 8.1% 4.2% 1.0% 1.4% 3.7% 10.2% Q1 25 7.2% 3.4% Adjusted operating expense is a non-GAAP measure. See definitions and reconciliation tables in the appendix of this presentation.*
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Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 Q1 25 Change YOY 23.6% 12.6% (1.3%) (7.3%) (9.2%) (8.1%) (3.6%) (2.2%) (1.4%) Leveraging Our Existing Resources Headcount represents permanent, full-time employees. As of March 31, 2025, headcount was 11,115. Headcount (000) 12.112.4 11.311.6 11.3 11.1 11.1 11.1 11.1
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2024 Revenue Growth Drivers The size of the rectangles represents 2024 reported revenue. The color of the rectangles represents 2024 organic revenue growth compared to 2023. *The operating segments of Morningstar Sustainalytics and Morningstar Indexes have been combined and presented as part of Corporate and All Other, which is not a reportable segment.** See definitions and reconciliation tables in the appendix of this presentation. 40% -40% Organic Revenue Growth** Morningstar Direct Platform Morningstar Credit Morningstar Wealth PitchBook Corporate and All Other* Morningstar Retirement
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2023 Morningstar Direct Platform 2024 Adjusted Operating Income Walk PitchBookMorningstar Credit Morningstar Wealth Morningstar Retirement Corporate All Other* 326.5 15.6 38.353.9 31.1 11.5 16.9 493.8 ($mil) The operating segments of Morningstar Sustainalytics and Morningstar Indexes have been combined and presented as part of Corporate and All Other, which is not a reportable segment. Corporate and All Other also includes unallocated corporate expenses. See definitions and reconciliation tables in the appendix of this presentation. *
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Revenue and Profit Contribution 2023 2024 2023 2024 Morningstar Direct Platform PitchBook Morningstar Credit Morningstar Wealth Morningstar Retirement Corporate & All Other* 2,000 1,500 1,000 500 –500 Revenue Adjusted Operating Income (Loss)** ($mil) * $2,500 The operating segments of Morningstar Sustainalytics and Morningstar Indexes have been combined and presented as part of Corporate and All Other, which is not a reportable segment. Corporate and All Other also includes unallocated corporate expenses. **See definitions and reconciliation tables in the appendix of this presentation.
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Segment Revenue and Margin Profile 788.1747.2696.6 45.0% 45.5% 45.1% 15.9% Morningstar Direct Platform PitchBook Morningstar Credit Morningstar Wealth Morningstar Retirement 22 23 24 $696.6 $747.2 $788.1 $450.7 $551.9 $618.4 $104.0 $110.5 $127.1 Revenue ($ mil) Adjusted Operating Margin* $228.9 $229.9 $248.4 (6.2%) (17.6%) (3.7%) $236.9 $215.4 $291.1 24.9% 10.1% 26.0% 49.4% 49.0% 51.6% 26.8% 30.1% *See definitions and reconciliation tables in the appendix of this presentation.
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Adjusted Operating Income and Free Cash Flow 316.7 298.9 363.4 20 21 22 24 TTM Q1 493.8 326.5 23 518.4 Adjusted Operating Income ($mil)* Free Cash Flow* 307.6 348.1 168.3 197.3 448.9 448.2 *See definitions and reconciliation tables in the appendix of this presentation.
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Capital Allocation & Deployment 20 21 22 23 24 Capital Expenditures Acquisitions & Investments Dividends Paid Share Repurchase TTM Q1 25 ($mil) 200 400 600 800 1000 1200 *Total debt as of March 31, 2025. **Consolidated funded indebtedness to EBITDA as defined in our credit agreements. Share Repurchase $41.9 $1.3 $226.0 $1.4 $11.6 $121.2 Total Debt $449.1 $359.4 $1,109.6 $972.4 $698.6 $803.7 Leverage Ratio 1.0x 0.7x 2.2x 1.7x 0.9x 1.0x * **
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ROIC: Return On Invested Capital 14.1% 10.8% 15.4% 20 21 22 24 TTM Q1 15.8% 10.5% 23 16.2% Return on invested capital is a non-GAAP measure. See definitions and reconciliation tables in the appendix of this presentation.
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MORN Total Return Annualized returns as of May 5, 2025. *Peer group includes FDS, MCO, MSCI, SEIC, and SPGI. Period MORN Peer Group Morningstar US Market Total Return 10-year 15.60 16.69 11.97 5-year 15.69 12.88 15.88 3-year 5.97 12.99 12.12 1-year 0.95 17.38 11.13 *
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Adjusted Operating Income 316.7 298.9 363.4 20 21 22 24 TTM Q1 25 493.8 326.5 23 518.4 Adjusted Operating Income ($mil)* 233.3236.5 182.2184.1190.6 15 16 17 18 19 *See definitions and reconciliation tables in the appendix of this presentation.
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65 Rod Diefendorf, President and COO of PitchBook PitchBook Delivering Today, Building for Tomorrow
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PitchBook’s Growth 2017 2018 2019 2020 2021 2022 2023 2024 $700M $600M $500M $400M $300M $200M $100M Revenue* 18.4% 15.9% 26.8% 30.1% AO Margin 66 Adjusted operating margin is a non-GAAP measure. See definitions and reconciliation tables in the appendix of this presentation.*Reflects PitchBook reportable segment starting in 2021. For 2017- 2020 reflects PitchBook key product area.
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Market Leadership Growing Opportunity Additional Growth 67
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Private Market Growth Private Market Access Private Market Complexity 68
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69
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70 Private Market Growth 01
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$1T 2000 $15T 2024 $20T+ 2028 Private Market AUM In 2000, the S&P 500 was 15x larger than the alternative assets market AUM. Today, it’s just 3x larger. Private Market Growth 71Source: PitchBook, The Evergreen Evolution, September 27, 2024
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$20T+ *Count of PE & VC backed companies versus domestic firms publicly listed on the NYSE and Nasdaq 72 PE and VC-backed ($200M in post-money valuation) Company Inventory Compared to Public Markets 0 4,000 8,000 12,000 16,000 2010 2012 2014 2016 2018 2020 2022 2024 Publicly listed* Total VC & PE inventory 14,596 4,300 Private Market Growth Source: PitchBook, Geography: US, As of December 31, 2024
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$0 $1,000 $2,000 $3,000 $4,000 0 200 400 600 800 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Active unicorns Aggregate Post-Valuation ($B) New unicorns US Unicorn Count and Aggregate Post-Valuation 73 Private Market Growth Source: PitchBook, Geography: US, As of March 25, 2025
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4 5 6 7 8 9 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Acquisition Buyout Public Listing Average Time to IPO 74 Private Market Growth 7.8 Source: PitchBook, Geography: US, As of March 31, 2025
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75 Private Market Accessibility 02
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76 Private Market Accessibility PitchBook Private Capital Indexes: Hypothetical growth of $100 invested in Q1 2014 50 Percentage Points PitchBook, US Private Market Indexes 10-year return, As of September 30, 2024
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77 $0 $500 $1,000 $1,500 $2,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Dry powder ($B) Remaining value ($B) Institutional AUM exceeds $1.8 trillion with $566.8 billion in dry powder Private Market Accessibility Source: PitchBook, 2024 Global Private Debt Report, March 18, 2025
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78 Private Market Accessibility 10 Top publicly traded companies on Morningstar US Market TR Index ~40%Total Market Capitalization Source: PitchBook, Morningstar US Market TR USD, Geography: US, As of May 8, 2025
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79 Private Market Accessibility Perpetual Capital ($B) % of Total AUM 76.3% 14.0% 27.6% 20.6% 42.0% 59.5% 39.5% 191.5 34.4 133.6 91 268 447 444.8 76.3% 14.0% 27.6% 20.6% 42.0% 59.5% 39.5% Source: PitchBook, 2024 Global Private Debt Report, March 18, 2025
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80 Private Market Complexity 03
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Private Asset Classes Private Market Complexity Public Asset Class 81 Source: PitchBook, Unicorn 30 Index
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Market Drivers Pain Points Private market growth is formidable and undeniable Access to private markets is expanding Managing private market portfolios has never been more complex Transparency 82
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Market Drivers Pain Points Private market growth is formidable and undeniable Access to private markets is expanding Managing private market portfolios has never been more complex Transparency Workflow Complexity 83
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Market Drivers Pain Points Private market growth is formidable and undeniable Access to private markets is expanding Managing private market portfolios has never been more complex Transparency Workflow Complexity 84 Standardization
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85 How PitchBook Addresses Pain Points
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IP Software Research Data PitchBook Key Drivers 86 Standardization Transparency Workflow Complexity
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Data 87 IP Software Research Data Standardization Transparency Workflow Complexity
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Our Data: Who and What You Can Research with PitchBook 88
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89 10M+ Companies Perpetual Capital Private credit and CLO Secondaries 2025+ IP Software Research Data Non-Backed Companies
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Research 90 IP Software Research Data Standardization Transparency Workflow Complexity
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91 APAC Private credit & CLO expansion Additional Industries Additional Aftermarket Research contributors 2025+ IP Software Research Data
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Software 92 IP Software Research Data Standardization Transparency Workflow Complexity
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AI/ML Automated profile generation Data collection automation Market Maps VC Exit Predictor GenAI company descriptions AI summaries of earnings call transcripts AI summaries of company profiles 93
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AI/ML Conversational Search A standalone chatbot, powered by AI, that allows users to quickly find insights, refine searches, and navigate PitchBook's data Automated profile generation Data collection automation Market Maps VC Exit Predictor GenAI company descriptions AI summaries of earnings call transcripts AI summaries of company profiles AI conversational search and screener construction Cross-document summarization 94
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Lumonic 95
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LP Participant GP 96 Credit Credit Credit
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Lumonic Portfolio Analytics 97 PitchBook Data, Research, Software and IP
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LP Alternative Asset Classes GP Credit PE VC 98
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99 “Congrats Kevin, this is a testament to the great work you have put in and the great team you have built. Excited to continue to be a part of your story.” “Kevin and Rod — congratulations to you both. We’re excited to see continued success across both platforms.” “We are big fans of Kevin and the Lumonic team and are thrilled to see them joining forces with such a great platform like PitchBook. Looking forward to growing our respective businesses as partners in the years ahead.” “Kevin — congrats, that is great to hear. Happy that your team found a good fit with someone to keep building and improving the product (and kudos to PitchBook for making a smart acquisition).”
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Intellectual Property 100 IP Software Research Data Standardization Transparency Workflow Complexity
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101
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Indexes Unicorn Index Unicorn 30 Buyout Replication Index 102
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Indexes Unicorn Index Unicorn 30 Buyout Replication Index CLO Index BDC Index Sponsor-backed Index IPO Index Private Credit Index Evergreen Fund Index 103
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Growth & Value Expansion 104
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IP Software Research Data PitchBookKey Drivers 105 Standardization Transparency Workflow Complexity
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IP Software Research Data Deal Sourcing Deal Execution Fundraising, Allocation, and Benchmarking Portfolio Monitoring and Reporting Research and Intelligence 106
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Deal Sourcing Deal Execution Fundraising, Allocation, and Benchmarking Portfolio Monitoring and Reporting Research and Intelligence 113
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Market Leadership Growing Opportunity Additional Growth 114
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Morningstar Credit Detlef Scholz President, Morningstar DBRS
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The Next Generation Credit Rating Agency D CCCCCC BBBBBB AAAA AA One of four global credit rating agencies universally accepted by leading investors, bank, insurance and pension system regulators Leading coverage not only in Canada and global structured finance, but also many segments of the quickly growing private credit markets Credit Analytics is a steadily accelerating component of our revenue mix We are well positioned to benefit from the evolving credit markets
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A Scalable Platform Financial institutions Corporate credit Structured credit / Funds Operational risk assessments Asset-backed securities Residential mortgage- backed securities Commercial mortgage- backed securities
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Research Highlights Commentary 2025 U.S. ABS Outlook: All Eyes on the Consumer Looser Monetary Policy and Easing Inflation Expected in 2025, but Consumers Still Cautious in the Short Term Despite the Federal Reserve (the Fed) changing its course and easing monetary policy (with three interest rate cuts in 2024 and two more expected in 2025), consumers remain cautious entering the year because of concerns about the overall economy and future incomes. According to The Conference Board's Consumer Confidence Index (CCI), the consumer outlook is less sanguine, with the CCI declining by 8.1 points in December 2024 to 104.7, based in part on less optimism for business and the labor market. A more muted expectation of only two more rate cuts means interest rates will remain elevated this year, while inflation, albeit easing somewhat, also continues to be a concern. Nonetheless, we expect the U.S. economy to continue to experience robust and broad-based growth in 2025, primarily because the fundamentals for consumers look solid.1 Household debt servicing costs remain near historic lows, and easing monetary policy should support credit expansion. While the personal saving rate is low, which may prompt some consumers to pull back on spending, household balance sheets in aggregate have benefited from large valuation gains in the capital markets. Tariffs remain the biggest risk to what is a generally positive outlook. In this elevated interest rate environment, we expect to see some credit deterioration in underlying subprime consumer asset-backed securities (ABS) collateral, particularly across the auto loans/leases, consumer loans, and timeshare sectors. We continue to have a negative credit rating outlook for subordinated auto loan/lease and consumer loan securitizations. Meanwhile, we have stable credit rating outlooks for the credit card receivable, residential property assessed clean energy (R-PACE), Federal Family Education Loan Program (FFELP) student loan, private student loan, refinanced (refi) student loan, and timeshare sectors. Across commercial ABS, we have stable credit rating outlooks on most sectors, except for film/television (TV) royalty-backed ABS, where we have a positive credit rating outlook. For aviation, we have a positive outlook on collateral performance in the sector, with a stable credit rating outlook. While we do expect to see higher delinquencies and defaults in underlying equipment lease and small business loans, deleveraging transaction structures will likely mitigate such credit deterioration. 1. North America Macroeconomic Update: Potential Policy Changes Add Risk to a Positive Outlook, December 9, 2024. Morningstar DBRS January 8, 2025 Stephanie K. Chin Senior Vice President Structured Finance Research +1 646 560-4571 stephanie.chin@morningstar.com Chris D'Onofrio Managing Director Head of U.S. ABS +1 212 806-3284 chris.donofrio@morningstar.com Claire Mezzanotte Group Managing Director Head of Global Structured Finance +1 212 806-3272 claire.mezzanotte@morningstar.com 1 Morningstar DBRS Los Angeles Area Wildfires Will Cause Record Insured Losses; Solutions to Address Insurability Are Needed Morningstar DBRS Los Angeles Area Wildfires Will Cause Record Insured Losses; Solutions to Address Insurability Are Needed JANUARY 15, 2025 Commentary 7Ke ongoing Los Angeles area Zildfires are already liNely to KaYe caused uS to a record billion in insured losses easily surSassing tKe billion in losses caused by tKe CaPS )ire in nortKern CaliIornia 7Ke iPSact on leading CaliIornia SroSerty insurers EXHIBIT 1) is liNely to be significant but Panageable giYen tKe industry s diYersified risN e[Sosures and its access to global reinsurance caSacity +oZeYer tKe Zildfires Zill Zorsen tKe ongoing crisis in tKe CaliIornia SroSerty insurance ParNet tKat Kas already caused PaMor insurers to stoS issuing neZ Solicies ZKile regulators attePSt to address aĭordability and insurability issues Reinsurance costs are liNely to be negatiYely aĭected as Zell IurtKer cKallenging tKe ability oI SriPary insurers to SroYide coYerage Record Wildfire Damages Wildfires are a recurring Seril Ior tKe CaliIornia SroSerty insurance ParNet and a PaMor culSrit beKind tKe rising SroSerty insurance costs and insurability issues in tKat state Wet ZeatKer in tKe ś Zinter season resulted in tKe substantial groZtK oI coPbustible Paterial tKat Zas subMected to drier conditions during tKe rePainder oI leaYing large areas oI tKe state Yulnerable to fire WitK Pore tKan structures destroyed tKe Los Angeles area Zildfires Zill be tKe costliest in Key Highlights Los Angeles area Zildfires KaYe caused record SroSerty daPage ZitK insured losses tKat could reacK Pore tKan billion PaNing a negatiYe but Panageable iPSact on insurers credit Srofiles 3roSerties located in tKe Zildlandurban interIace are increasingly diĮcult to insure and cause issues Ior tKe CaliIornia SroSerty insurance ParNet as a ZKole Reinsurance caSacity is critical Ior direct carriers to be able to assuPe and Srice Zildfire risN but it is e[Sected to becoPe Pore e[SensiYe IolloZing tKis eYent Patrick Douville Vice President *lobal Insurance 3ension Ratings SatricNdouYille#PorningstarcoP 8S Kistory considering tKe KigK SroSerty Yalues in tKe aĭected neigKbourKoods 2Yerall tKe resulting econoPic daPage could ranN tKese fires aPong tKe Post daPaging natural disasters in 8S Kistory including PaMor Kurricanes 7Ke aYerage KoPe Yalues in tKe Post KeaYily aĭected areas oI 3acific 3alisades and Altadena Zere Pillion and Pillion Marcos Alvarez Managing Director *lobal )inancial Institution Ratings + 34 919 03 65 29 ParcosalYare]#PorningstarcoP Name Market Share (%) 1State )arP *rouS 9.11% 2)arPers Insurance *rouS 3%erNsKire +atKaZay *rouS 6.16% 4Allstate Insurance *rouS 4.93% 5Auto Club (nterSrises Insurance *rouS 4.53% 67raYelers *rouS 4.33% 7Liberty 0utual *rouS 4.13% 8CSAA Insurance *rouS 4.09% 90ercury *eneral *rouS 10CKubb LiPited *rouS 3.45% 2023 California Property and Casualty Market Share EXHIBIT 1 Source CaliIornia 'eSartPent oI Insurance Commentary Private Credit Downgrade Actions Up Moderately Relative to Upgrades in Q1 2025 Downgrade/Upgrade Ratio Moderately Weaker From Q4 2024 For the trailing 12 months ended February 21, 2025, the ratio of middle market private credit rating downgrades to upgrades is trending a bit higher (Exhibit 1) as we note incremental weakness among some issuers reviewed in February. The ratio has increased, year-to-date, to 2.61 times (x) from 2.40x for the full-year 2024 but remains lower from the Q3 2024 peak of 3.1x. Exhibit 1 Ratio of Middle Market Downgrade to Upgrade Rating Actions Notes: We maintain more than 400 lender-solicited, private credit ratings for middle market borrowers in North America and Europe. These companies generally have high leverage and operating earnings of up to $50 million. Average credit quality is in the B category. LTM = Trailing 12 months ended February 14, 2025. Source: Morningstar DBRS. Exhibit 2 shows that the bulk of upgrade activity was concentrated in the B or B (high) rating categories. We also noted modest activity in the CCC (high) and lower category, though this primarily represented previously defaulted issuers that were reinstated at higher rating levels. Meanwhile, downgrade activity remained heavily concentrated in the "vulnerable" rating categories (ratings of B (low) or lower). Downgrades to D (default) accounted for 15.1% of total downgrade actions over the past 12 months, reflecting ongoing fundamental challenges among a subgroup of weaker issuers. Meanwhile, 47% of downgrades were to CCC (high) through C categories. Morningstar DBRS February 25, 2025 Key Highlights: • The ratio of downgrades to upgrades is trending higher through the first seven weeks of Q1 2025. • Downgrade activity remains skewed toward the "vulnerable" rating categories (B (low) or lower). • The data continue to show proportionally fewer trend changes shifting to Negative with a general upward trend in the mix of Positive trends since Q3 2023. • Issuers rated D (default) increased to 2.6% of ratings from 2.2% at the end of Q4 2024, with two new defaults so far this year. Michael Dimler, CFA Senior Vice President Corporate Ratings, Private Credit +1 312 696-6339 michael.dimler@morningstar.com Krutang Desai Analyst Private Credit Ratings +1 312 332-9577 krutang.desai@morningstar.com 1.68 1.43 2.40 2.80 2.63 2.86 3.14 2.40 2.61 - 0.50 1.00 1.50 2.00 2.50 3.00 3.50 Q1 2023Q2 2023Q3 2023Q4 2023Q1 2024Q2 2024Q3 2024Q4 2024 LTM 2021 2022 2023 2024 0 10 20 30 40 50 60 ABS RMBS CMBS SC NPL The United Kingdom’s 2024 in Structured Finance So Far: Defending its Leading Position Across Asset Classes Commentary The UK securitisation market has been large and diverse this year. Interesting Trends Although the UK often has an active securitisation market, it seems to have tempered somewhat this year. So far it’s registered GBP 12.5 billion in new issuance, down from GBP 19.2 billion at around the same time last year. In terms of the number of transactions and investor-placed issuance, the UK has been the busiest European market, though it falls short in total issuance volume where it is second only to Ireland, whose volume is boosted by a large retained transaction. As in prior years, the majority of UK securitisations come from RMBS but also feature investor-placed ABS and CMBS. We have a stable outlook on UK prime RMBS collateral performance in 2024 but a negative outlook for all other UK RMBS types. We expect the weighted-average cost of a mortgage to increase as some borrowers roll off their low fixed rates and into new mortgages with higher rates. Financial markets expect the Bank of England to start cutting rates later in 2024, though that remains to be seen with inflation still above its 2% target. Recent Morningstar DBRS-Rated New Issuance ABS NewDay Funding Master Issuer plc On 13 March 2024, Morningstar DBRS assigned provisional credit ratings of AAA (sf), AA (sf), A (sf), BBB (sf), BB (sf), and B (high) (sf) to the Series 2024-1, Class A; Series 2024-1, Class B; Series 2024-1, Class C; Series 2024-1, Class D; Series 2024-1, Class E; and Series 2024-1, Class F Notes; respectively, to be issued Caitlin Veno Senior Copy Editor Global Editorial Total YTD European Issuance Volume Excluding BSL CLOs United Kingdom: New Issuance Activity (No. of Transactions) Securitisation at a Glance Total Issuance (EUR Billions) 2024 (YTD) 2023 2022 2021 48.7 49.6 45.0 12.5 Others, 2%France, 8% 1 The United Kingdom’s 2024 in Structured Finance So Far: Defending its Leading Position Across Asset Classes by NewDay Funding Master Issuer plc. On 3 April 2024, Morningstar DBRS finalised its provisional credit ratings on the notes. • The transaction represents the issuance of notes backed by a portfolio of own-branded credit cards granted by NewDay Cards to individuals domiciled in the UK. London Cards No. 2 plc On 2 April 2024, Morningstar DBRS assigned provisional credit ratings of AAA (sf), AA (sf), A (low) (sf), BBB (low) (sf), BB (low) (sf), CCC (sf), and BB (high) (sf) to the Class A, Class B, Class C, Class D, Class E, UK, 28% Ireland, 35% Germany, 13% Spain, 6% Italy, 4% Netherlands, 4% Mudasar Chaudhry Senior Vice President, Lead European Structured Finance Research +44 20 7855 6613 mudasar.chaudhry@morningstar.com Christian Aufsatz Managing Director European Structured Finance Ratings +44 20 7855 6664 christian.aufsatz@morningstar.com 30 MAY 2024
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Universe of Morningstar Credit Capabilities
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2024 Revenue Diversification FIG 12% Other 1% Data Products 6% SC / Funds 6% RMBS 16% CMBS 19% Corporate Credit 22% ABS 18% Data Products Other Corporate Credit Asset Backed Securities Financial Institutions Group Commercial Mortgage Backed Securities Residential Mortgage Backed Securities Structured Credit Funds
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Competitive Landscape Global Capabilities Local / Single Geography Limited Ratings Coverage Broad Ratings Coverage S&P Global Ratings Moody’s FitchRatings AM Best KBRA Scope Egan-Jones Others Note: Calibrations based on SEC ORC report on NRSROs Chart 6 (Jan 2025) and our assessment of regulatory recognitions and segment acceptance.
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06 11 14 19 Canada US Morningstar DBRS History 76 00 $291.1 Toronto New YorkChicago London Madrid Frankfurt Europe 24 Revenue (US $mil)
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Top-line Growth and Margin Expansion Revenue and Adjusted Operating Income ($mil) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 22 23 24 *Adjusted operating income is a non-GAAP measure. See definitions and reconciliation tables in the appendix of this presentation. Revenue Adjusted Operating Income* 100 80 60 40 20 Q1 25 Q4
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–5.2% 2120 221918 2423 200 150 100 50 License-Based Transaction-Based Recurring Transaction-Based New Issuance Revenue by Fee Type ($mil)
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A Leading Edge in Credit Analytics and a More Nimble Approach Coverage Tool CRE Analytics Platform Ratings Engine
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A Deep-Dive into Private Credit Why is private credit so exciting for us? Because it is more of a level playing field as investors can freely choose their preferred credit rating agency without the limitations of legacy investment mandate definitions or credit rating agency index eligibility issues. Question: Answer:
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A Deep-Dive into Private Credit Buy & hold in less transparent markets require use of unbiased third party to assess default risk. Default use of credit rating calibrations when you handle third party funds or when you are subject to bank, insurance or pension system regulators. The evolving market segments are much wider than most imagine. We benefit both from credit rating mandates but also from the use of our credit analytics tools. Expected growth on both sides. Volatility, change and (a certain degree of) market disruption have proven to be good for building our business.
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Select Private Credit Segment Opportunities Incremental Market Momentum Relative Competitive Positioning Strategic Focus Private (Direct) Placements Leveraged Loans Middle Market Lending Infrastructure/Project Finance Real Estate Loans Funds Structured Credit & Risk Transfer Private ABS, RMBS, CMBS Continuum Fundamental to Structured Finance Strong Medium
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Convergence of Public and Private Credit Convergence of public and private is easy to imagine in credit as the markets already speak the same language. We have well-established industry standards on how to assess credit risk, credit risk adjusted pricing and performance measurements.
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The Next Generation Credit Rating Agency D CCCCCC BBBBBB AAAA AA One of four global credit rating agencies universally accepted by leading investors, bank, insurance and pension system regulators Leading coverage not only in Canada and global structured finance, but also many segments of the quickly growing private credit markets Credit Analytics is a steadily accelerating component of our revenue mix We are well positioned to benefit from the evolving credit markets
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Appendix: Reconciliation of Non-GAAP Measure with the Nearest Comparable GAAP Measure
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Definitions This presentation includes references to the non-GAAP financial measures listed below (including percentage growth or decline of those numbers). These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is provided in the appendix to this presentation and in our filings with the SEC, including our most recent Forms 8-K, 10-K, and 10-Q. "Organic Revenue" is consolidated revenue before (1) acquisitions and divestitures, (2) adoption of new accounting standards or revisions to accounting practices (accounting changes), and (3) the effect of foreign currency translations. "Adjusted Operating Income (Loss)" is consolidated operating income (loss) excluding (1) intangible amortization expense, (2) the impact of merger, acquisition, and divestiture-related activity which, when applicable, may include certain non-recurring expenses such as pre-deal due diligence, transaction costs, contingent consideration, severance, and post-close integration costs (M&A-related expenses), and (3) certain other one-time, non-recurring items which management does not consider when evaluating ongoing performance. "Adjusted Operating Margin" is operating margin excluding (1) intangible amortization expense, (2) M&A-related expenses, and (3) certain other one-time, non-recurring items which management does not consider when evaluating ongoing performance. "Adjusted Operating Expense" is operating expenses excluding (1) intangible amortization expense, (2) M&A-related expenses, and (3) certain other one-time, non-recurring items which management does not consider when evaluating ongoing performance. "Free Cash Flow" is cash provided by or used for operating activities less capital expenditures.
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Reconciliation from Reported to Organic Revenue Change ($mil) 2020 2021 2022 2023 2024 Consolidated revenue change 17.9% 22.3% 10.1% 9.0% 11.6% Less: M&A and accounting changes 9.5% 2.8% 2.0% 1.7% (0.2%) Less: currency and other 0.2% 1.9% (2.7%) (0.2%) 0.0% Organic revenue change 8.2% 17.6% 10.8% 7.5% 11.8%
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2023 2024 Q1 2025 Morningstar Direct Platform Reported revenue change 7.3% 5.5% 1.3% Less: M&A, accounting changes, and currency (0.1%) (0.3%) (2.9%) Organic revenue change 7.4% 5.8% 4.2% PitchBook Reported revenue change 22.5% 12.0% 10.9% Less: M&A, accounting changes, and currency 4.9% (0.1%) (0.2%) Organic revenue change 17.6% 12.1% 11.1% Reconciliation from Reported to Organic Revenue Change
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2023 2024 Q1 2025 Morningstar Credit Reported revenue change (9.1%) 35.1% 21.1% Less: M&A, accounting changes, and currency (0.6%) (0.2%) (2.1%) Organic revenue change (8.5%) 35.3% 23.2% Morningstar Wealth Reported revenue change 0.4% 8.0% 3.9% Less: M&A, accounting changes, and currency 2.0% (0.1%) (4.0%) Organic revenue change (1.6%) 8.1% 7.9% Reconciliation from Reported to Organic Revenue Change
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2023 2024 Q1 2025 Morningstar Retirement Reported revenue change 6.3% 15.0% 15.8% Less: M&A, accounting changes, and currency — — — Organic revenue change 6.3% 15.0% 15.8% Reconciliation from Reported to Organic Revenue Change
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2023 2024 Q1 2025 Morningstar Indexes Reported revenue change 30.5% 29.3% 15.0% Less: M&A, accounting changes, and currency 5.8% 0.2% (0.7%) Organic revenue change 24.7% 29.1% 15.7 Morningstar Sustainalytics Reported revenue change 14.4% (0.8%) (6.5%) Less: M&A, accounting changes, and currency 0.5% 0.1% (1.6%) Organic revenue change 13.9% (0.9%) (4.9%) Reconciliation from Reported to Organic Revenue Change
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Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Adjusted Operating Income (Loss) Morningstar Direct Platform $75.6 $76.6 $79.1 $82.0 $80.9 $80.1 $88.4 $90.4 PitchBook 12.3 15.8 26.7 16.7 30.4 37.2 39.1 41.4 Morningstar Credit 21.4 16.6 10.6 10.5 (4.0) 5.0 2.8 17.9 Morningstar Wealth 0.6 (0.3) (7.1) (7.5) (14.6) (12.3) (8.2) (5.3) Morningstar Retirement 13.7 12.8 11.7 13.2 11.2 13.4 14.7 14.8 T otal Reportable Segments 123.6 121.5 121.0 114.9 103.9 123.4 136.8 159.2 Less: Corporate and all other (41.1) (48.1) (44.4) (48.5) (52.1) (53.7) (44.8) (46.2) Adjusted Operating Income $82.5 $73.4 $76.6 $66.4 $51.8 $69.7 $92.0$113.0 Intangible amortization expense (14.1) (15.6) (18.7) (18.3) (17.5) (17.7) (17.7) (17.6) M&A related expenses (4.9) (3.9) (4.9) (3.4) (4.2) (3.0) (1.7) (0.9) Other one-time, non-recurring items (7.1) — (31.0) (9.2) (5.6) (7.3) (2.6) (0.1) Operating Income $56.4 $53.9 $22.0 $35.5 $24.5 $41.7 $70.0 $94.4 Reconciliation from Adjusted Operating Income by Segment to Consolidated Operating Income
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Q1 24 Q2 24 Q3 24 Q4 24 Q1 25 Adjusted Operating Income (Loss) Morningstar Direct Platform $91.2 $87.3 $91.4 $85.5 $87.1 PitchBook 40.0 47.3 50.4 48.7 52.3 Morningstar Credit 12.3 27.9 15.2 20.2 21.4 Morningstar Wealth (5.6) (2.2) (0.7) (0.8) (0.8) Morningstar Retirement 14.2 17.3 16.9 17.2 14.6 T otal Reportable Segments 152.1 177.6 173.2 170.8 174.6 Less: Corporate and all other (41.3) (46.6) (42.9) (49.1) (39.2) Adjusted Operating Income $110.8$131.0$130.3$121.7$135.4 Intangible amortization expense (17.7) (17.5) (14.7) (14.6) (14.4) M&A related expenses (0.5) (5.0) (0.1) (2.9) (6.9) Other one-time, non-recurring items — — — 64.0 — Operating Income $92.6$108.5$115.5$168.2$114.1 Reconciliation from Adjusted Operating Income by Segment to Consolidated Operating Income
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Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 Q1 25 Operating expense $455.2$463.0$445.5$444.3$450.2$463.4$453.9$486.8$467.8 Less: Intangible amortization and all M&A-related expenses (including M&A-related earn- outs), M&A related gains, and items related to the significant reduction and shift in the Company's operations in China 27.3 28.0 22.0 18.6 18.2 22.5 14.8 17.5 21.3 Adjusted operating expense $427.9$435.0$423.5$425.7$432.0$440.9$439.1$469.3$446.5 Reconciliation from Total Operating Expenses to Adjusted Operating Expenses
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Reconciliation from Reported Operating Income to Adjusted Operating Income ($mil) 2015 2016 2017 2018 2019 GAAP operating income $190.6 $180.8 $169.8 $215.8 $189.6 Intangible amortization expense — 0.9 10.6 20.7 36.5 M&A-related expenses — — — — 7.2 Other one-time, non-recurring items — 2.4 1.8 — — Adjusted operating income $190.6 $184.1 $182.2 $236.5 $233.3
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Reconciliation from Reported Operating Income to Adjusted Operating Income ($mil) 2020 2021 2022 2023 2024 TTM Q1 GAAP operating income $215.2 $257.0 $167.8 $230.6 $484.8 $506.3 Intangible amortization expense 58.8 62.0 66.7 70.5 64.5 61.2 M&A-related expenses 14.9 17.4 17.1 9.8 8.5 14.9 Other one-time, non-recurring items 27.8 27.0 47.3 15.6 (64.0) (64.0) Adjusted operating income $316.7 $363.4 $298.9 $326.5 $493.8 $518.4
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($mil) 2021 2022 2023 2024 Morningstar Direct Platform $293.5 $313.3 $339.8 $355.4 PitchBook 55.4 71.5 148.1 186.4 Morningstar Credit 74.5 59.1 21.7 75.6 Morningstar Wealth 19.4 (14.3) (40.4) (9.3) Morningstar Retirement 55.4 51.4 54.1 65.6 Total Reportable Segments $498.2 $481.0 $523.3 $673.7 Less: Corporate and All Other* (134.8) (182.1) (196.8) (179.9) Adjusted operating income $363.4 $298.9 $326.5 $493.8 Corporate and All Other includes unallocated corporate expenses as well as adjusted operating income/loss from Morningstar Sustainalytics and Morningstar Indexes. Unallocated corporate expenses include certain management-related costs that are not considered when segment performance is evaluated. Reconciliation from Adjusted Operating Income by Segment to Consolidated Adjusted Operating Income *
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Reconciliation from Operating Margin to Adjusted Operating Margin 2020 2021 2022 2023 2024 Operating margin 15.5% 15.1% 9.0% 11.3% 21.3% Add: intangible amortization expense and all M&A- related expenses (including M&A-related earn- outs), M&A-related gains, and items related to the significant reduction and shift in the Company’s operations in China 7.3% 6.2% 7.0% 4.7% 0.4% Adjusted operating margin 22.8% 21.3% 16.0% 16.0% 21.7%
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Reconciliation from Cash Provided by Operating Activities to Free Cash Flow ($mil) 2020 2021 2022 2023 2024 Cash provided by operating activities $384.3 $449.9 $297.8 $316.4 $591.6 Capital expenditures (76.7) (101.8) (129.5) (119.1) (142.7) Free cash flow $307.6 $348.1 $168.3 $197.3 $448.9
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ROIC: Return on Invested Capital All items included in invested capital reflect average of 12/31 balance for current and previous year. **We calculate this measure based on NOPAT divided by average invested capital. ($mil) 2020 2021 2022 2023 2024 TTM Q1 25 Adjusted Operating Income $316.7 $363.4 $298.9 $326.5 $493.8 $518.4 Tax Rate 26.0% 26.0% 26.0% 26.0% 26.0% 26.0% NOPAT $234.4 $268.9 $221.2 $241.6 $365.4 $383.6 Total Debt $449.1 $359.4 $1,109.6 $972.4 $698.6 $803.7 Shareholders’ Equity $1,271.4 $1,415.9 $1,207.1 $1,327.8 $1,618.6 $1,609.2 Invested Capital $1,720.5 $1,775.3 $2,316.7 $2,300.2 $2,317.2 $2,412.9 Average Invested Capital* $1,658.6 $1,747.9 $2,046.0 $2,308.5 $2,308.7 $2,372.7 ROIC** 14.1% 15.4% 10.8% 10.5% 15.8% 16.2% *
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Q1 2025 Reconciliations
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Reconciliation from Reported to Organic Revenue Change Q1 25 Q1 24 Consolidated revenue change 7.2% 13.2% Less: M&A and accounting changes (0.9%) 0.0% Less: currency and other (1.0%) 0.3% Organic revenue change 9.1% 12.9%
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Reconciliation from Reported Operating Income to Adjusted Operating Income ($mil) Q1 25 Q1 24 GAAP operating income $114.1 $92.6 Intangible amortization expense 14.4 17.7 M&A-related expenses 6.9 0.5 Other one-time, non-recurring items — — Adjusted operating income $135.4 $110.8
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Corporate and All Other includes unallocated corporate expenses as well as adjusted operating income/loss from Morningstar Sustainalytics and Morningstar Indexes. Unallocated corporate expenses include certain management-related costs that are not considered when segment performance is evaluated. ($mil) Q1 25 Q1 24 Morningstar Direct Platform $87.1 $91.2 PitchBook 52.3 40.0 Morningstar Credit 21.4 12.3 Morningstar Wealth (0.8) (5.6) Morningstar Retirement 14.6 14.2 Total Reportable Segments $174.6 $152.1 Less: Corporate and All Other* (39.2) (41.3) Adjusted operating income $135.4 $110.8 Reconciliation from Adjusted Operating Income by Segment to Consolidated Adjusted Operating Income *
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Reconciliation from Operating Margin to Adjusted Operating Margin Q1 25 Q1 24 Operating margin 19.6% 17.1% Add: intangible amortization expense and all M&A- related expenses (including M&A-related earn-outs), M&A-related gains, and items related to the significant reduction and shift in the Company’s operations in China 3.7% 3.3% Adjusted Operating Margin 23.3% 20.4%
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Reconciliation from Cash Provided by Operating Activities to Free Cash Flow ($mil) Q1 25 Q1 24 Cash provided by operating activities $91.0 $93.6 Capital expenditures (32.2) (34.1) Free cash flow $58.8 $59.5