Core Insights - The article discusses the recent wave of "risk level adjustments" in the domestic fund market, where numerous fund companies have raised the risk levels of hundreds of funds, posing challenges for institutional investors in terms of suitability management [1][3]. Group 1: Fund Risk Level Adjustments - A significant number of fund companies have adjusted the risk levels of their funds, primarily increasing them, which presents a direct challenge for institutional investors regarding how to interpret these adjustments and communicate risk information effectively [1]. - Morningstar has introduced a "suitability" solution to assist institutional clients in the full process of fund risk assessment and investor matching, enhancing compliance and service quality [1]. Group 2: Event Details - The upcoming online event will focus on the challenges posed by the recent fund risk level adjustments and will delve into the underlying logic of Morningstar's fund risk assessment [3]. - The event aims to provide practical strategies for addressing common issues in investor communication and suitability matching [6][7]. Group 3: Expert Insights - The event will feature insights from experts on the motivations and trends behind the recent concentrated adjustments in fund risk levels [6]. - Participants will learn about third-party risk assessment frameworks to improve product selection and suitability management capabilities [6].

Group 1 - Morningstar has appointed Zhang Zhe as the Managing Director for its China operations, effective October 27, 2025, to oversee the company's strategic layout and sustainable growth in China [2][4] - Zhang Zhe has extensive experience in wealth management and banking, particularly in enhancing digital customer experiences and expanding data-driven businesses [2] - Prior to joining Morningstar, Zhang served as CEO of HSBC Financial Technology Services (Shanghai) and held key positions in several leading fintech companies [2][4] Group 2 - Since entering the Chinese market in 2003, Morningstar has focused on developing its business in China, aiming to enhance the experience of public fund investors and expand strategic client relationships [4] - Zhang Zhe will lead the China business team to accelerate development and deepen collaboration with financial institutions, regulatory bodies, and the public fund industry [4] - As of June 30, 2025, Morningstar managed and advised assets totaling approximately $352 billion, providing a wide range of products and solutions to various market participants [5]

You can find original article here WealthManagement. Subscribe to our free daily WealthManagement newsletters. Morningstar announced the upcoming launch of the Morningstar PitchBook U.S. Evergreen Fund Indexes, which it said will offer peer group benchmarks designed to measure the performance of nontraded semiliquid funds, such as interval funds, tender offer funds, business development companies and non-traded REITs covering asset classes with subindexes across private equity, private debt, real estate, ...

Financial Performance - Consolidated revenue for Q3 2025 was $617.4 million, an increase of 8.4% compared to $569.4 million in Q3 2024[123] - Operating income for Q3 2025 reached $127.8 million, reflecting a 10.6% increase from $115.5 million in Q3 2024[123] - Operating margin improved to 20.7% in Q3 2025, up from 20.3% in Q3 2024, indicating a 0.4 percentage point increase[123] - Total revenue for the nine months ended September 30, 2025, was $1,804.4 million, a 7.1% increase from $1,684.1 million in the same period of 2024[123] - Operating income for the nine months ended September 30, 2025, was $367.0 million, representing a 15.9% increase from $316.6 million in the same period of 2024[123] - Adjusted operating income for Q3 2025 was $150.6 million, a 15.6% increase from $130.3 million in Q3 2024, while for the first nine months, it reached $429.4 million, up 15.4% from $372.1 million[146] Cash Flow and Investments - Cash provided by operating activities was $195.7 million in Q3 2025, a slight increase of 2.0% from $191.9 million in Q3 2024[123] - Free cash flow for Q3 2025 was $160.1 million, up 2.8% from $155.8 million in Q3 2024[123] - Cash used for investing activities in Q3 2025 was $(33.0) million, compared to $14.1 million in Q3 2024, indicating a significant change[123] - Cash used for financing activities increased to $(188.1) million in Q3 2025, up 212.5% from $(60.2) million in Q3 2024[123] - Cash provided by operating activities decreased by 12.0% to $385.7 million for the nine months ended September 30, 2025, compared to $438.2 million in the same period of 2024[202] - The company generated free cash flow of $160.1 million for the three months ended September 30, 2025, reflecting a 2.8% increase from $155.8 million in the same period of 2024[202] Revenue Breakdown - License-based revenue rose by 6.4% in Q3 2025, driven by strong demand for Morningstar Direct Platform and PitchBook products[131] - Asset-based revenue increased by 1.1% in Q3 2025, primarily due to growth in Morningstar Retirement products[132] - Transaction-based revenue surged by 27.2% in Q3 2025, mainly attributed to Morningstar Credit revenue[132] - Organic revenue increased by 9.0% in Q3 2025 and 8.0% in the first nine months of 2025, driven by growth in PitchBook, Morningstar Credit, and Morningstar Direct Platform[135] - International revenue accounted for 29% of consolidated revenue in Q3 2025, with a growth of 11.8% driven by Morningstar Credit and Morningstar Direct Platform products[138] Expenses - Total operating expenses for Q3 2025 were $490.1 million, reflecting an increase of 8.0% compared to the previous year[139] - Cost of revenue increased by $19.0 million in Q3 2025, primarily due to higher compensation expenses[140] - Sales and marketing expenses rose by $7.6 million in Q3 2025, driven by increased sales commissions and marketing costs[141] Shareholder Returns and Debt - The company declared a quarterly dividend of $0.455 per share, totaling $19.0 million, payable on October 31, 2025[195] - The company has a total outstanding debt of $499.8 million under the Amended 2022 Credit Agreement as of September 30, 2025, with borrowing availability of $500.0 million[190] - The company repurchased a total of 1,538,103 shares for $414.7 million under the 2022 Share Repurchase Program as of September 30, 2025, leaving $85.3 million available for future repurchases[197] Acquisitions and Future Plans - The company expects to complete the acquisition of the Center for Research in Security Prices, LLC for approximately $375.0 million during the fourth quarter of 2025[200] - The company paid $39.1 million for the acquisitions of DealX and Lumonic Inc. during the nine months ended September 30, 2025[199] Tax and Compliance - The effective tax rate for the three months ended September 30, 2025, was 25.5%, reflecting an increase of 5.7 percentage points compared to the same period in the prior year[183] - The company was in compliance with financial covenants, with consolidated funded indebtedness to consolidated EBITDA calculated at approximately 1.0x as of September 30, 2025[194] Currency and Market Position - The company has a net currency position of $41.9 million in Australian dollars as of September 30, 2025[208] - The estimated effect of a 10% adverse currency fluctuation on operating income for the nine months ended September 30, 2025, is a loss of $3.2 million from other foreign currencies[208]

Core Insights - Morningstar, Inc. reported strong financial performance for the third quarter of 2025, with an earnings per share (EPS) of $2.55, exceeding the estimated EPS of $2.42, and revenue of $617.4 million, surpassing the estimated revenue of approximately $605.8 million [2][6] Financial Performance - The company's success is attributed to revenue growth and increases in both operating and adjusted operating income and margins, with significant contributions from Morningstar Credit across various asset classes and regions [3] - Morningstar's financial metrics include a price-to-earnings (P/E) ratio of approximately 21.96, indicating investor confidence in future growth, and a price-to-sales ratio of about 3.75, reflecting market valuation of its sales [4] - The enterprise value to sales ratio is around 3.98, and the enterprise value to operating cash flow ratio is approximately 17.45, indicating efficient cash flow management [5][4] Financial Health - The company maintains a moderate debt-to-equity ratio of approximately 0.64, suggesting a balanced approach to leveraging, and a current ratio of around 1.13, indicating the ability to cover short-term liabilities with short-term assets [5][6] - An earnings yield of about 4.55% provides insight into the return on investment [5]

Core Insights - The article discusses the recent wave of "risk level adjustments" in the domestic fund market, where numerous fund companies have raised the risk levels of hundreds of funds, posing challenges for institutional investors in terms of suitability management [1][3]. Group 1: Fund Risk Level Adjustments - A significant number of fund companies have adjusted the risk levels of their funds, primarily increasing them, which presents a direct challenge for institutional investors regarding how to interpret these adjustments and communicate risk information effectively [1]. - Morningstar has introduced a "suitability" solution to assist institutional clients in the full process of fund risk assessment and investor matching, enhancing compliance and service quality [1]. Group 2: Event Details - The upcoming online event will focus on the challenges posed by the recent fund risk level adjustments and will delve into the underlying logic of Morningstar's fund risk assessment [3]. - The event aims to provide practical strategies for addressing common issues in investor communication and suitability matching [6][7]. Group 3: Expert Insights - The event will feature insights from experts on the motivations and trends behind the recent concentrated adjustments in fund risk levels [6]. - Participants will learn about third-party risk assessment frameworks to improve product selection and suitability management capabilities [6].

Q3 2025 Financial Performance - Revenue increased to $617.4 million, representing an 8.4% reported increase and a 9.0% organic increase[13] - Adjusted Operating Income increased to $150.6 million, compared to $130.3 million in Q3 24[13] - Free Cash Flow increased to $160.1 million, a 2.8% increase from $155.8 million in Q3 24[13] - The Adjusted Operating Margin was 24.4%[102] Segment Performance - Morningstar Direct Platform revenue reached $211.1 million, with a 6.3% reported increase and a 6.2% organic increase; Adjusted Operating Income was $93.7 million[49] - PitchBook revenue reached $169.0 million, with a 7.9% reported increase and a 7.7% organic increase; Adjusted Operating Income was $52.9 million[58] - Morningstar Credit revenue reached $91.1 million, with a 28.5% reported increase and a 27.0% organic increase; Adjusted Operating Income was $28.1 million[67] - Morningstar Wealth revenue reached $62.1 million, with a 0.5% reported increase and a 9.8% organic increase; Adjusted Operating Income was $3.1 million[81] - Morningstar Retirement revenue reached $34.2 million, with a 7.5% reported and organic increase; Adjusted Operating Income was $16.9 million[93] Cash Flow and Capital Allocation - Operating Cash Flow was $195.7 million[26] - Capital Allocation included $170.1 million in share repurchases, $35.6 million in capital expenditures, and $19.2 million in dividends paid[27]

Revenue Growth - Reported revenue increased 8.4% to $617.4 million, with organic revenue growth of 9.0% compared to the prior-year period[4] - Morningstar Credit revenue grew 28.5% to $91.1 million, driven by strong performance across asset classes and regions[17] - Morningstar Direct Platform contributed $211.1 million to revenue, with a 6.3% increase compared to the prior-year period[12] - PitchBook revenue increased 7.9% to $169.0 million, supported by growth in core investor and advisor client segments[14] - Morningstar's consolidated revenue for Q3 2025 was $617.4 million, an increase of 8.4% compared to $569.4 million in Q3 2024[39] - The total revenue for the nine months ended September 30, 2025, reached $1,804.4 million, reflecting a 7.1% growth from $1,684.1 million in the same period of 2024[39] - Morningstar Direct Platform revenue increased by 6.3% to $211.1 million in Q3 2025, with a nine-month revenue of $619.5 million, up 4.6% year-over-year[39] - PitchBook revenue grew by 7.9% to $169.0 million in Q3 2025, with a nine-month total of $499.2 million, representing a 9.5% increase[39] - Morningstar Credit reported a significant revenue increase of 28.5% to $91.1 million in Q3 2025, with a nine-month revenue of $249.1 million, up 19.3%[39] Income and Earnings - Operating income rose 10.6% to $127.8 million, while adjusted operating income increased 15.6% to $150.6 million[8] - Diluted net income per share decreased 21.7% to $2.17, but adjusted diluted net income per share increased 27.5% to $2.55[9] - Consolidated net income decreased by 23.5% to $91.6 million in Q3 2025, down from $119.7 million in Q3 2024[36] - Basic net income per share was $2.18, a decline of 21.9% from $2.79 in the same quarter last year[36] - Adjusted operating income for Q3 2025 was $150.6 million, a 15.6% increase from $130.3 million in Q3 2024[47] - Adjusted diluted net income per share increased by 27.5% to $2.55 for the three months ended September 30, 2025, compared to $2.00 in 2024[49] Cash Flow and Expenditures - Cash provided by operating activities increased 2.0% to $195.7 million, while free cash flow rose 2.8% to $160.1 million[29] - Cash provided by operating activities for Q3 2025 was $195.7 million, compared to $191.9 million in Q3 2024[38] - Free cash flow for the three months ended September 30, 2025, was $160.1 million, a 2.8% increase from $155.8 million in 2024[49] - Year-to-date free cash flow decreased by 16.3% to $281.3 million in 2025, down from $336.1 million in 2024[49] - Year-to-date cash provided by operating activities decreased by 12.0% to $385.7 million in 2025, compared to $438.2 million in 2024[49] - Capital expenditures decreased slightly by 1.4% to $35.6 million for the three months ended September 30, 2025, from $36.1 million in 2024[49] Assets and Liabilities - Assets under management and advisement (AUMA) increased 11.1% to $70.8 billion, primarily driven by market performance[21] - Total assets as of September 30, 2025, were $3,557.6 million, slightly up from $3,548.9 million at the end of 2024[37] - Total liabilities increased to $2,043.6 million as of September 30, 2025, compared to $1,930.3 million at the end of 2024[37] - The total current liabilities were $945.5 million as of September 30, 2025, down from $967.3 million at the end of 2024[37] Share Repurchase and Tax - The company completed a $500 million share repurchase program, with a new three-year program approved for up to $1 billion in share repurchases[2] - The effective tax rate increased to 25.5% from 19.8% in the prior-year period, mainly due to the prior-year gain from the sale of the Commodity and Energy Data business[10] Other Financial Metrics - The average Assets Under Management (AUMA) for Morningstar was approximately $360.4 billion in Q3 2025, an 11.9% increase from $322.2 billion in Q3 2024[41] - Morningstar Retirement's total AUMA reached $297.8 billion, a 12.6% increase from $264.4 billion in the previous year[41] - The adjusted operating margin improved to 24.4% in Q3 2025, compared to 22.9% in Q3 2024, reflecting a 1.5 percentage point increase[47] - The company reported a decrease in interest expense by 21.3% to $7.0 million in Q3 2025 from $8.9 million in Q3 2024[36] - Non-operating gains and losses for the three months ended September 30, 2025, reflected a significant decrease of 98.0% compared to the previous year[49] - Other non-recurring items showed a not meaningful change, with a loss of $0.01 for the three months ended September 30, 2025[49] - Adjusted operating income and margin metrics were not provided in the extracted data but are critical for ongoing performance evaluation[48] - The company continues to focus on organic revenue growth, excluding the effects of acquisitions and foreign currency translations[48]

Core Insights - Morningstar, Inc. (NASDAQ:MORN) is recognized as one of the Best 52-Week Low Mid Cap Stocks to Buy Now, highlighting its investment potential [1] - Morningstar Retirement has announced a strategic collaboration with NPPG Plan Professionals, LLC to enhance personalized retirement offerings [1][2] Company Collaboration - The collaboration will deliver new retirement offerings through Pooled Employer Plans (PEPs), integrating Morningstar Retirement's advisor-managed accounts service into NPPG's PEP offerings [2] - This partnership aims to bring personalization to retirement plans, making them more accessible to a broader market [2] Market Impact - Nathan Voris, head of go-to-market at Morningstar Retirement, emphasized that PEPs are addressing the coverage gap for small and mid-sized businesses, where 56 million U.S. workers currently lack workplace retirement plans [3] - The collaboration is expected to simplify administration, lower costs, and expand access to high-quality retirement plans, democratizing access for more employees [3] Company Overview - Morningstar, Inc. is a provider of independent investment research and data, offering insights across various markets and asset classes worldwide [3]

Core Viewpoint - The article emphasizes the importance of risk matching in investment advisory services, especially in the context of current market volatility, highlighting that regardless of market conditions, aligning client risk tolerance with account risk levels is essential for enhancing the investment experience [1][2][3]. Group 1: Risk Matching Focus - The seminar will focus on the theme of "risk," exploring how to accurately match client account risk levels with their risk tolerance, thereby creating a robust investment strategy that can withstand market fluctuations [3][5]. - Traditional methods of understanding clients (KYC) and their holdings (KYP) often lack rigor, leading to mismatches between client risk tolerance and account risk levels, which negatively impacts the investment experience [2][3]. - The seminar aims to utilize Morningstar's professional risk assessment tools and methodologies to develop a practical asset allocation logic centered on risk matching [5][9]. Group 2: Seminar Highlights - Key highlights include mastering scientific risk assessment tools to ensure that client risk identification is substantive rather than superficial [8]. - The seminar will guide clients away from impulsive trading behaviors, such as "buying high and selling low," by establishing a risk-driven asset allocation framework [8]. - The focus will be on enhancing the precision of asset allocation and improving client experience, thereby reinforcing the professional value of investment advisory services [8][9]. Group 3: Participation and Registration - Interested participants can register for the seminar via a QR code or by clicking the link provided at the end of the article, with a registration deadline set for October 30 at noon [13]. Group 4: About Morningstar - Morningstar, Inc. is a leading global investment research firm, providing financial information, analysis, and ratings for various investment products, and managing approximately $352 billion in assets as of June 30, 2025 [16].