Morningstar, Inc. reported a solid financial performance for the second quarter and first half of 2025, with consolidated revenue reaching $605.1 million for the quarter, a 5.8% increase from $571.9 million in the same period last year. For the first six months, revenue rose 6.5% to $1.187 billion, compared to $1.115 billion in 2024. The company's operating income also saw a significant increase, rising 15.3% to $125.1 million for the second quarter and 18.9% to $239.2 million for the first half. The operating margin improved to 20.7% for the second quarter and 20.2% for the first six months, up from 19.0% and 18.0%, respectively, in the prior year.
The company experienced notable changes in its revenue streams, with license-based revenue increasing by 6.6% in the second quarter, driven primarily by strong demand for its PitchBook and Morningstar Direct Platform products. Transaction-based revenue also grew by 10.3%, largely due to increased activity in the Morningstar Credit segment. However, asset-based revenue saw a slight decline of 2.7% in the second quarter, attributed to decreases in Morningstar Indexes and Morningstar Retirement products. The overall growth in revenue was partially offset by foreign currency fluctuations, which negatively impacted revenue by approximately $5.1 million in the second quarter.
Strategically, Morningstar made significant acquisitions in 2025, including the purchase of DealX, a provider of commercial mortgage-backed security data, and Lumonic, a private credit portfolio monitoring platform. These acquisitions are expected to enhance the company's offerings in the credit analytics space and contribute to future growth. The company also reported an increase in its employee headcount, reflecting its ongoing investment in talent to support its expanding operations.
Operationally, Morningstar's customer base remained stable, with 42.2 million shares outstanding as of June 30, 2025. The company reported a decrease in cash provided by operating activities, which fell by 22.9% to $190 million in the first half of 2025, primarily due to higher tax payments and bonuses. Free cash flow also decreased by 32.8% to $121.2 million, indicating a need for careful cash management moving forward. The company maintained a strong balance sheet, with cash and cash equivalents totaling $503.5 million at the end of the quarter.
Looking ahead, Morningstar expressed optimism about its growth trajectory, driven by continued demand for its data and analytics services. The company plans to leverage its recent acquisitions to enhance its product offerings and expand its market presence. However, it remains vigilant regarding potential risks, including economic fluctuations and regulatory changes that could impact its operations. The company is committed to maintaining its strong liquidity position and intends to utilize its cash reserves for general corporate purposes and future growth initiatives.
About Morningstar, Inc.
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