NASDAQ$MORN

Morningstar Inc. · Q1 2023 earnings

Q1 2023 earnings · · Investor relations

Briefing

Morningstar's Q1 2023 financial results were released, revealing revenue growth driven by license-based product areas, but impacted by soft credit issuance and market volatility.

Morningstar's first-quarter revenue grew by 5.0% to $479.7 million, with organic revenue up 2.8%. Growth was driven by license-based product areas, while asset-based and transaction-based areas faced headwinds. The company reported a net loss of $7.6 million, or ($0.18) per diluted share.

  • Revenue increased by 5.0% to $479.7 million, with organic revenue growing by 2.8%.
  • License-based revenue rose by 16.7%, driven by PitchBook, Morningstar Sustainalytics, Morningstar Data, and Morningstar Direct.
  • Asset-based revenue decreased by 4.7% due to lower revenue from Investment Management and Workplace Solutions.
  • The company is managing the business cautiously during this period of economic uncertainty and have slowed our headcount growth significantly in 2023.

Headline financials

Total Revenue

$480M

Previous: $457M+5.0%
EPS (adj)

$0.56

Previous: $1.41-60.3%
Assets Under Management

$249B

Previous: $265B-6.0%
Capital Expenditures

-$29.5M

Previous: -$28M-5.4%
Free Cash Flow

-$37.1M

Previous: $18.1M-305.0%
Net Income

-$7.6M

Previous: $46.1M-116.5%
Operating Income

$24.5M

Previous: $56.4M-56.6%
Gross Profit

$261M

Previous: $266M-1.8%
Cash & Equivalents

$385M

Previous: $545M-29.3%
Total Assets

$3.45B

Previous: $2.87B+20.3%
Stock-Based Comp

$12.2M

Previous: $13.9M-12.2%

Revenue & EPS history

Morningstar · Revenue · Quarterly

$480M

Q1 2023+5%vs Q1 2022
Beat estimate in 4 of 6 quarters(67%)
ActualEstimate

Revenue by segment

Morningstar · $430M total across 4 segments · Q1 2023

  • Morningstar Data & Analytics
    $193M+36.3%
  • PitchBook
    $136M+76.6%
  • Morningstar Retirement
    $51.4M+76.6%
  • Morningstar Wealth
    $48.8M-33.9%

Forward guidance

The company expects significant product enhancements in the coming months, including the integration of LCD into PitchBook, the launch of our index calculation capability, the introduction of our climate data, the buildout of our wealth platform, and the expansion of our ratings effort across even more managed investment products.

Tailwinds

  • Integration of LCD into PitchBook
  • Launch of index calculation capability
  • Introduction of climate data
  • Buildout of wealth platform
  • Expansion of ratings effort across more managed investment products

Headwinds

  • Soft credit issuance
  • Market volatility
  • Economic uncertainty
  • Decline in asset-based revenue
  • Decline in transaction-based revenue

Historical earnings impact

How earnings announcements have historically affected this stock's price.

Avg. return before/after earnings

Based on 20 quarterly earnings reports · overlaid with Q1 2023

Historical avgQ1 2023

+0.5%

Avg return

Earnings day

+0.0%

Avg return

5 days after

+0.4%

Avg return

30 days after

53%

36 / 68 earnings

Positive

+12.6%

Q3 2018

Best reaction

-12.9%

Q1 2023

Worst reaction

Earnings price reactions
QuarterReport dateReaction (Day 0)+5 days+30 days
Q1 2026-10.0%-11.2%-3.0%
Q4 2025+2.3%+5.7%+19.0%
Q3 2025+2.8%+1.4%+2.9%
Q1 2025-0.5%+3.1%+8.3%
Q4 2024-2.8%-6.5%-7.5%
Q3 2024-3.5%-2.7%+0.8%
Q2 2024+4.5%+4.7%+1.6%
Q1 2024-4.3%-5.5%-0.9%
Q4 2023-0.2%+8.1%+9.8%
Q3 2023+11.1%+12.6%+23.7%
Q2 2023+6.5%+6.5%+2.7%
Q1 2023-12.9%-7.9%+1.7%
Q4 2022-11.1%-11.0%-19.6%
Q3 2022+2.1%+4.7%+11.2%
Q2 2022+3.5%-0.0%-5.8%
Q1 2022+1.4%-4.4%-0.6%
Q4 2021+6.4%+2.0%+1.3%
Q3 2021+4.8%+3.1%+1.4%
Q2 2021+3.0%+5.6%+7.0%
Q1 2021+3.7%+3.5%-7.7%
Q4 2020-1.2%-8.9%-5.6%
Q3 2020+6.9%+6.5%+8.8%
Q2 2020+4.9%+2.8%+0.1%
Q1 2020+9.0%+3.8%+7.1%
Q4 2019-2.5%-6.4%-35.4%
Q3 2019-7.2%-4.7%-1.1%
Q2 2019+0.6%-1.0%-0.8%
Q1 2019-0.9%+2.9%-2.7%
Q4 2018+0.3%+0.6%-3.9%
Q3 2018+12.6%+4.3%-0.8%
Q2 2018-2.7%-4.1%-0.9%
Q1 2018+6.2%+5.0%+13.8%
Q4 2017-1.1%-1.7%-1.3%
Q3 2017+1.9%-2.3%+6.3%
Q2 2017+2.9%+3.4%+1.6%
Q1 2017-4.1%-6.1%-6.8%
Q4 2016+1.8%+2.2%-2.0%
Q3 2016-6.4%-7.2%-4.8%
Q2 2016+1.0%+0.7%-1.8%
Q1 2016-4.2%
Q4 2015-0.5%
Q3 2015-1.9%
Q2 2015+3.2%
Q1 2015+3.5%
Q4 2014+10.7%
Q3 2014-0.3%
Q2 2014-2.4%
Q1 2014-4.6%
Q4 2013+4.3%
Q3 2013+4.9%
Q2 2013+0.7%
Q1 2013+0.5%
Q4 2012+1.9%
Q3 2012-1.3%
Q2 2012+2.4%
Q1 2012+1.7%
Q4 2011-0.1%
Q3 2011-0.4%
Q2 2011-2.5%
Q1 2010-1.7%
Q1 2011+1.5%
Q4 2010-2.2%
Q4 2008-2.2%
Q3 2009+0.1%
Q3 2010+0.1%
Q2 2010-1.1%
Q4 2009-1.1%
Q2 2009-1.1%

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