PART 1 FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Morningstar, Inc. as of and for the three and six months ended June 30, 2025 [Unaudited Consolidated Statements of Income](index=4&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Income) Revenue for Q2 2025 increased to $605.1 million, driving consolidated net income up to $89.0 million and diluted EPS to $2.09 Consolidated Statements of Income Highlights (Q2 & H1 2025 vs 2024) | Metric (in millions, except per share) | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $605.1 | $571.9 | +5.8% | $1,187.0 | $1,114.7 | +6.5% | | **Operating Income** | $125.1 | $108.5 | +15.3% | $239.2 | $201.1 | +18.9% | | **Consolidated Net Income** | $89.0 | $69.1 | +28.8% | $167.5 | $133.3 | +25.7% | | **Diluted EPS** | $2.09 | $1.60 | +30.6% | $3.91 | $3.09 | +26.5% | | **Dividends Declared per Share** | $0.46 | $0.41 | +12.2% | $0.91 | $0.81 | +12.3% | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $3,630.5 million as of June 30, 2025, primarily due to goodwill, while total liabilities rose to $2,016.0 million Consolidated Balance Sheet Summary | Metric (in millions) | June 30, 2025 (unaudited) | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $1,042.3 | $1,014.1 | | Cash and cash equivalents | $503.5 | $502.7 | | **Goodwill** | $1,618.2 | $1,562.0 | | **Total Assets** | $3,630.5 | $3,548.9 | | **Total Current Liabilities** | $921.0 | $967.3 | | **Long-term debt** | $838.8 | $698.6 | | **Total Liabilities** | $2,016.0 | $1,930.3 | | **Total Equity** | $1,614.5 | $1,618.6 | [Unaudited Consolidated Statements of Cash Flows](index=10&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) Cash provided by operating activities decreased to $190.0 million for H1 2025, with increased cash used for investing and financing activities Cash Flow Summary (Six Months Ended June 30) | Activity (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | **Cash provided by operating activities** | $190.0 | $246.3 | | **Cash used for investing activities** | $(94.6) | $(59.5) | | **Cash used for financing activities** | $(132.6) | $(125.1) | | **Effect of exchange rate changes** | $38.0 | $(8.4) | | **Net increase in cash** | $0.8 | $53.3 | | **Cash and cash equivalents—end of period** | $503.5 | $391.2 | [Notes to Unaudited Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes detail accounting policies, credit arrangements, acquisitions, revenue recognition, segment performance, and contingencies, noting increased total debt - Total debt increased to **$838.8 million** as of June 30, 2025, from **$698.6 million** at year-end 2024, primarily due to drawings on the Amended 2022 Revolving Credit Facility[24](index=24&type=chunk) - In Q1 2025, the company completed two acquisitions: the remaining 65% of Morningstar Credit Analytics (DealX) and Lumonic Inc., adding a combined **$32.1 million** to goodwill[30](index=30&type=chunk)[34](index=34&type=chunk)[39](index=39&type=chunk) Revenue by Type (Six Months Ended June 30) | Revenue Type (in millions) | 2025 | 2024 | YoY Change | | :--- | :--- | :--- | :--- | | License-based | $846.4 | $801.9 | +5.5% | | Asset-based | $168.1 | $161.7 | +4.0% | | Transaction-based | $172.5 | $151.1 | +14.2% | | **Consolidated revenue** | **$1,187.0** | **$1,114.7** | **+6.5%** | - The company repurchased **766,641 shares** for **$221.6 million** in the first six months of 2025, with **$265.4 million** remaining available under the current share repurchase program[101](index=101&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 and H1 2025 financial results, highlighting revenue growth, operating margin expansion, and a decrease in free cash flow [Consolidated Results](index=30&type=section&id=Consolidated%20Results) Consolidated revenue increased 5.8% to $605.1 million in Q2 2025, with operating income up 15.3%, but free cash flow declined significantly Key Financial Metrics (Q2 2025 vs Q2 2024) | Metric (in millions) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | **Consolidated revenue** | $605.1 | $571.9 | 5.8% | | **Operating income** | $125.1 | $108.5 | 15.3% | | **Operating margin** | 20.7% | 19.0% | 1.7 pp | | **Free cash flow** | $62.4 | $120.8 | (48.3)% | - Organic revenue, which excludes acquisitions, divestitures, and currency effects, grew **5.9%** in Q2 2025 and **7.5%** in H1 2025[122](index=122&type=chunk)[124](index=124&type=chunk) - License-based revenue, the largest component, grew **6.6%** in Q2, driven by PitchBook and Morningstar Direct Platform. Transaction-based revenue increased **10.3%**, led by Morningstar Credit[118](index=118&type=chunk)[119](index=119&type=chunk) [Segment Results](index=37&type=section&id=Segment%20Results) PitchBook, Morningstar Direct Platform, and Morningstar Credit showed strong revenue growth in Q2 2025, while Morningstar Retirement and Sustainalytics declined Segment Revenue and Adjusted Operating Income (Q2 2025) | Segment (in millions) | Revenue | YoY Change | Adj. Operating Income | YoY Change | | :--- | :--- | :--- | :--- | :--- | | **Morningstar Direct Platform** | $209.2 | +6.2% | $96.3 | +10.3% | | **PitchBook** | $166.5 | +9.8% | $52.8 | +11.6% | | **Morningstar Credit** | $85.0 | +9.5% | $30.5 | +9.3% | | **Morningstar Wealth** | $64.3 | +2.7% | $3.0 | NMF | | **Morningstar Retirement** | $32.4 | -2.7% | $15.4 | -11.0% | - PitchBook's growth was driven by its core investor and advisor client segments, with licensed users growing **7.6%**[145](index=145&type=chunk) - Morningstar Sustainalytics revenue decreased **6.5%** in Q2, primarily due to the streamlining of its licensed-ratings offering and lower revenues for ESG Risk Ratings[160](index=160&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) Cash, cash equivalents, and investments totaled $541.6 million, but free cash flow for H1 2025 decreased due to higher bonus and tax payments - Cash provided by operating activities for H1 2025 decreased **22.9%** to **$190.0 million**, and free cash flow decreased **32.8%** to **$121.2 million**[171](index=171&type=chunk) - Approximately **83%** of the company's cash, cash equivalents, and investments were held outside the U.S. as of June 30, 2025[173](index=173&type=chunk) - The company repurchased **766,641 shares** for **$221.6 million** in H1 2025, with **$265.4 million** remaining under the share repurchase program[182](index=182&type=chunk) - Total outstanding debt under the Amended 2022 Credit Agreement was **$489.8 million**, with an additional borrowing availability of **$510.0 million**[175](index=175&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces market risk from interest rate fluctuations on variable-rate debt and foreign currency exposure from international operations - A **100 basis-point** change in the SOFR is estimated to have a **$4.9 million** impact on annualized interest expense based on the outstanding debt balance as of June 30, 2025[189](index=189&type=chunk) Foreign Currency Revenue Exposure (Six Months Ended June 30, 2025) | Currency | % of Revenue | Estimated Revenue Impact of 10% Adverse Fluctuation (in millions) | | :--- | :--- | :--- | | **British Pound** | 7.7% | $(9.7) | | **Euro** | 6.3% | $(8.1) | | **Canadian Dollar** | 6.0% | $(7.4) | | **Australian Dollar** | 2.6% | $(3.1) | | **Other** | 5.2% | $(6.5) | [Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - Based on an evaluation as of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[192](index=192&type=chunk) - No changes occurred during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[193](index=193&type=chunk) PART 2 OTHER INFORMATION [Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 13, indicating no material adverse effect on financial position - Information regarding legal proceedings is detailed in Note 13 of the financial statements[195](index=195&type=chunk) [Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) No new risk factors are disclosed in this report, referring to previously stated risks in the Annual Report and prior quarterly filings - The company directs investors to review the risk factors disclosed in its Annual Report and previous quarterly reports, as no new material risks have been added in this filing[196](index=196&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 398,442 common shares for approximately $112.0 million during Q2 2025, primarily in April Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Value Remaining for Purchase | | :--- | :--- | :--- | :--- | | April 2025 | 309,232 | $276.87 | $291.8M | | May 2025 | 89,210 | $295.83 | $265.4M | | June 2025 | 0 | - | $265.4M | | **Total Q2** | **398,442** | **$281.11** | **$265.4M** | [Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including various stock incentive plan agreements, the executive severance policy, and certifications by the CEO and CFO - Exhibits filed include updated forms for stock unit award agreements, a new executive severance policy effective May 9, 2025, and required CEO/CFO certifications[202](index=202&type=chunk)

Morningstar, Inc. Second-Quarter 2025 Financial Results [Financial Highlights](index=1&type=section&id=Financial%20Highlights) The company reported solid Q2 2025 growth in revenue and operating income, though cash flow declined due to higher taxes - CEO Kunal Kapoor highlighted that PitchBook, Morningstar Direct Platform, and Morningstar Credit were the primary contributors to the solid growth in the second quarter[2](index=2&type=chunk) - The company repurchased **398,442 shares for $112.0 million** in Q2 2025, and a total of 766,641 shares for $221.6 million year-to-date[4](index=4&type=chunk) Second-Quarter 2025 Financial Highlights (vs. Q2 2024) | Metric | Q2 2025 Value | Change vs. Q2 2024 | | :--- | :--- | :--- | | Reported Revenue | $605.1 million | +5.8% | | Organic Revenue | - | +5.9% | | Reported Operating Income | $125.1 million | +15.3% | | Adjusted Operating Income | - | +9.5% | | Diluted Net Income per Share | $2.09 | +30.6% | | Adjusted Diluted Net Income per Share | $2.40 | +19.4% | | Cash from Operating Activities | $99.0 million | -35.2% | | Free Cash Flow | $62.4 million | -48.3% | Year-To-Date 2025 Financial Highlights (vs. YTD 2024) | Metric | YTD 2025 Value | Change vs. YTD 2024 | | :--- | :--- | :--- | | Reported Revenue | $1.2 billion | +6.5% | | Organic Revenue | - | +7.5% | | Reported Operating Income | $239.2 million | +18.9% | | Adjusted Operating Income | - | +15.3% | | Diluted Net Income per Share | $3.91 | +26.5% | | Adjusted Diluted Net Income per Share | $4.63 | +23.8% | | Cash from Operating Activities | $190.0 million | -22.9% | | Free Cash Flow | $121.2 million | -32.8% | [Consolidated Financial Performance](index=2&type=section&id=Consolidated%20Financial%20Performance) Consolidated revenue grew 5.8% in Q2 2025, driving a 15.3% increase in operating income and margin expansion - The primary driver of the 3.8% increase in operating expenses was a **$16.7 million rise in compensation costs**, stemming from annual merit increases and higher stock-based compensation[6](index=6&type=chunk) - Adjusted operating income, which excludes certain items like intangible amortization, **increased by 9.5% to $143.4 million**, with the adjusted operating margin expanding to 23.7%[7](index=7&type=chunk) Q2 2025 Consolidated Financial Results | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $605.1M | $571.9M | +5.8% | | Operating Expense | $480.8M | $463.4M | +3.8% | | Operating Income | $125.1M | $108.5M | +15.3% | | Operating Margin | 20.7% | 19.0% | +1.7 pp | | Net Income | $89.0M | $69.1M | +28.8% | | Diluted EPS | $2.09 | $1.60 | +30.6% | [Segment Performance Analysis](index=2&type=section&id=Segment%20Performance%20Analysis) Growth was led by PitchBook, Morningstar Credit, and Morningstar Direct Platform, while Morningstar Retirement saw a decline [Morningstar Direct Platform](index=2&type=section&id=Morningstar%20Direct%20Platform) The segment's revenue grew 6.2%, driven by Morningstar Data and a slight increase in Direct licenses - Revenue growth was primarily driven by Morningstar Data, supported by higher managed investment (fund) data revenue, with Morningstar Direct licenses also contributing, **increasing by 0.6%**[9](index=9&type=chunk) Morningstar Direct Platform Q2 2025 Performance | Metric | Q2 2025 | % Change (YoY) | Organic % Change (YoY) | | :--- | :--- | :--- | :--- | | Revenue | $209.2M | +6.2% | +6.3% | | Adjusted Operating Income | $96.3M | +10.3% | - | | Adjusted Operating Margin | 46.0% | +1.7 pp | - | [PitchBook](index=2&type=section&id=PitchBook) PitchBook revenue increased 9.8% due to a 7.6% rise in licensed users, particularly in investor and advisor segments - Growth was driven by a **7.6% increase in licensed users** of the PitchBook platform, with strength in core investor and advisor client segments, partially offset by softness in the corporate client segment[11](index=11&type=chunk)[12](index=12&type=chunk) PitchBook Q2 2025 Performance | Metric | Q2 2025 | % Change (YoY) | Organic % Change (YoY) | | :--- | :--- | :--- | :--- | | Revenue | $166.5M | +9.8% | +9.6% | | Adjusted Operating Income | $52.8M | +11.6% | - | | Adjusted Operating Margin | 31.7% | +0.5 pp | - | [Morningstar Credit](index=3&type=section&id=Morningstar%20Credit) Revenue grew 9.5%, fueled by higher demand for securities ratings and licensed data - The primary drivers of growth were higher revenue from asset-backed, residential mortgage-backed, and commercial mortgage-backed securities ratings, along with an increase in licensed data revenue[14](index=14&type=chunk) Morningstar Credit Q2 2025 Performance | Metric | Q2 2025 | % Change (YoY) | Organic % Change (YoY) | | :--- | :--- | :--- | :--- | | Revenue | $85.0M | +9.5% | +8.4% | | Adjusted Operating Income | $30.5M | +9.3% | - | | Adjusted Operating Margin | 35.9% | -0.1 pp | - | [Morningstar Wealth](index=3&type=section&id=Morningstar%20Wealth) The segment returned to profitability with 7.2% organic growth and a 13.0% increase in AUMA - Assets under management and advisement (AUMA) **increased 13.0% year-over-year to $66.8 billion**, driven by market performance and positive net flows to Morningstar Model Portfolios[17](index=17&type=chunk) Morningstar Wealth Q2 2025 Performance | Metric | Q2 2025 | % Change (YoY) | Organic % Change (YoY) | | :--- | :--- | :--- | :--- | | Revenue | $64.3M | +2.7% | +7.2% | | Adjusted Operating Income | $3.0M | NMF | - | | Adjusted Operating Margin | 4.7% | +8.2 pp | - | [Morningstar Retirement](index=3&type=section&id=Morningstar%20Retirement) Revenue declined 2.7% due to a prior-year item, though AUMA grew 11.0% from market gains and net flows - The revenue decrease was primarily due to an isolated item in the prior-year period, while **AUMA increased 11.0% to $285.4 billion**, driven by positive net flows and market gains[19](index=19&type=chunk) Morningstar Retirement Q2 2025 Performance | Metric | Q2 2025 | % Change (YoY) | Organic % Change (YoY) | | :--- | :--- | :--- | :--- | | Revenue | $32.4M | -2.7% | -2.7% | | Adjusted Operating Income | $15.4M | -11.0% | - | | Adjusted Operating Margin | 47.5% | -4.5 pp | - | [Corporate and All Other](index=4&type=section&id=Corporate%20and%20All%20Other) Segment revenue decreased 4.2%, primarily driven by softness in the Morningstar Sustainalytics business - Revenue for this segment **decreased 4.2% to $47.7 million**, primarily due to softness in Morningstar Sustainalytics[22](index=22&type=chunk) - The decline in Morningstar Sustainalytics revenue was driven by the streamlining of its licensed-ratings offering and lower revenues for ESG Risk Ratings, partly due to vendor consolidation[22](index=22&type=chunk) - The segment's impact on consolidated adjusted operating income was a **loss of $54.6 million**, compared to a loss of $46.6 million in the prior-year period[23](index=23&type=chunk) [Balance Sheet and Cash Flow](index=4&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) The company maintained a solid balance sheet, but operating and free cash flow declined significantly due to higher tax payments - The decline in cash flow was primarily driven by an **increase in income tax payments**, which were $79.5 million in Q2 2025 compared to $31.6 million in Q2 2024[25](index=25&type=chunk) - Key capital allocation activities in Q2 2025 included a **net debt increase of $35.0 million**, share repurchases of $112.0 million, and dividend payments of $19.3 million[26](index=26&type=chunk) Key Balance Sheet Items | Item | June 30, 2025 | Dec. 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents, and investments | $541.6M | $551.0M | | Total Debt | $838.8M | $698.6M | Q2 Cash Flow Summary (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Cash from Operating Activities | $99.0M | $152.7M | -35.2% | | Free Cash Flow | $62.4M | $120.8M | -48.3% | [Financial Statements and Supplemental Data](index=7&type=section&id=Financial%20Statements%20and%20Supplemental%20Data) This section provides detailed unaudited financial statements, segment data, AUMA figures, and non-GAAP reconciliations [Unaudited Condensed Consolidated Statements of Income](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income) The statement details revenue, expenses, and net income for the three and six months ended June 30, 2025 Unaudited Condensed Consolidated Statements of Income (in millions, except per share) | | Three months ended June 30, | Six months ended June 30, | | :--- | :--- | :--- | | | **2025** | **2024** | **2025** | **2024** | | **Revenue** | **$605.1** | **$571.9** | **$1,187.0** | **$1,114.7** | | Total operating expense | $480.8 | $463.4 | $948.6 | $913.6 | | **Operating income** | **$125.1** | **$108.5** | **$239.2** | **$201.1** | | Income before income taxes | $116.5 | $89.5 | $225.0 | $176.5 | | Income tax expense | $26.3 | $19.2 | $53.7 | $40.5 | | **Consolidated net income** | **$89.0** | **$69.1** | **$167.5** | **$133.3** | | **Diluted net income per share** | **$2.09** | **$1.60** | **$3.91** | **$3.09** | | Diluted weighted average shares | 42.5 | 43.1 | 42.8 | 43.1 | [Unaudited Condensed Consolidated Balance Sheets](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet presents the company's assets, liabilities, and equity as of June 30, 2025 Unaudited Condensed Consolidated Balance Sheets (in millions) | | As of June 30, 2025 | As of Dec 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $503.5 | $502.7 | | Total current assets | $1,042.3 | $1,014.1 | | Goodwill | $1,618.2 | $1,562.0 | | **Total assets** | **$3,630.5** | **$3,548.9** | | **Liabilities and equity** | | | | Deferred revenue | $594.2 | $540.8 | | Total current liabilities | $921.0 | $967.3 | | Long-term debt | $838.8 | $698.6 | | **Total liabilities** | **$2,016.0** | **$1,930.3** | | **Total equity** | **$1,614.5** | **$1,618.6** | | **Total liabilities and equity** | **$3,630.5** | **$3,548.9** | [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement outlines cash flows from operating, investing, and financing activities for the recent periods Unaudited Condensed Consolidated Statements of Cash Flows (in millions) | | Three months ended June 30, | Six months ended June 30, | | :--- | :--- | :--- | | | **2025** | **2024** | **2025** | **2024** | | **Cash provided by operating activities** | **$99.0** | **$152.7** | **$190.0** | **$246.3** | | Cash used for investing activities | ($23.9) | ($32.8) | ($94.6) | ($59.5) | | Cash used for financing activities | ($108.5) | ($81.6) | ($132.6) | ($125.1) | | Net (decrease) increase in cash | ($8.0) | $37.5 | $0.8 | $53.3 | | **Cash and cash equivalents-end of period** | **$503.5** | **$391.2** | **$503.5** | **$391.2** | [Supplemental Data](index=10&type=section&id=Supplemental%20Data) This section provides a breakdown of revenue by segment and details on assets under management and advisement Q2 2025 Revenue by Segment (in millions) | Segment | Q2 2025 Revenue | % Change (YoY) | Organic % Change | | :--- | :--- | :--- | :--- | | Morningstar Direct Platform | $209.2 | 6.2% | 6.3% | | PitchBook | $166.5 | 9.8% | 9.6% | | Morningstar Credit | $85.0 | 9.5% | 8.4% | | Morningstar Wealth | $64.3 | 2.7% | 7.2% | | Morningstar Retirement | $32.4 | (2.7)% | (2.7)% | | Corporate and All Other | $47.7 | (4.2)% | - | Assets Under Management and Advisement (AUMA) as of June 30 (in billions) | Category | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Morningstar Retirement (total) | $285.4 | $257.2 | 11.0% | | Investment Management (total) | $66.8 | $59.1 | 13.0% | | Asset value linked to Morningstar Indexes | $221.0 | $207.6 | 6.5% | [Reconciliations of Non-GAAP Measures](index=12&type=section&id=Reconciliations%20of%20Non-GAAP%20Measures) This section reconciles GAAP figures to non-GAAP measures like organic revenue, adjusted operating income, and free cash flow Reconciliation to Organic Revenue (Q2 2025, in millions) | | Amount | | :--- | :--- | | Consolidated revenue | $605.1 | | Less: Acquisitions | ($1.0) | | Less: Divestitures | ($3.0) | | Less: Effect of foreign currency | ($5.1) | | **Organic revenue** | **$596.0** | Reconciliation to Adjusted Operating Income (Q2 2025, in millions) | | Amount | | :--- | :--- | | Consolidated operating income | $125.1 | | Add: Intangible amortization expense | $15.3 | | Add: M&A-related expenses | $3.8 | | Less: Other non-recurring items | ($0.8) | | **Adjusted operating income** | **$143.4** | Reconciliation to Free Cash Flow (Q2 2025, in millions) | | Amount | | :--- | :--- | | Cash provided by operating activities | $99.0 | | Less: Capital expenditures | ($36.6) | | **Free cash flow** | **$62.4** |

Second-Quarter 2025 Supplemental Presentation July 30, 2025 This presentation contains forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations about future events or future financial performance. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, and often contain words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estima ...

Core Insights - The article emphasizes the importance of global investment trends and diversified asset allocation, highlighting the role of data, tools, and research in enhancing financial institutions' investment research systems and service efficiency [1] Group 1: Market Trends - Since 2025, the sales ratio limit for cross-border investments has been relaxed to 80%, leading to a rapid growth in the scale of northbound mutual funds due to the increasing demand for cross-border asset allocation from mainland investors [2] Group 2: Challenges in Cross-Border Funds - Cross-border funds face three major business challenges: - Diverse investment strategies and styles make it difficult to unify evaluation standards [3] - Fund information disclosure is fragmented, resulting in high data integration costs [3] - A lack of analytical tools leads to low research efficiency for cross-border funds [3] Group 3: Focus of the Sharing Session - The current sharing session will focus on northbound mutual funds, aiming to help fund sales institutions better understand cross-border fund products and enhance their research selection and service capabilities [4] Group 4: About Morningstar - Morningstar, Inc. is one of the leading investment research firms globally, providing financial information, fund, and stock analysis to various professionals, including individual investors and institutional investors [5] - As of December 31, 2024, Morningstar managed and provided investment advice on assets totaling approximately $338 billion across 33 global markets [5]

Company Overview - WuXi Biologics is a leading global Contract Research, Development, and Manufacturing Organization (CRDMO) that provides end-to-end solutions for biologics from concept to commercialization [6][8] - The company employs over 12,000 skilled employees across multiple countries including China, the United States, Ireland, Germany, and Singapore [7] ESG Rating and Recognition - WuXi Biologics has achieved the highest negligible-risk tier in the Morningstar Sustainalytics ESG rating, placing it in the top 1% globally [3][9] - The company has been recognized as an Industry and Regional ESG Top-Rated Company for five consecutive years [3][9] - WuXi Biologics has received multiple accolades for its sustainability efforts, including a MSCI AAA rating, EcoVadis Platinum Medal, and inclusion in the Dow Jones Sustainability Indices [4] Commitment to Sustainability - The company emphasizes sustainability as a cornerstone of long-term business growth and is focused on driving green technology innovations [8] - WuXi Biologics collaborates with stakeholders to promote responsible practices and create positive social and environmental impacts throughout the value chain [10]

Core Insights - The article emphasizes the importance of global investment trends and diversified asset allocation, highlighting the role of data, tools, and research in enhancing financial institutions' investment research systems and service efficiency [1]. Group 1: Market Trends - Since 2025, the sales ratio limit for cross-border investments has been relaxed to 80%, leading to a rapid growth in the scale of northbound mutual funds due to the increasing demand for cross-border asset allocation from mainland investors [2]. Group 2: Challenges in Cross-Border Funds - Cross-border funds face three major business challenges: - Diverse investment strategies and styles make it difficult to establish unified evaluation standards [3]. - Fund information disclosure is fragmented, resulting in high data integration costs [3]. - There is a lack of analytical tools, which lowers the research efficiency of cross-border funds [3]. Group 3: Focus of the Sharing Session - The current sharing session will focus on northbound mutual funds, aiming to help fund sales institutions better understand cross-border fund products and enhance their research selection and service capabilities [4]. Group 4: About Morningstar - Morningstar, Inc. is one of the leading investment research firms globally, providing financial information, fund, and stock analysis to various professionals, including individual investors and institutional investors [5]. - As of December 31, 2024, Morningstar managed and provided investment advice on assets totaling approximately $338 billion across 33 global markets [5].

Core Insights - The article emphasizes the importance of personalized investment advisory services to meet the diverse needs of clients, particularly in the context of market volatility [1] - It highlights the challenges faced in account management, including difficulties in account integration and reliance on manual data entry [2] - The need for more sophisticated risk diagnosis methods is discussed, as current approaches are often limited to simple assessments and single asset analysis [3] - The transition from diagnostic results to actionable asset allocation strategies is noted as unclear, making it difficult to implement effective solutions at the account level [4] Group 1 - The Morningstar seminar aims to address the challenges in investment advisory by providing a comprehensive view of portfolio diagnostics and optimization [5] - Future themes of the seminar include refined risk identification and matching, personalized asset allocation strategies, and practical implementation of customized portfolios [5] Group 2 - Morningstar, Inc. is recognized as a leading global investment research firm, providing analysis and ratings for various investment products and services [7] - As of December 31, 2024, Morningstar manages and advises on assets totaling approximately $338 billion across 33 global markets [7]

Group 1 - The core viewpoint emphasizes the responsibility of investment advisory firms to help investors make more rational investment decisions, thereby enhancing actual returns [1][6][7] - The discussion highlights the importance of reducing the discrepancy between product returns and investor account returns, with a focus on fee reforms and management practices [6][7] - The need for continuous efforts in investor education to address irrational behaviors is acknowledged, as it is a common phenomenon globally [7] Group 2 - The future of China's public fund industry is seen as having significant growth potential compared to overseas markets, with a focus on building a platform-based research and investment system [9][10] - Large domestic fund companies are expected to shift from asset management to wealth management, while smaller firms should adopt differentiated investment strategies to seek growth [9][10] - The industry is likely to experience a "Matthew Effect," where larger firms gain more advantages, leading to a focus on unique active management capabilities and international investment opportunities [10]

Core Insights - The article emphasizes the importance of personalized investment advisory services to meet the diverse needs of clients, particularly in the context of market volatility [1] - It highlights the challenges faced in account management, including difficulties in account integration and reliance on manual data entry [2] - The need for more sophisticated risk diagnosis methods is discussed, as current approaches are often limited to simple assessments and single asset analysis [3] - There is a lack of clear pathways from diagnostic results to actionable asset allocation strategies, making it hard to implement findings at the account level [4] Group 1 - The Morningstar seminar aims to address the challenges in investment advisory by providing a comprehensive view of portfolio diagnostics and optimization [5] - Future themes of the seminar include refined risk identification and matching, personalized asset allocation strategies, and practical implementation of customized portfolios [5] Group 2 - Morningstar, Inc. is recognized as a leading global investment research firm, providing data and analysis for various investment products and managing approximately $338 billion in assets as of December 31, 2024 [7]

Core Insights - Morningstar was founded in the 1980s by Joe Mansueto to bridge the information gap between ordinary investors and professionals, emphasizing the importance of high-quality data and independent research [1] - Since entering China in 2003, Morningstar has combined global methodologies with local market insights, providing independent research support as the only foreign institution qualified for fund ratings in the country [1] Group 1: Investment Principles - Morningstar adheres to three core investment principles: focusing on investors, maintaining a fundamental analysis approach, and recognizing the importance of fees [2] - The company has conducted three key studies to enhance investor experience: "Fund Fees and Future Success Rates," "Active vs. Passive Weather Vane," and "Investor Return Gap" [2] Group 2: Fund Fees and Future Success Rates Study - The study indicates that fund fees are the most critical predictor of future performance, with lower fees correlating to a higher likelihood of outperforming peers and long-term survival [4] - Both in the U.S. and China, funds with lower fees tend to have better performance and survival rates, while larger fund sizes generally lead to lower fees [4] Group 3: Active vs. Passive Weather Vane Study - This research aims to reveal the probability of active funds outperforming passive funds in different market environments [9] - Over the past decade in the U.S., passive funds have significantly outperformed active funds across various market sectors, while in China, the success rate of active large-cap balanced equity funds has notably declined [10] Group 4: Investor Return Gap Study - The "Investor Return Gap" study explores why actual investor returns often lag behind fund performance, attributing this to factors like poor timing decisions [14] - The research shows significant disparities in return gaps across different asset classes, closely linked to the volatility of those assets, with higher volatility assets generally exhibiting larger return gaps for investors [14]