MORNINGSTAR, INC., 10-Q filed on 10/28/2022
Quarterly Report
v3.22.2.2
Cover page - shares
 9 Months Ended
Sep. 30, 2022
Oct. 21, 2022
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2022  
Document Transition Report false  
Entity File Number 000-51280  
Entity Registrant Name MORNINGSTAR, INC.  
Entity Central Index Key 0001289419  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Document Fiscal Year Focus 2022  
Document Fiscal Period Focus Q3  
Amendment Flag false  
Title of 12(b) Security Common stock, no par value  
Entity Incorporation, State or Country Code IL  
Entity Tax Identification Number 36-3297908  
Entity Address, Address Line One 22 West Washington Street  
Entity Address, City or Town Chicago  
Entity Address, State or Province IL  
Entity Address, Postal Zip Code 60602  
Trading Symbol MORN  
Security Exchange Name NASDAQ  
City Area Code 312  
Local Phone Number 696-6000  
Entity Current Reporting Status Yes  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Interactive Data Current Yes  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   42,446,188
v3.22.2.2
Condensed Consolidated Statements of Income - USD ($)
shares in Millions, $ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Income Statement [Abstract]        
Revenue $ 468.2 $ 428.9 $ 1,395.6 $ 1,237.1
Operating expense:        
Cost of revenue 195.4 183.1 584.3 508.8
Sales and marketing 89.7 72.9 262.9 201.3
General and administrative 116.9 67.0 294.3 232.5
Depreciation and amortization 44.2 38.1 121.8 112.3
Total operating expense 446.2 361.1 1,263.3 1,054.9
Operating income 22.0 67.8 132.3 182.2
Non-operating loss, net:        
Interest expense, net (10.5) (2.3) (17.3) (7.3)
Realized gains (losses) on sale of investments, reclassified from other comprehensive income 0.0 1.2 (2.1) 4.1
Other loss, net (13.8) (3.5) (12.9) (2.7)
Non-operating loss, net (24.3) (4.6) (32.3) (5.9)
Income before income taxes and equity in net income (loss) of unconsolidated entities (2.3) 63.2 100.0 176.3
Equity in net income (loss) of unconsolidated entities (1.3) 1.9 (2.7) 4.6
Income tax expense 5.4 16.1 30.1 44.1
Consolidated net income $ (9.0) $ 49.0 $ 67.2 $ 136.8
Net income per share:        
Basic (in dollars per share) $ (0.21) $ 1.14 $ 1.57 $ 3.18
Diluted (in dollars per share) (0.21) 1.13 1.56 3.16
Dividends declared (in dollars per share) 0 0 0.72 0.63
Dividends paid per common share (in dollars per share) $ 0.36 $ 0.32 $ 1.08 $ 0.95
Weighted average shares outstanding:        
Basic (in shares) 42.5 43.1 42.7 43.0
Diluted (in shares) 42.7 43.4 43.0 43.3
v3.22.2.2
Condensed Consolidated Statements of Comprehensive Income - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Statement of Comprehensive Income [Abstract]        
Consolidated net income (loss) $ (9.0) $ 49.0 $ 67.2 $ 136.8
Other comprehensive loss, net of tax:        
Foreign currency translation adjustment (51.2) (18.6) (99.9) (14.0)
Unrealized gains (losses) on securities:        
Unrealized holding gains (losses) arising during period 0.2 (0.5) (7.6) 4.4
Reclassification of (gains) losses on investments included in net income 0.0 (1.0) 2.1 (3.2)
Other comprehensive loss, net (51.0) (20.1) (105.4) (12.8)
Comprehensive income $ (60.0) $ 28.9 $ (38.2) $ 124.0
v3.22.2.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Sep. 30, 2022
Dec. 31, 2021
Current assets:    
Cash and cash equivalents $ 372.7 $ 483.8
Investments 34.4 62.3
Accounts receivable, less allowance for credit losses of $5.4 million and $4.5 million, respectively 284.5 268.9
Income tax receivable 9.5 8.9
Deferred commissions 36.9 31.2
Prepaid expenses 39.6 30.6
Other current assets 11.2 1.9
Total current assets 788.8 887.6
Goodwill 1,542.4 1,207.0
Intangible assets, net 559.1 328.2
Property, equipment, and capitalized software, less accumulated depreciation and amortization of $590.4 million and $529.2 million, respectively 187.8 171.8
Operating lease assets 185.5 149.2
Investments in unconsolidated entities 96.9 63.3
Deferred tax asset, net 11.5 12.8
Deferred commissions 32.5 31.1
Other assets 10.6 11.7
Total assets 3,415.1 2,862.7
Current liabilities:    
Deferred revenue 424.8 377.4
Accrued compensation 194.9 273.7
Accounts payable and accrued liabilities 67.1 76.5
Current portion of long-term debt 32.1 0.0
Operating lease liabilities 37.1 36.4
Contingent consideration liability 46.4 17.3
Other current liabilities 4.0 2.2
Total current liabilities 806.4 783.5
Operating lease liabilities 162.5 135.7
Accrued compensation 19.1 16.3
Deferred tax liabilities, net 72.5 101.7
Long-term debt 1,125.5 359.4
Deferred revenue 35.3 36.4
Other long-term liabilities 14.8 13.8
Total liabilities 2,236.1 1,446.8
Morningstar, Inc. shareholders’ equity:    
Common stock, no par value, 200,000,000 shares authorized, of which 42,472,580 and 43,136,273 shares were outstanding as of September 30, 2022 and December 31, 2021, respectively 0.0 0.0
Treasury stock at cost, 11,969,583 and 11,124,021 shares as of September 30, 2022 and December 31, 2021, respectively (982.2) (764.3)
Additional paid-in capital 738.9 689.0
Retained earnings 1,563.0 1,526.5
Accumulated other comprehensive loss:    
Currency translation adjustment (140.7) (40.8)
Unrealized gain on available-for-sale investments 0.0 5.5
Total accumulated other comprehensive loss (140.7) (35.3)
Total equity 1,179.0 1,415.9
Total liabilities and equity $ 3,415.1 $ 2,862.7
v3.22.2.2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Sep. 30, 2022
Dec. 31, 2021
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts receivable $ 5.4 $ 4.5
Accumulated depreciation and amortization $ 590.4 $ 529.2
Common Stock, No Par Value (in dollars per share) $ 0 $ 0
Common Stock, Shares Authorized (in shares) 200,000,000 200,000,000
Common Stock, Shares, Outstanding (in shares) 42,472,580 43,136,273
Treasury Stock, Shares (in shares) 11,969,583 11,124,021
v3.22.2.2
Condensed Consolidated Statement of Equity - USD ($)
$ in Millions
Total
Common Stock
Treasury Stock
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Balance at Dec. 31, 2020 $ 1,271.4 $ 0.0 $ (767.3) $ 671.3 $ 1,389.4 $ (22.0)
Balance (in shares) at Dec. 31, 2020   42,898,158        
Increase (Decrease) in Stockholders' Equity            
Net income 54.9       54.9  
Other comprehensive income (loss):            
Unrealized holding gains (losses) arising during period 2.1         2.1
Reclassification of adjustments for gain included in net income, net of income tax (1.0)         (1.0)
Foreign currency translation adjustment (3.0)         (3.0)
Other comprehensive income (loss), net (1.9)         (1.9)
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net of shares withheld for taxes on settlements of restricted stock units (in shares)   47,826        
Stock Issued During Period, Value, Stock Options Exercised and Vesting of Restricted Stock (6.3)     (6.3)    
Reclassification of awards previously liability-classified that were converted to equity 8.7     8.7    
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition            
Stock-based compensation 8.1     8.1    
Dividends declared (13.5)       (13.5)  
Balance at Mar. 31, 2021 1,321.4 $ 0.0 (767.3) 681.8 1,430.8 (23.9)
Balance (in shares) at Mar. 31, 2021   42,945,984        
Balance at Dec. 31, 2020 1,271.4 $ 0.0 (767.3) 671.3 1,389.4 (22.0)
Balance (in shares) at Dec. 31, 2020   42,898,158        
Increase (Decrease) in Stockholders' Equity            
Net income 136.8          
Other comprehensive income (loss):            
Unrealized holding gains (losses) arising during period 4.4          
Reclassification of adjustments for gain included in net income, net of income tax (3.2)          
Foreign currency translation adjustment (14.0)          
Other comprehensive income (loss), net (12.8)          
Balance at Sep. 30, 2021 1,385.5 $ 0.0 (764.3) 685.5 1,499.1 (34.8)
Balance (in shares) at Sep. 30, 2021   43,099,193        
Balance at Mar. 31, 2021 1,321.4 $ 0.0 (767.3) 681.8 1,430.8 (23.9)
Balance (in shares) at Mar. 31, 2021   42,945,984        
Increase (Decrease) in Stockholders' Equity            
Net income 32.9       32.9  
Other comprehensive income (loss):            
Unrealized holding gains (losses) arising during period 2.8         2.8
Reclassification of adjustments for gain included in net income, net of income tax (1.2)         (1.2)
Foreign currency translation adjustment 7.6         7.6
Other comprehensive income (loss), net 9.2         9.2
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net of shares withheld for taxes on settlements of restricted stock units (in shares)   120,587        
Stock Issued During Period, Value, Stock Options Exercised and Vesting of Restricted Stock (12.0)   2.2 (14.2)    
Reclassification of awards previously liability-classified that were converted to equity 0.1     0.1    
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition            
Stock-based compensation 11.8     11.8    
Dividends declared (13.6)       (13.6)  
Balance at Jun. 30, 2021 1,349.8 $ 0.0 (765.1) 679.5 1,450.1 (14.7)
Balance (in shares) at Jun. 30, 2021   43,066,571        
Increase (Decrease) in Stockholders' Equity            
Net income 49.0       49.0  
Other comprehensive income (loss):            
Unrealized holding gains (losses) arising during period (0.5)         (0.5)
Reclassification of adjustments for gain included in net income, net of income tax (1.0)         (1.0)
Foreign currency translation adjustment (18.6)         (18.6)
Other comprehensive income (loss), net (20.1)         (20.1)
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net of shares withheld for taxes on settlements of restricted stock units (in shares)   33,822        
Stock Issued During Period, Value, Stock Options Exercised and Vesting of Restricted Stock (4.0)   1.1 (5.1)    
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition            
Stock-based compensation 11.1     11.1    
Common share repurchased (in shares)   (1,200)        
Common shares repurchased (0.3)   (0.3)      
Balance at Sep. 30, 2021 1,385.5 $ 0.0 (764.3) 685.5 1,499.1 (34.8)
Balance (in shares) at Sep. 30, 2021   43,099,193        
Balance at Dec. 31, 2021 $ 1,415.9 $ 0.0 (764.3) 689.0 1,526.5 (35.3)
Balance (in shares) at Dec. 31, 2021 43,136,273 43,136,273        
Increase (Decrease) in Stockholders' Equity            
Net income $ 46.1       46.1  
Other comprehensive income (loss):            
Unrealized holding gains (losses) arising during period (4.8)         (4.8)
Reclassification of adjustments for gain included in net income, net of income tax (0.7)         (0.7)
Foreign currency translation adjustment (5.0)         (5.0)
Other comprehensive income (loss), net (10.5)         (10.5)
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net of shares withheld for taxes on settlements of restricted stock units (in shares)   34,350        
Stock Issued During Period, Value, Stock Options Exercised and Vesting of Restricted Stock (7.1)     (7.1)    
Reclassification of awards previously liability-classified that were converted to equity 19.4     19.4    
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition            
Stock-based compensation 13.9     13.9    
Common share repurchased (in shares)   (402,971)        
Common shares repurchased (110.6)   (110.6)      
Dividends declared (15.4)       (15.4)  
Balance at Mar. 31, 2022 1,351.7 $ 0.0 (874.9) 715.2 1,557.2 (45.8)
Balance (in shares) at Mar. 31, 2022   42,767,652        
Balance at Dec. 31, 2021 $ 1,415.9 $ 0.0 (764.3) 689.0 1,526.5 (35.3)
Balance (in shares) at Dec. 31, 2021 43,136,273 43,136,273        
Increase (Decrease) in Stockholders' Equity            
Net income $ 67.2          
Other comprehensive income (loss):            
Unrealized holding gains (losses) arising during period (7.6)          
Reclassification of adjustments for gain included in net income, net of income tax 2.1          
Foreign currency translation adjustment (99.9)          
Other comprehensive income (loss), net (105.4)          
Balance at Sep. 30, 2022 $ 1,179.0 $ 0.0 (982.2) 738.9 1,563.0 (140.7)
Balance (in shares) at Sep. 30, 2022 42,472,580 42,472,580        
Balance at Mar. 31, 2022 $ 1,351.7 $ 0.0 (874.9) 715.2 1,557.2 (45.8)
Balance (in shares) at Mar. 31, 2022   42,767,652        
Increase (Decrease) in Stockholders' Equity            
Net income 30.1       30.1  
Other comprehensive income (loss):            
Unrealized holding gains (losses) arising during period (3.0)         (3.0)
Reclassification of adjustments for gain included in net income, net of income tax 2.8         2.8
Foreign currency translation adjustment (43.7)         (43.7)
Other comprehensive income (loss), net (43.9)         (43.9)
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net of shares withheld for taxes on settlements of restricted stock units (in shares)   98,894        
Stock Issued During Period, Value, Stock Options Exercised and Vesting of Restricted Stock (11.3)   1.4 (12.7)    
Reclassification of awards previously liability-classified that were converted to equity (0.1)     (0.1)    
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition            
Stock-based compensation 22.1     22.1    
Common share repurchased (in shares)   (374,358)        
Common shares repurchased (92.5)   (92.5)      
Dividends declared (15.3)       (15.3)  
Balance at Jun. 30, 2022 1,240.8 $ 0.0 (966.0) 724.5 1,572.0 (89.7)
Balance (in shares) at Jun. 30, 2022   42,492,188        
Increase (Decrease) in Stockholders' Equity            
Net income (9.0)       (9.0)  
Other comprehensive income (loss):            
Unrealized holding gains (losses) arising during period 0.2         0.2
Reclassification of adjustments for gain included in net income, net of income tax 0.0         0.0
Foreign currency translation adjustment (51.2)         (51.2)
Other comprehensive income (loss), net (51.0)         (51.0)
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net of shares withheld for taxes on settlements of restricted stock units (in shares)   58,445        
Stock Issued During Period, Value, Stock Options Exercised and Vesting of Restricted Stock (6.7)   0.9 (7.6)    
Reclassification of awards previously liability-classified that were converted to equity (0.1)     (0.1)    
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition            
Stock-based compensation 22.1     22.1    
Common share repurchased (in shares)   (78,053)        
Common shares repurchased (17.1)   (17.1)      
Balance at Sep. 30, 2022 $ 1,179.0 $ 0.0 $ (982.2) $ 738.9 $ 1,563.0 $ (140.7)
Balance (in shares) at Sep. 30, 2022 42,472,580 42,472,580        
v3.22.2.2
Condensed Consolidated Statement of Equity (Parenthetical) - $ / shares
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Sep. 30, 2022
Sep. 30, 2021
Statement of Stockholders' Equity [Abstract]                
Dividends declared (in dollars per share) $ 0 $ 0.36 $ 0.36 $ 0 $ 0.32 $ 0.32 $ 0.72 $ 0.63
v3.22.2.2
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Operating activities    
Consolidated net income (loss) $ 67.2 $ 136.8
Adjustments to reconcile consolidated net income to net cash flows from operating activities:    
Depreciation and amortization 121.8 112.3
Deferred income taxes (27.5) (8.5)
Stock-based compensation expense 58.1 31.0
Provision for bad debt 2.1 2.0
Equity in net (income) loss of unconsolidated entities 2.7 (4.6)
Acquisition earn-out accrual 0.9 22.5
Other, net 25.0 (0.8)
Changes in operating assets and liabilities:    
Accounts receivable (19.8) (38.0)
Accounts payable and accrued liabilities 5.4 (1.4)
Accrued compensation and deferred commissions (55.6) 8.5
Income taxes, current 0.6 (8.1)
Deferred revenue 39.1 62.7
Other assets and liabilities (25.7) (0.4)
Cash provided by operating activities 194.3 314.0
Investing activities    
Purchases of investment securities (33.6) (54.5)
Proceeds from maturities and sales of investment securities 41.2 40.6
Capital expenditures (93.4) (71.6)
Acquisitions, net of cash acquired (646.8) (24.6)
Purchases of investments in unconsolidated entities (28.3) (15.8)
Other, net (0.1) 0.5
Cash used for investing activities (761.0) (125.4)
Financing activities    
Common shares repurchased (217.7) (0.1)
Dividends paid (46.2) (40.6)
Proceeds from revolving credit facility 460.0 10.0
Repayment of revolving credit facility (300.0) (10.0)
Proceeds from term facility 650.0 0.0
Repayment of term facility (10.9) (75.0)
Proceeds from stock-option exercises 0.0 0.2
Employee taxes withheld for restricted stock units (25.0) (22.4)
Payment of acquisition-related earn-outs (16.2) (34.4)
Other, net (2.2) (3.2)
Cash provided by (used for) financing activities 491.8 (175.5)
Effect of exchange rate changes on cash and cash equivalents (36.2) (8.6)
Net increase (decrease) in cash and cash equivalents (111.1) 4.5
Cash and cash equivalents—beginning of period 483.8 422.5
Cash and cash equivalents—end of period 372.7 427.0
Supplemental disclosure of cash flow information:    
Cash paid for income taxes 57.1 60.5
Cash paid for interest 17.7 8.1
Supplemental information of non-cash investing activities:    
Unrealized gain (loss) on available-for-sale investments $ (0.4) $ 1.3
v3.22.2.2
Basis of Presentation of Interim Financial Information
 9 Months Ended
Sep. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation of Interim Financial Information Basis of Presentation of Interim Financial Information
 
The accompanying unaudited condensed consolidated financial statements of Morningstar, Inc. and subsidiaries (Morningstar, we, our, the Company) have been prepared to conform to the rules and regulations of the Securities and Exchange Commission (SEC). The preparation of financial statements in conformity with accounting principles generally accepted in the United States (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues, and expenses. Actual results could differ from those estimates. In the opinion of management, the statements reflect all adjustments, which are of a normal recurring nature, necessary to present fairly our financial position, results of operations, equity, and cash flows. These financial statements and notes are unaudited and should be read in conjunction with our Audited Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the year ended
December 31, 2021, filed with the SEC on February 25, 2022 (our Annual Report).

The acronyms that appear in the Notes to our Unaudited Condensed Consolidated Financial Statements refer to the following:

ASC: Accounting Standards Codification
ASU: Accounting Standards Update
FASB: Financial Accounting Standards Board
v3.22.2.2
Summary of Significant Accounting Policies
 9 Months Ended
Sep. 30, 2022
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies Summary of Significant Accounting Policies
Our significant accounting policies are included in Note 2 of the Notes to our Audited Consolidated Financial Statements included in our Annual Report.

Reference Rate Reform: On March 12, 2020, the FASB issued ASU No. 2020-04: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848) (ASU No. 2020-04), which provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contract modifications resulting from reference rate reform initiatives. The intention of the standard is to ease the potential accounting and financial reporting burden associated with transitioning away from the expiring London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative benchmark rates. The amendments in this update are applicable to contract modifications that replace a reference LIBOR rate beginning on March 12, 2020 through December 31, 2022. On May 6, 2022, we terminated our 2019 Credit Agreement and entered into the 2022 Credit Agreement in connection with the acquisition of Leveraged Commentary & Data (LCD). As we entered into the 2022 Credit Agreement for reasons unrelated to reference rate reform, ASU No. 2010-04 is not applicable. See Note 3 for additional information on our 2022 Credit Agreement and Note 4 for additional information on our acquisition of LCD.

Business Combinations: On October 28, 2021, the FASB issued ASU No. 2021-08: Business Combinations: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805) (ASU No. 2021-08), which requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. Generally, the new standard will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. Under current U.S. GAAP, contract assets and contract liabilities acquired in a business combination are recorded by the acquirer at fair value. ASU No. 2021-08 creates an exception to the general recognition and measurement principles of ASC 805, Business Combinations (ASC 805). The new standard is effective for us on January 1, 2023. Early adoption is permitted, including in an interim period, for any period for which financial statements have not yet been issued. Entities should apply the new guidance on a prospective basis to all business combinations with an acquisition date on or after the effective date. We elected to early adopt ASU No. 2021-08 during the second quarter of 2022 and the adoption did not have a material effect on our consolidated financial statements, related disclosures, and results of operations.
Severance: In July 2022, the Company began to significantly reduce its operations in Shenzhen, China and to shift the work related to its global business functions, including global product and software development, managed investment data collection and analysis, and equity data collection and analysis, to other Morningstar locations. These activities will result in a significant headcount reduction in Shenzhen, China and growth in other Morningstar locations including Mumbai, Toronto, Madrid, and Chicago. Going forward, the Company's work in China will be focused solely on commercial activities in the domestic market.

As a result of these activities, the Company incurred $26.3 million of severance expense in the third quarter of 2022, which was recorded within "General and administrative" on our Consolidated Statements of Income. Due to statutory severance requirements in China and the application of the relevant accounting standards, the Company recorded substantially all of the severance costs in the third quarter of 2022 with the remainder to be incurred through the third quarter of 2023.
v3.22.2.2
Credit Arrangements
 9 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
Credit Arrangements Credit Arrangements
Debt

The following table summarizes our debt as of September 30, 2022 and December 31, 2021:
(in millions)As of September 30, 2022As of December 31, 2021
Term Facility, net of unamortized debt issuance costs of $0.8 million and $0.1 million, respectively
$649.2 $11.0 
Revolving Credit Facility160.0 — 
2.32% Senior Notes due October 26, 2030, net of unamortized debt issuance costs of $1.6 million and $1.6 million, respectively
348.4 348.4 
Total debt$1,157.6 $359.4 

Credit Agreement

On July 2, 2019, the Company entered into a senior credit agreement (the 2019 Credit Agreement). The 2019 Credit Agreement provided the Company with a five-year multi-currency credit facility with an initial borrowing capacity of up to $750.0 million, including a $300.0 million revolving credit facility (the 2019 Revolving Credit Facility) and a term loan facility of $450.0 million. The 2019 Credit Agreement also provided for the issuance of up to $50.0 million of letters of credit and a $100.0 million sub-limit for a swingline facility under the 2019 Revolving Credit Facility. On May 6, 2022, the Company terminated the 2019 Credit Agreement.

On May 6, 2022, the Company entered into a new senior credit agreement (the 2022 Credit Agreement). The 2022 Credit Agreement provided the Company with a five-year multi-currency credit facility with an initial borrowing capacity of up to $1.1 billion, including a $650.0 million term loan (the 2022 Term Facility) with an initial draw of $600.0 million and an option for a second draw of up to $50.0 million and a $450.0 million revolving credit facility (the 2022 Revolving Credit Facility). The 2022 Credit Agreement also provides for the issuance of up to $50.0 million of letters of credit and a $100.0 million sub-limit for a swingline.

The proceeds of the first draw under the 2022 Term Facility and initial borrowings under the 2022 Revolving Credit Facility were used to finance the acquisition of LCD and to repay borrowings under the 2019 Revolving Credit Facility. The optional second draw on the 2022 Term Facility was available to fund the contingent consideration payment of up to $50.0 million payable in connection with the LCD acquisition.

The 2022 Credit Agreement was amended (the Amended 2022 Credit Agreement) on September 13, 2022 (the First Amendment to the 2022 Credit Agreement) and on September 30, 2022 (the Second Amendment to the 2022 Credit Agreement). The First Amendment to the 2022 Credit Agreement terminated the unfunded term commitment related to the optional second draw of up to $50.0 million in the 2022 Term Facility and increased the 2022 Revolving Credit Facility to $600.0 million. The Second Amendment to the 2022 Credit Agreement increased the 2022 Term Facility to a fully funded $650.0 million facility (the Amended 2022 Term Facility) and increased the 2022 Revolving Credit Facility to $650.0 million (the Amended 2022 Revolving Credit Facility) for total borrowing capacity of $1.3 billion. As of September 30, 2022, our total outstanding debt under the Amended 2022 Credit Agreement was $809.2 million, net of debt issuance costs, with borrowing availability of $490.0 million under the 2022 Revolving Credit Facility. Except for incremental borrowing capacity, there were no material changes to the existing terms and conditions of the 2022 Credit Agreement.
The proceeds of the additional draw under the Amended 2022 Term Facility were used to repay borrowings under the 2022 Revolving Credit Facility. The proceeds of future borrowings under the Amended 2022 Revolving Credit Facility may be used for working capital, capital expenditures, or any other general corporate purpose.

The interest rate applicable to any loan under the Amended 2022 Credit Agreement is, at the Company's option, either: (i) the applicable Secured Overnight Financing Rate (SOFR) plus an applicable margin for such loans, which ranges between 1.00% and 1.48%, based on the Company's consolidated leverage ratio or (ii) the lender's base rate plus the applicable margin for such loans, which ranges between 0.00% and 0.38%, based on the Company's consolidated leverage ratio.

The portions of deferred debt issuance costs related to the Amended 2022 Revolving Credit Facility are included in other current and non-current assets, and the portion of deferred debt issuance costs related to the Amended 2022 Term Facility is reported as a reduction to the carrying amount of the Amended 2022 Term Facility. Debt issuance costs related to the Amended 2022 Revolving Credit Facility are amortized on a straight-line basis to interest expense over the term of the Amended 2022 Credit Agreement. Debt issuance costs related to the Amended 2022 Term Facility are amortized to interest expense using the effective interest method over the term of the Amended 2022 Credit Agreement.

Private Placement Debt Offering

On October 26, 2020, we completed the issuance and sale of $350.0 million aggregate principal amount of 2.32% senior notes due October 26, 2030 (the 2030 Notes), in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended. Proceeds were primarily used to pay off a portion of the Company's outstanding debt under the 2019 Credit Agreement. Interest on the 2030 Notes is payable semi-annually on each October 30 and April 30 during the term of the 2030 Notes and at maturity. As of September 30, 2022, our total outstanding debt, net of issuance costs, under the 2030 Notes was $348.4 million.

Compliance with Covenants

Each of the Amended 2022 Credit Agreement and the 2030 Notes include customary representations, warranties, and covenants, including financial covenants, that require us to maintain specified ratios of consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) to consolidated interest charges and consolidated funded indebtedness to consolidated EBITDA, which are evaluated on a quarterly basis. We were in compliance with these financial covenants as of September 30, 2022.
v3.22.2.2
Acquisitions, Goodwill and Other Intangible Assets
 9 Months Ended
Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
Acquisitions, Goodwill and Other Intangible Assets Acquisitions, Goodwill, and Other Intangible Assets
2022 Acquisitions

Leveraged Commentary & Data

On June 1, 2022, we completed our acquisition of LCD, a market leader in news, research, data, insights, and indexes for the leveraged finance market, from S&P Global (S&P) for an initial cash payment of $600.0 million plus a contingent payment of up to $50.0 million. We began consolidating the financial results of LCD in our consolidated financial statements as of June 1, 2022.

The total consideration transferred has been recorded as $645.5 million, comprised of a $600.0 million cash payment plus contingent consideration with an acquisition date fair value of $45.5 million.

The acquisition was accounted for as a business combination under the acquisition method of accounting pursuant to ASC 805, which requires that assets acquired and liabilities assumed be recognized at fair value as of the acquisition date. During the third quarter of 2022, we did not record significant adjustments to the purchase price allocation compared with the preliminary estimates recorded in the second quarter of 2022.
The acquisition date fair value of certain assets and liabilities, including intangible assets acquired and related weighted average expected life calculations, are provisional and subject to revision within one year of the acquisition date. Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill.

The final contingent consideration will be determined based upon the achievement of certain conditions related to the separation of LCD’s contractual relationships from S&P contracts that include other S&P products and services during the six month period following closing. To estimate the fair value of the contingent payment at the acquisition date, we calculated the weighted average of the estimated contingent payment scenarios. At subsequent balance sheet dates, the contingent payment will continue to be measured at fair value and any changes in the estimate will be recorded in earnings unless the change in fair value is the result of facts and circumstances that existed as of the acquisition date. During the third quarter of 2022, the contingent consideration was remeasured and an immaterial amount was recorded in earnings. The contingent payment is classified as "Contingent consideration liabilities" on our Consolidated Balance Sheet as of September 30, 2022.

The following table summarizes our preliminary allocation of the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:
(in millions)
Fair value of consideration$645.5 
Accounts receivable and other current assets$9.7 
Intangible assets, net275.6 
Deferred revenue(25.8)
Total fair value of net assets acquired$259.5 
Goodwill$386.0 

Accounts receivable acquired were recorded at gross contractual amounts receivable, which approximates fair value. We expect to collect substantially all of the gross contractual amounts receivable within a reasonable period of time after the acquisition date.

The preliminary allocation of the estimated fair values of the assets acquired and liabilities assumed includes $275.6 million of acquired intangible assets, as follows:
(in millions)Weighted average useful life (years)
Customer-related assets$197.3 20
Technology-based assets65.7 10
Intellectual property12.6 10
Total intangible assets$275.6 

Goodwill of $386.0 million represents the excess over the fair value of the net tangible and intangible assets acquired. Since LCD was an asset acquisition, goodwill is deductible for income tax purposes.

Praemium Portfolio Services Limited

On June 30, 2022, we completed our acquisition of Praemium Portfolio Services Limited (Praemium), a U.K.-based global provider of digital-first financial services, with $44.9 million in cash paid at closing, subject to post-closing adjustments. Praemium and its subsidiaries offer several investment platforms and customer relationship management services to their financial planning and wealth management clients across the U.K. and international markets. We began consolidating the financial results of Praemium in our consolidated financial statements as of June 30, 2022.
The acquisition was accounted for as a business combination under the acquisition method of accounting pursuant to ASC 805. During the third quarter of 2022, we did not record significant adjustments to the purchase price allocation compared with the preliminary estimates recorded in the second quarter of 2022.

The acquisition date fair value of certain assets and liabilities, including intangible assets acquired and related weighted average expected life calculations, are provisional and subject to revision within one year of the acquisition date. Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill.

The following table summarizes our allocation of the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:
(in millions)
Fair value of consideration transferred$44.9 
Cash and cash equivalents$5.5 
Accounts receivable and other current and non-current assets3.3 
Intangible assets, net22.7 
Deferred revenue(0.3)
Deferred tax liability, net(5.6)
Other current and non-current liabilities(2.2)
Total fair value of net assets acquired$23.4 
Goodwill$21.5 

Accounts receivable acquired were recorded at gross contractual amounts receivable, which approximates fair value. We expect to collect substantially all of the gross contractual amounts receivable within a reasonable period of time after the acquisition date.

The preliminary allocation of the estimated fair values of the assets acquired and liabilities assumed includes $22.7 million of acquired intangible assets, as follows:
(in millions)Weighted average useful life (years)
Customer-related assets$3.4 10
Technology-based assets19.3 10
Total intangible assets$22.7 

Goodwill of $21.5 million represents the excess over the fair value of the net tangible and intangible assets acquired. Goodwill is not deductible for income tax purposes.

We recognized a preliminary net deferred tax liability of $5.6 million primarily because the amortization expense related to certain intangible assets is not deductible for income tax purposes.

Goodwill
The following table shows the changes in our goodwill balances from December 31, 2021 to September 30, 2022:

 (in millions)
Balance as of December 31, 2021$1,207.0 
Acquisition of LCD386.0 
Acquisition of Praemium21.5 
Foreign currency translation(72.1)
Balance as of September 30, 2022$1,542.4 
We did not record any goodwill impairment losses in the first nine months of 2022 and 2021. We perform our annual impairment reviews in the fourth quarter or when impairment indicators and triggering events are identified.

Intangible Assets
The following table summarizes our intangible assets: 

 As of September 30, 2022As of December 31, 2021
(in millions)GrossAccumulated
Amortization		NetWeighted
Average
Useful  Life
(years)		GrossAccumulated
Amortization		NetWeighted
Average
Useful  Life
(years)
Customer-related assets$586.7 $(206.9)$379.8 14$413.7 $(192.8)$220.9 11
Technology-based assets309.7 (167.7)142.0 8232.3 (157.7)74.6 7
Intellectual property & other90.8 (53.5)37.3 883.0 (50.3)32.7 8
Total intangible assets$987.2 $(428.1)$559.1 12$729.0 $(400.8)$328.2 10
 
The following table summarizes our amortization expense related to intangible assets:

 Three months ended September 30,Nine months ended September 30,
(in millions)2022202120222021
Amortization expense$18.7 $15.6 $48.4 $46.9 
 
We amortize intangible assets using the straight-line method over their expected economic useful lives.

Based on acquisitions completed through September 30, 2022, we expect intangible amortization expense for the remainder of 2022 and subsequent years to be as follows:
 (in millions)
Remainder of 2022 (October 1 through December 31)$14.8 
202369.1 
202463.3 
202555.2 
202651.4 
Thereafter305.3 
Total$559.1 
 
Our estimates of future amortization expense for intangible assets may be affected by additional acquisitions, divestitures, changes in the estimated useful lives, impairments, and foreign currency translation.
v3.22.2.2
Income Per Share
 9 Months Ended
Sep. 30, 2022
Earnings Per Share [Abstract]  
Income Per Share Income (Loss) Per Share
The following table shows how we reconcile our net income (loss) and the number of shares used in computing basic and diluted net income (loss) per share:
 Three months ended September 30,Nine months ended September 30,
(in millions, except share and per share amounts)2022202120222021
Basic net income (loss) per share:  
Consolidated net income (loss)$(9.0)$49.0 $67.2 $136.8 
Weighted average common shares outstanding42.5 43.1 42.7 43.0 
Basic net income (loss) per share$(0.21)$1.14 $1.57 $3.18 
Diluted net income (loss) per share:
Consolidated net income (loss)$(9.0)$49.0 $67.2 $136.8 
Weighted average common shares outstanding42.5 43.1 42.7 43.0 
Net effect of dilutive stock options and restricted stock units0.2 0.3 0.3 0.3 
Weighted average common shares outstanding for computing diluted income per share42.7 43.4 43.0 43.3 
Diluted net income (loss) per share$(0.21)$1.13 $1.56 $3.16 

During the periods presented, the number of anti-dilutive restricted stock units, performance share awards, or market stock units excluded from our calculation of diluted earnings per share was immaterial.
v3.22.2.2
Revenue
 9 Months Ended
Sep. 30, 2022
Revenue from Contract with Customer [Abstract]  
Revenue Revenue
Disaggregation of Revenue
The following table presents our revenue disaggregated by revenue type. Sales and usage-based taxes are excluded from revenue.
Three months ended September 30,Nine months ended September 30,
(in millions)2022202120222021
License-based $342.6 $287.0 $982.0 $830.3 
Asset-based67.3 68.4 203.4 194.6 
Transaction-based58.3 73.5 210.2 212.2 
Consolidated revenue$468.2 $428.9 $1,395.6 $1,237.1 

License-based performance obligations are generally satisfied over time as the customer has access to the product or service during the term of the subscription license and the level of service is consistent during the contract period. License-based agreements typically have a term of 1 to 3 years, and are accounted for as subscription services available to customers and not as a license under the accounting guidance. License-based revenue is generated from the sale of PitchBook, Morningstar Data, Morningstar Direct, Morningstar Sustainalytics, Morningstar Advisor Workstation, and other similar product licenses.
Asset-based performance obligations are satisfied over time as the customer receives continuous access to a service for the term of the agreement. Asset-based arrangements typically have a term of 1 to 3 years. Asset-based fees represent variable consideration and the customer does not make separate purchasing decisions that result in additional performance obligations. Significant changes in the underlying fund assets and significant disruptions in the market are evaluated to determine whether estimates of earned asset-based fees need to be revised for the current quarter. The timing of client asset reporting and the structure of certain contracts can result in a one-quarter lag between market movements and the impact on earned revenue. An estimate of variable consideration is included in the initial transaction price only to the extent it is probable that a significant reversal in the amount of the revenue recognized will not occur. Estimates of asset-based fees are based on the most recently completed quarter and, as a result, it is unlikely a significant reversal of revenue would occur. Asset-based revenue is generated by Investment Management, Workplace Solutions, and Morningstar Indexes.

Transaction-based performance obligations are satisfied when the product or service is completed or delivered. Transaction-based revenue is generated by DBRS Morningstar, Internet advertising, and Morningstar-sponsored conferences. DBRS Morningstar revenue includes revenue from surveillance services, which is recognized over time, as the customer has access to the service during the surveillance period.

Contract liabilities

Our contract liabilities represent deferred revenue. We record contract liabilities when cash payments are received or due in advance of our performance, including amounts which may be refundable. The contract liabilities balance as of September 30, 2022 had a net increase of $46.3 million, primarily driven by cash payments received or payable in advance of satisfying our performance obligations. We recognized $291.2 million of revenue in the nine months ended September 30, 2022 that was included in the contract liabilities balance as of December 31, 2021.

We expect to recognize revenue related to our contract liabilities, including future billings, for the remainder of 2022 and subsequent years as follows:
(in millions)As of September 30, 2022
Remainder of 2022 (from October 1 through December 31)$277.9 
2023485.3 
2024118.3 
202535.9 
202613.9 
Thereafter33.9 
Total$965.2 

The aggregate amount of revenue we expect to recognize for the remainder of 2022 and subsequent years is higher than our contract liability balance of $460.1 million as of September 30, 2022. The difference represents the value of future obligations for signed contracts that have yet to be billed.

The table above does not include variable consideration for unsatisfied performance obligations related to certain of our license-based, asset-based, and transaction-based contracts as of September 30, 2022. We are applying the optional exemption available under ASC Topic 606, as the variable consideration relates to these unsatisfied performance obligations being fulfilled as a series. The performance obligations related to these contracts are expected to be satisfied over the next 1 to 3 years as services are provided to the client. For license-based contracts, the consideration received for services performed is based on the number of future users, which is not known until the services are performed. The variable consideration for this revenue can be affected by the number of user licenses, which cannot be reasonably estimated. For asset-based contracts, the consideration received for services performed is based on future asset values, which are not known until the services are performed. The variable consideration for this revenue can be affected by changes in the underlying value of fund assets due to client redemptions, additional investments, or movements in the market. For transaction-based contracts for Internet advertising, the consideration received for services performed is based on the number of impressions, which is not known until the impressions are created. The variable consideration for this revenue can be affected by the timing and quantity of impressions in any given period and cannot be reasonably estimated.
As of September 30, 2022, the table above also does not include revenue for unsatisfied performance obligations related to certain of our license-based and transaction-based contracts with durations of one year or less since we are applying the optional exemption under ASC Topic 606. For certain license-based contracts, the remaining performance obligation is expected to be less than one year based on the corresponding subscription terms or the existence of cancellation terms that may be exercised causing the contract term to be less than one year from September 30, 2022. For transaction-based contracts, such as new credit rating issuances and Morningstar-sponsored conferences, the related performance obligations are expected to be satisfied within the next 12 months.

Contract Assets

Our contract assets represent accounts receivable, less allowance for credit losses, and deferred commissions.

The following table summarizes our contract assets balance:
(in millions)As of September 30, 2022As of December 31, 2021
Accounts receivable, less allowance for credit losses$284.5 $268.9 
Deferred commissions69.4 62.3 
Total contract assets$353.9 $331.2 
v3.22.2.2
Segment and Geographical Area Information
 9 Months Ended
Sep. 30, 2022
Segment Reporting [Abstract]  
Segment and Geographical Area Information Segment and Geographical Area Information
 
Segment Information

We report our results in a single reportable segment, which reflects how our chief operating decision maker allocates resources and evaluates our financial results. Because we have a single reportable segment, all required financial segment information can be found directly in the consolidated financial statements. The accounting policies for our reportable segment are the same as those described in Note 2 of the Audited Consolidated Financial Statements included in our Annual Report. We evaluate the performance of our reporting segment based on revenue and operating income.

Geographical Area Information

The tables below summarize our revenue and long-lived assets, which includes property, equipment, and capitalized software, net and operating lease assets, by geographical area:

Revenue by geographical area
Three months ended September 30,Nine months ended September 30,
(in millions)2022202120222021
United States$340.9 $302.6 $1,007.2 $856.7 
Asia11.2 10.6 33.5 30.3 
Australia13.6 14.0 42.3 42.2 
Canada27.2 25.9 83.8 84.1 
Continental Europe39.1 41.1 121.6 116.2 
United Kingdom33.6 32.1 99.6 100.6 
Other2.6 2.6 7.6 7.0 
Total International127.3 126.3 388.4 380.4 
Consolidated revenue$468.2 $428.9 $1,395.6 $1,237.1 
Property, equipment, and capitalized software, net by geographical area
(in millions)As of September 30, 2022As of December 31, 2021
United States$155.6 $139.3 
Asia12.4 8.8 
Australia2.3 3.1 
Canada4.5 3.8 
Continental Europe8.0 10.1 
United Kingdom4.7 6.4 
Other0.3 0.3 
Total International32.2 32.5 
Consolidated property, equipment, and capitalized software, net$187.8 $171.8 
Operating lease assets by geographical area
(in millions)As of September 30, 2022As of December 31, 2021
United States$111.3 $82.7 
Asia24.8 24.1 
Australia4.1 4.6 
Canada5.9 7.1 
Continental Europe19.0 15.8 
United Kingdom20.0 14.4 
Other0.4 0.5 
Total International74.2 66.5 
Consolidated operating lease assets$185.5 $149.2 

The long-lived assets by geographical area do not include deferred commissions, non-current as the balance is not material.
v3.22.2.2
Fair Value Measurement of Investments
 3 Months Ended
Sep. 30, 2022
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Investments

As of September 30, 2022 and December 31, 2021, our investment balances totaled $34.4 million and $62.3 million, respectively. We classify our investments into two categories: equity investments and debt securities. We further classify our debt securities into available-for-sale, held-to-maturity, and trading securities. Our investment portfolio consists of stocks, bonds, options, mutual funds, money market funds, or exchange-traded products that replicate the model portfolios and strategies created by Morningstar. These investment accounts may also include exchange-traded products where Morningstar is an index provider. As of September 30, 2022, all investments in our investment portfolio have valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access, and, therefore, are classified as Level 1 within the fair value hierarchy.
During the second quarter of 2022, we converted our $10.0 million convertible note, which was previously recorded as an available-for-sale investment, into shares of preferred stock, which are now accounted for as an investment in equity securities. The preferred stock was initially measured at fair value and any subsequent remeasurement may occur upon impairment or an observable price change via a transaction with identical or similar instruments of the same issuer. The preferred stock is classified as an "Investment in unconsolidated entities" on our Consolidated Balance Sheet as of September 30, 2022.

Contingent Consideration

As of September 30, 2022, financial assets and liabilities that are classified as Level 3 within the fair value hierarchy include a contingent consideration liability of $46.4 million, which represents the acquisition date fair value of $45.5 million plus changes due to remeasurement in subsequent reporting periods.

The contingent consideration reflects potential future payments that are contingent upon the achievement of certain conditions related to the separation of LCD’s contractual relationships from S&P contracts that include other S&P products and services. This additional purchase consideration, for which the amount is contingent, is recognized at fair value at the date of acquisition, which was calculated as the weighted average of the estimated contingent payment scenarios. The contingent consideration is remeasured each reporting period until the contingency is resolved with any changes in fair value recorded in current period earnings.

In the second quarter of 2022, we made the third and final cash payment of $56.2 million, resolving our contingent consideration liability related to our acquisition of Sustainalytics. The payment was based on the achievement of certain revenue metrics for the year ended December 31, 2021.
v3.22.2.2
Leases
 9 Months Ended
Sep. 30, 2022
Leases [Abstract]  
Leases Leases
We lease office space and certain equipment under various operating and finance leases, with most of our lease portfolio consisting of operating leases for office space.

We determine whether an arrangement is, or includes, an embedded lease at contract inception. Operating lease assets and lease liabilities are recognized at the commencement date and initially measured using the present value of lease payments over the defined lease term. Lease expense is recognized on a straight-line basis over the lease term. For finance leases, we also recognize a finance lease asset and finance lease liability at inception, with lease expense recognized as interest expense and amortization.

A contract is or contains an embedded lease if the contract meets all of the below criteria:

•there is an identified asset;
•we obtain substantially all the economic benefits of the asset; and
•we have the right to direct the use of the asset.

For initial measurement of the present value of lease payments and for subsequent measurement of lease modifications, we are required to use the rate implicit in the lease, if available. However, as most of our leases do not provide an implicit rate, we use our incremental borrowing rate, which is a collateralized rate. To apply the incremental borrowing rate, we used a portfolio approach and grouped leases based on similar lease terms in a manner whereby we reasonably expect that the application does not differ materially from a lease-by-lease approach.

Our leases have remaining lease terms of approximately 1 year to 12 years, which may include the option to extend the lease when it is reasonably certain we will exercise that option. We do not have lease agreements with residual value guarantees, sale leaseback terms, or material restrictive covenants.

Leases with an initial term of 12 months or less are not recognized on the balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term.
Our operating lease expense for the three months ended September 30, 2022 was $10.5 million, compared with $11.0 million for the three months ended September 30, 2021. Charges related to our operating leases that are variable and, therefore, not included in the measurement of the lease liabilities, were $4.8 million for the three months ended September 30, 2022, compared with $4.2 million for the three months ended September 30, 2021. We made lease payments of $10.7 million during the three months ended September 30, 2022, compared with $12.0 million during the three months ended September 30, 2021.

Our operating lease expense for the nine months ended September 30, 2022 was $30.7 million, compared with $32.9 million for the nine months ended September 30, 2021. Charges related to our operating leases that are variable and, therefore, not included in the measurement of the lease liabilities, were $12.8 million for the nine months ended September 30, 2022, compared with $12.2 million for the nine months ended September 30, 2021. We made lease payments of $32.2 million during the nine months ended September 30, 2022, compared with $36.0 million during the nine months ended September 30, 2021.

The following table shows our minimum future lease commitments due in each of the next five years and thereafter for operating leases:

Minimum Future Lease Commitments (in millions)Operating Leases
Remainder of 2022 (October 1 through December 31)$10.2 
202340.4 
202439.2 
202528.9 
202632.6 
Thereafter67.4 
Total minimum lease commitments218.7 
Adjustment for discount to present value19.1 
Present value of lease liabilities
$199.6 

The following table summarizes the weighted-average remaining lease terms and weighted-average discount rates for our operating leases:
As of September 30, 2022
Weighted-average remaining lease term (in years)6.1
Weighted-average discount rate2.9 %
v3.22.2.2
Stock-Based Compensation
 9 Months Ended
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
 
Stock-Based Compensation Plans
 
All our employees and our non-employee directors are eligible for awards under the Morningstar Amended and Restated 2011 Stock Incentive Plan, which provides for a variety of stock-based awards, including stock options, restricted stock units, performance share awards, market stock units, and restricted stock.

The following table summarizes the stock-based compensation expense included in each of our operating expense categories:
Three months ended September 30,Nine months ended September 30,
(in millions)2022202120222021
Cost of revenue$6.8 $4.7 $16.0 $12.0 
Sales and marketing2.3 1.3 6.3 3.3 
General and administrative13.0 5.1 35.8 15.7 
Total stock-based compensation expense$22.1 $11.1 $58.1 $31.0 
As of September 30, 2022, the total unrecognized stock-based compensation cost related to outstanding restricted stock units, performance share awards, and market stock units expected to vest was $88.7 million, which we expect to recognize over a weighted average period of 28 months.
v3.22.2.2
Income Taxes
 9 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Effective Tax Rate

The following table shows our effective tax rate for the three and nine months ended September 30, 2022 and September 30, 2021:

 Three months ended September 30,Nine months ended September 30,
(in millions)2022202120222021
Income before income taxes and equity in net income (loss) of unconsolidated entities$(2.3)$63.2 $100.0 $176.3 
Equity in net income of unconsolidated entities(1.3)1.9 (2.7)4.6 
Total$(3.6)$65.1 $97.3 $180.9 
Income tax expense$5.4 $16.1 $30.1 $44.1 
Effective tax rateNMF24.7 %30.9 %24.4 %
 ___________________________________________________________________________________________
NMF - not meaningful

Our effective tax rate in the first nine months of 2022 was 30.9%, reflecting an increase of 6.5 percentage points, compared with the same period in the prior year. The increase in our effective tax rate for the nine months ended September 30, 2022 is primarily attributable to minimum taxes, additional reserves for uncertain tax positions that increased our liability for unrecognized tax benefits, and non-deductible foreign exchange losses.

Unrecognized Tax Benefits

The table below provides information concerning our gross unrecognized tax benefits as of September 30, 2022 and December 31, 2021, as well as the effect these gross unrecognized tax benefits would have on our income tax expense, if they were recognized.

(in millions)As of September 30, 2022As of December 31, 2021
Gross unrecognized tax benefits$14.0 $11.4 
Gross unrecognized tax benefits that would affect income tax expense$14.0 $11.4 
Decrease in income tax expense upon recognition of gross unrecognized tax benefits$13.8 $11.2 

Our gross unrecognized tax benefits of $14.0 million at September 30, 2022 increased by $2.6 million compared with $11.4 million at December 31, 2021. The increase was primarily attributable to a change in facts and circumstances regarding our assessment of the realizability of certain unrecognized tax benefits for prior tax periods recorded in the first quarter of 2022, partially offset by lapses of statutes of limitations in the third quarter of 2022.

Our Unaudited Condensed Consolidated Balance Sheets include the following liabilities for unrecognized tax benefits. These amounts include interest and penalties, less any associated tax benefits.

Liabilities for Unrecognized Tax Benefits (in millions)As of September 30, 2022As of December 31, 2021
Current liability$9.6 $7.2 
Non-current liability5.8 5.2 
Total liability for unrecognized tax benefits$15.4 $12.4 
Our total liability for unrecognized tax benefits of $15.4 million at September 30, 2022 increased by $3.0 million compared with $12.4 million at December 31, 2021. This increase reflects the change in our assessment of the realizability of certain unrecognized tax benefits for prior tax periods, partially offset by lapses of statutes of limitations.

Because we conduct business globally, we file income tax returns in U.S. federal, state, local, and foreign jurisdictions. We are currently under audit by federal, state, and local tax authorities in the U.S. as well as tax authorities in certain non-U.S. jurisdictions. It is likely that the examination phase of some of these federal, state, local, and non-U.S. audits will conclude in 2022. It is not possible to estimate the effect of current audits on previously recorded unrecognized tax benefits.

Approximately 61% of our cash, cash equivalents, and investments balance as of September 30, 2022 was held by our operations outside of the United States. We generally consider our U.S. directly-owned foreign subsidiary earnings to be permanently reinvested. We believe that our cash balances and investments in the United States, along with cash generated from our U.S. operations, will be sufficient to meet our U.S. operating and cash needs for the foreseeable future, without requiring us to repatriate earnings from these foreign subsidiaries.

Certain of our non-U.S. operations have incurred net operating losses (NOLs), which may become deductible to the extent these operations become profitable. For each of our operations, we evaluate whether it is more likely than not that the tax benefits related to NOLs will be realized. As part of this evaluation, we consider evidence such as tax planning strategies, historical operating results, forecasted taxable income, and recent financial performance. In the year that certain non-U.S. operations record a loss, we do not recognize a corresponding tax benefit, which increases our effective tax rate. Upon determining that it is more likely than not that the NOLs will be realized, we reduce the tax valuation allowances related to these NOLs, which results in a reduction to our income tax expense and our effective tax rate in that period.
v3.22.2.2
Contingencies
 9 Months Ended
Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]  
Contingencies Contingencies
We record accrued liabilities for litigation, regulatory, and other business matters when those matters represent loss contingencies that are both probable and estimable. In these cases, there may be an exposure to loss in excess of any amounts accrued. Unless a loss contingency is both probable and estimable, we do not establish an accrued liability. As litigation, regulatory, or other business matters develop, we evaluate on an ongoing basis whether such matters present a loss contingency that is probable and estimable.

Data Audits and Reviews
In our global data business, we include in our products, or directly redistribute to our customers, data and information licensed from third-party vendors. Our compliance with the terms of these licenses is reviewed internally and is also subject to audit by the third-party vendors. At any given time, we may be undergoing several such internal reviews and third-party vendor audits and the results and findings may indicate that we may be required to make a payment for prior data usage. Due to a lack of available information and data, as well as potential variations of any audit or internal review findings, we generally are not able to reasonably estimate a possible loss, or range of losses, for these matters. In situations where more information or specific areas subject to audit are available, we may be able to estimate a potential range of losses. While we cannot predict the outcome of these processes, we do not anticipate they will have a material adverse effect on our business, operating results, or financial position. Our financial results as of September 30, 2022 include an immaterial accrual related to certain in-progress audits and reviews.

Ratings and Regulatory Matters
Our ratings and related research activities, including credit ratings, ESG ratings, managed investment and equity ratings, are or may in the future become subject to regulation or increased scrutiny from executive, legislative, regulatory and private parties. Accordingly, those activities may be subject to governmental, regulatory, and legislative investigations, regulatory examinations in the ordinary course of business, subpoenas and other forms of legal process, and ultimately claims and litigation brought by governmental and private parties that are based on ratings assigned or research issued in connection with these activities or that are otherwise incidental to these activities. Our regulated businesses are generally subject to periodic reviews, inspections, examinations, and investigations by regulators in the jurisdictions in which they operate, any of which may result in claims, legal proceedings, assessments, fines, penalties, disgorgement, or restrictions on business activities. While it is difficult to predict the outcome of any particular investigation or proceeding, we do not believe the result of any of these matters will have a material adverse effect on our business, operating results, or financial position.
Other Matters
We are involved from time to time in commercial disputes and legal proceedings that arise in the normal course of our business. While it is difficult to predict the outcome of any particular dispute or proceeding, we do not believe the result of any of these matters will have a material adverse effect on our business, operating results, or financial position.
v3.22.2.2
Share Repurchase Program
 9 Months Ended
Sep. 30, 2022
Equity [Abstract]  
Treasury Stock Share Repurchase Program
 
In December 2020, the board of directors approved a share repurchase program that authorizes the Company to repurchase up to $400.0 million in shares of the Company's outstanding common stock, effective January 1, 2021. This authorization expires on December 31, 2023. Under this authorization, we may repurchase shares from time to time at prevailing market prices on the open market or in private transactions in amounts that we deem appropriate.

For the three months ended September 30, 2022, we repurchased a total of 78,053 shares for $17.1 million, of which $2.5 million was settled in early October 2022. For the nine months ended September 30, 2022, we repurchased a total of 855,382 shares for $220.2 million, of which $2.5 million was settled in early October 2022. As of September 30, 2022, we have repurchased a total of 860,282 shares for $221.5 million, leaving $178.5 million available for future repurchases under the current share repurchase program.
v3.22.2.2
Summary of Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2022
Accounting Policies [Abstract]  
Recent Accounting Pronouncements Policy
Reference Rate Reform: On March 12, 2020, the FASB issued ASU No. 2020-04: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848) (ASU No. 2020-04), which provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contract modifications resulting from reference rate reform initiatives. The intention of the standard is to ease the potential accounting and financial reporting burden associated with transitioning away from the expiring London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative benchmark rates. The amendments in this update are applicable to contract modifications that replace a reference LIBOR rate beginning on March 12, 2020 through December 31, 2022. On May 6, 2022, we terminated our 2019 Credit Agreement and entered into the 2022 Credit Agreement in connection with the acquisition of Leveraged Commentary & Data (LCD). As we entered into the 2022 Credit Agreement for reasons unrelated to reference rate reform, ASU No. 2010-04 is not applicable. See Note 3 for additional information on our 2022 Credit Agreement and Note 4 for additional information on our acquisition of LCD.

Business Combinations: On October 28, 2021, the FASB issued ASU No. 2021-08: Business Combinations: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805) (ASU No. 2021-08), which requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. Generally, the new standard will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. Under current U.S. GAAP, contract assets and contract liabilities acquired in a business combination are recorded by the acquirer at fair value. ASU No. 2021-08 creates an exception to the general recognition and measurement principles of ASC 805, Business Combinations (ASC 805). The new standard is effective for us on January 1, 2023. Early adoption is permitted, including in an interim period, for any period for which financial statements have not yet been issued. Entities should apply the new guidance on a prospective basis to all business combinations with an acquisition date on or after the effective date. We elected to early adopt ASU No. 2021-08 during the second quarter of 2022 and the adoption did not have a material effect on our consolidated financial statements, related disclosures, and results of operations.
Severance: In July 2022, the Company began to significantly reduce its operations in Shenzhen, China and to shift the work related to its global business functions, including global product and software development, managed investment data collection and analysis, and equity data collection and analysis, to other Morningstar locations. These activities will result in a significant headcount reduction in Shenzhen, China and growth in other Morningstar locations including Mumbai, Toronto, Madrid, and Chicago. Going forward, the Company's work in China will be focused solely on commercial activities in the domestic market.

As a result of these activities, the Company incurred $26.3 million of severance expense in the third quarter of 2022, which was recorded within "General and administrative" on our Consolidated Statements of Income. Due to statutory severance requirements in China and the application of the relevant accounting standards, the Company recorded substantially all of the severance costs in the third quarter of 2022 with the remainder to be incurred through the third quarter of 2023.
v3.22.2.2
Fair Value Measurements (Policies)
 9 Months Ended
Sep. 30, 2022
Fair Value Disclosures [Abstract]  
Investments- Debt and Equity Securities Policy We classify our investments into two categories: equity investments and debt securities. We further classify our debt securities into available-for-sale, held-to-maturity, and trading securities.
v3.22.2.2
Leases, Codification Topic 842 (Policies)
 9 Months Ended
Sep. 30, 2022
Leases [Abstract]  
Lessee, Leases
We lease office space and certain equipment under various operating and finance leases, with most of our lease portfolio consisting of operating leases for office space.

We determine whether an arrangement is, or includes, an embedded lease at contract inception. Operating lease assets and lease liabilities are recognized at the commencement date and initially measured using the present value of lease payments over the defined lease term. Lease expense is recognized on a straight-line basis over the lease term. For finance leases, we also recognize a finance lease asset and finance lease liability at inception, with lease expense recognized as interest expense and amortization.

A contract is or contains an embedded lease if the contract meets all of the below criteria:

•there is an identified asset;
•we obtain substantially all the economic benefits of the asset; and
•we have the right to direct the use of the asset.

For initial measurement of the present value of lease payments and for subsequent measurement of lease modifications, we are required to use the rate implicit in the lease, if available. However, as most of our leases do not provide an implicit rate, we use our incremental borrowing rate, which is a collateralized rate. To apply the incremental borrowing rate, we used a portfolio approach and grouped leases based on similar lease terms in a manner whereby we reasonably expect that the application does not differ materially from a lease-by-lease approach.
v3.22.2.2
Credit Arrangements (Tables)
 9 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
Summary of Total Debt and Long-term Debt
The following table summarizes our debt as of September 30, 2022 and December 31, 2021:
(in millions)As of September 30, 2022As of December 31, 2021
Term Facility, net of unamortized debt issuance costs of $0.8 million and $0.1 million, respectively
$649.2 $11.0 
Revolving Credit Facility160.0 — 
2.32% Senior Notes due October 26, 2030, net of unamortized debt issuance costs of $1.6 million and $1.6 million, respectively
348.4 348.4 
Total debt$1,157.6 $359.4 
v3.22.2.2
Acquisitions, Goodwill and Other Intangible Assets (Tables)
 9 Months Ended
Jun. 30, 2022
Jun. 01, 2022
Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]      
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed The following table summarizes our allocation of the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:
(in millions)
Fair value of consideration transferred$44.9 
Cash and cash equivalents$5.5 
Accounts receivable and other current and non-current assets3.3 
Intangible assets, net22.7 
Deferred revenue(0.3)
Deferred tax liability, net(5.6)
Other current and non-current liabilities(2.2)
Total fair value of net assets acquired$23.4 
Goodwill$21.5 
 The following table summarizes our preliminary allocation of the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:
(in millions)
Fair value of consideration$645.5 
Accounts receivable and other current assets$9.7 
Intangible assets, net275.6 
Deferred revenue(25.8)
Total fair value of net assets acquired$259.5 
Goodwill$386.0 
  
Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination
The preliminary allocation of the estimated fair values of the assets acquired and liabilities assumed includes $22.7 million of acquired intangible assets, as follows:
(in millions)Weighted average useful life (years)
Customer-related assets$3.4 10
Technology-based assets19.3 10
Total intangible assets$22.7 
The preliminary allocation of the estimated fair values of the assets acquired and liabilities assumed includes $275.6 million of acquired intangible assets, as follows:
(in millions)Weighted average useful life (years)
Customer-related assets$197.3 20
Technology-based assets65.7 10
Intellectual property12.6 10
Total intangible assets$275.6 
  
Schedule of Goodwill    
The following table shows the changes in our goodwill balances from December 31, 2021 to September 30, 2022:

 (in millions)
Balance as of December 31, 2021$1,207.0 
Acquisition of LCD386.0 
Acquisition of Praemium21.5 
Foreign currency translation(72.1)
Balance as of September 30, 2022$1,542.4 
Schedule of Intangible Assets    
The following table summarizes our intangible assets: 

 As of September 30, 2022As of December 31, 2021
(in millions)GrossAccumulated
Amortization		NetWeighted
Average
Useful  Life
(years)		GrossAccumulated
Amortization		NetWeighted
Average
Useful  Life
(years)
Customer-related assets$586.7 $(206.9)$379.8 14$413.7 $(192.8)$220.9 11
Technology-based assets309.7 (167.7)142.0 8232.3 (157.7)74.6 7
Intellectual property & other90.8 (53.5)37.3 883.0 (50.3)32.7 8
Total intangible assets$987.2 $(428.1)$559.1 12$729.0 $(400.8)$328.2 10
Schedule of Intangible Asset, Amortization Expense    
The following table summarizes our amortization expense related to intangible assets:

 Three months ended September 30,Nine months ended September 30,
(in millions)2022202120222021
Amortization expense$18.7 $15.6 $48.4 $46.9 
Schedule of Expected Amortization Expense    
Based on acquisitions completed through September 30, 2022, we expect intangible amortization expense for the remainder of 2022 and subsequent years to be as follows:
 (in millions)
Remainder of 2022 (October 1 through December 31)$14.8 
202369.1 
202463.3 
202555.2 
202651.4 
Thereafter305.3 
Total$559.1 
v3.22.2.2
Income Per Share (Tables)
 9 Months Ended
Sep. 30, 2022
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share, Basic and Diluted
The following table shows how we reconcile our net income (loss) and the number of shares used in computing basic and diluted net income (loss) per share:
 Three months ended September 30,Nine months ended September 30,
(in millions, except share and per share amounts)2022202120222021
Basic net income (loss) per share:  
Consolidated net income (loss)$(9.0)$49.0 $67.2 $136.8 
Weighted average common shares outstanding42.5 43.1 42.7 43.0 
Basic net income (loss) per share$(0.21)$1.14 $1.57 $3.18 
Diluted net income (loss) per share:
Consolidated net income (loss)$(9.0)$49.0 $67.2 $136.8 
Weighted average common shares outstanding42.5 43.1 42.7 43.0 
Net effect of dilutive stock options and restricted stock units0.2 0.3 0.3 0.3 
Weighted average common shares outstanding for computing diluted income per share42.7 43.4 43.0 43.3 
Diluted net income (loss) per share$(0.21)$1.13 $1.56 $3.16 
v3.22.2.2
Revenue (Tables)
 9 Months Ended
Sep. 30, 2022
Revenue from Contract with Customer [Abstract]  
Disaggregation of Revenue
The following table presents our revenue disaggregated by revenue type. Sales and usage-based taxes are excluded from revenue.
Three months ended September 30,Nine months ended September 30,
(in millions)2022202120222021
License-based $342.6 $287.0 $982.0 $830.3 
Asset-based67.3 68.4 203.4 194.6 
Transaction-based58.3 73.5 210.2 212.2 
Consolidated revenue$468.2 $428.9 $1,395.6 $1,237.1 
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction
We expect to recognize revenue related to our contract liabilities, including future billings, for the remainder of 2022 and subsequent years as follows:
(in millions)As of September 30, 2022
Remainder of 2022 (from October 1 through December 31)$277.9 
2023485.3 
2024118.3 
202535.9 
202613.9 
Thereafter33.9 
Total$965.2 
Summary of Contract Assets and Change in Deferred Commissions
The following table summarizes our contract assets balance:
(in millions)As of September 30, 2022As of December 31, 2021
Accounts receivable, less allowance for credit losses$284.5 $268.9 
Deferred commissions69.4 62.3 
Total contract assets$353.9 $331.2 
v3.22.2.2
Segment and Geographical Area Information (Tables)
 9 Months Ended
Sep. 30, 2022
Segment Reporting [Abstract]  
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]
The tables below summarize our revenue and long-lived assets, which includes property, equipment, and capitalized software, net and operating lease assets, by geographical area:

Revenue by geographical area
Three months ended September 30,Nine months ended September 30,
(in millions)2022202120222021
United States$340.9 $302.6 $1,007.2 $856.7 
Asia11.2 10.6 33.5 30.3 
Australia13.6 14.0 42.3 42.2 
Canada27.2 25.9 83.8 84.1 
Continental Europe39.1 41.1 121.6 116.2 
United Kingdom33.6 32.1 99.6 100.6 
Other2.6 2.6 7.6 7.0 
Total International127.3 126.3 388.4 380.4 
Consolidated revenue$468.2 $428.9 $1,395.6 $1,237.1 
Property, equipment, and capitalized software, net by geographical area
(in millions)As of September 30, 2022As of December 31, 2021
United States$155.6 $139.3 
Asia12.4 8.8 
Australia2.3 3.1 
Canada4.5 3.8 
Continental Europe8.0 10.1 
United Kingdom4.7 6.4 
Other0.3 0.3 
Total International32.2 32.5 
Consolidated property, equipment, and capitalized software, net$187.8 $171.8 
Operating lease assets by geographical area
(in millions)As of September 30, 2022As of December 31, 2021
United States$111.3 $82.7 
Asia24.8 24.1 
Australia4.1 4.6 
Canada5.9 7.1 
Continental Europe19.0 15.8 
United Kingdom20.0 14.4 
Other0.4 0.5 
Total International74.2 66.5 
Consolidated operating lease assets$185.5 $149.2 

The long-lived assets by geographical area do not include deferred commissions, non-current as the balance is not material.
v3.22.2.2
Leases (Tables)
 9 Months Ended
Sep. 30, 2022
Leases [Abstract]  
Assets and Liabilities, Lessee
The following table summarizes the weighted-average remaining lease terms and weighted-average discount rates for our operating leases:
As of September 30, 2022
Weighted-average remaining lease term (in years)6.1
Weighted-average discount rate2.9 %
Lessee, Operating Lease, Liability, Maturity
The following table shows our minimum future lease commitments due in each of the next five years and thereafter for operating leases:

Minimum Future Lease Commitments (in millions)Operating Leases
Remainder of 2022 (October 1 through December 31)$10.2 
202340.4 
202439.2 
202528.9 
202632.6 
Thereafter67.4 
Total minimum lease commitments218.7 
Adjustment for discount to present value19.1 
Present value of lease liabilities
$199.6 
v3.22.2.2
Stock-Based Compensation (Tables)
 9 Months Ended
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]  
Schedule Of Compensation Cost By Expense Category
The following table summarizes the stock-based compensation expense included in each of our operating expense categories:
Three months ended September 30,Nine months ended September 30,
(in millions)2022202120222021
Cost of revenue$6.8 $4.7 $16.0 $12.0 
Sales and marketing2.3 1.3 6.3 3.3 
General and administrative13.0 5.1 35.8 15.7 
Total stock-based compensation expense$22.1 $11.1 $58.1 $31.0 
v3.22.2.2
Income Taxes (Tables)
 9 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
Schedule of Effective Income Tax Rate Reconciliation
The following table shows our effective tax rate for the three and nine months ended September 30, 2022 and September 30, 2021:

 Three months ended September 30,Nine months ended September 30,
(in millions)2022202120222021
Income before income taxes and equity in net income (loss) of unconsolidated entities$(2.3)$63.2 $100.0 $176.3 
Equity in net income of unconsolidated entities(1.3)1.9 (2.7)4.6 
Total$(3.6)$65.1 $97.3 $180.9 
Income tax expense$5.4 $16.1 $30.1 $44.1 
Effective tax rateNMF24.7 %30.9 %24.4 %
Schedule of Gross Unrecognized Tax Benefits
The table below provides information concerning our gross unrecognized tax benefits as of September 30, 2022 and December 31, 2021, as well as the effect these gross unrecognized tax benefits would have on our income tax expense, if they were recognized.

(in millions)As of September 30, 2022As of December 31, 2021
Gross unrecognized tax benefits$14.0 $11.4 
Gross unrecognized tax benefits that would affect income tax expense$14.0 $11.4 
Decrease in income tax expense upon recognition of gross unrecognized tax benefits$13.8 $11.2 
Schedule of Liabilities for Unrecognized Tax Benefits
Our Unaudited Condensed Consolidated Balance Sheets include the following liabilities for unrecognized tax benefits. These amounts include interest and penalties, less any associated tax benefits.

Liabilities for Unrecognized Tax Benefits (in millions)As of September 30, 2022As of December 31, 2021
Current liability$9.6 $7.2 
Non-current liability5.8 5.2 
Total liability for unrecognized tax benefits$15.4 $12.4 
v3.22.2.2
Credit Arrangements - Schedule of Long-term Debt (Details) - USD ($)
$ in Millions
Sep. 30, 2022
Sep. 13, 2022
May 06, 2022
Dec. 31, 2021
Oct. 26, 2020
Jul. 02, 2019
Debt Instrument [Line Items]            
Long-term debt $ 1,125.5     $ 359.4    
Long-term debt 1,157.6     359.4    
Debt Instrument, Interest Rate, Stated Percentage         2.32%  
Maximum borrowing capacity 650.0 $ 600.0        
Medium-term Notes [Member] | Term Loan Facility [Member]            
Debt Instrument [Line Items]            
Long-term debt 649.2     11.0    
Debt Issuance Costs, Gross 1.8     0.1    
Maximum borrowing capacity           $ 450.0
Notes Payable, Other Payables | Private Placement            
Debt Instrument [Line Items]            
Long-term debt 348.4     348.4    
Debt Issuance Costs, Gross $ 1.6     $ 1.6    
Debt Instrument, Interest Rate, Stated Percentage 2.32%     2.32%    
Revolving Credit Facility | Line of Credit [Member] | July 2019 Revolving Credit Facility [Member]            
Debt Instrument [Line Items]            
Long-term debt       $ 0.0    
Maximum borrowing capacity           300.0
Revolving Credit Facility | Line of Credit [Member] | May 2022 Revolving Credit Facility            
Debt Instrument [Line Items]            
Long-term debt $ 160.0          
Maximum borrowing capacity     $ 450.0      
Letters of credit [Member] | Line of Credit [Member] | July 2019 Revolving Credit Facility [Member]            
Debt Instrument [Line Items]            
Maximum borrowing capacity           $ 50.0
Letters of credit [Member] | Line of Credit [Member] | May 2022 Revolving Credit Facility            
Debt Instrument [Line Items]            
Maximum borrowing capacity     $ 50.0      
v3.22.2.2
Credit Arrangements (Details) - USD ($)
$ in Millions
Sep. 30, 2022
May 06, 2022
Jul. 02, 2019
Sep. 13, 2022
Dec. 31, 2021
Oct. 26, 2020
Line of Credit Facility [Line Items]            
Maximum borrowing capacity $ 650.0     $ 600.0    
Remaining borrowing capacity 490.0          
Long-term debt, outstanding 809.2          
Debt Instrument, Interest Rate, Stated Percentage           2.32%
Long-term debt 1,125.5       $ 359.4  
Medium-term Notes [Member] | Term Loan Facility [Member]            
Line of Credit Facility [Line Items]            
Maximum borrowing capacity     $ 450.0      
Long-term debt $ 649.2       11.0  
Line of Credit [Member] | Credit Agreement [Member]            
Line of Credit Facility [Line Items]            
Debt Instrument, Term     5 years      
Maximum borrowing capacity     $ 750.0      
Line of Credit [Member] | Credit Agreement [Member] | Maximum [member] | Lender's base rate [Member]            
Line of Credit Facility [Line Items]            
Basis spread on variable rate debt 0.38%          
Line of Credit [Member] | Credit Agreement [Member] | Maximum [member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate            
Line of Credit Facility [Line Items]            
Basis spread on variable rate debt 1.48%          
Line of Credit [Member] | Credit Agreement [Member] | Minimum [Member] | Lender's base rate [Member]            
Line of Credit Facility [Line Items]            
Basis spread on variable rate debt 0.00%          
Line of Credit [Member] | Credit Agreement [Member] | Minimum [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate            
Line of Credit Facility [Line Items]            
Basis spread on variable rate debt 1.00%          
Line of Credit [Member] | July 2019 Revolving Credit Facility [Member] | Revolving Credit Facility            
Line of Credit Facility [Line Items]            
Maximum borrowing capacity     300.0      
Long-term debt         $ 0.0  
Line of Credit [Member] | July 2019 Revolving Credit Facility [Member] | Letters of credit [Member]            
Line of Credit Facility [Line Items]            
Maximum borrowing capacity     50.0      
Line of Credit [Member] | May 6, 2022 Credit Agreement            
Line of Credit Facility [Line Items]            
Maximum borrowing capacity   $ 600.0        
Line of Credit [Member] | May 6, 2022 Credit Agreement | Line of Credit [Member]            
Line of Credit Facility [Line Items]            
Debt Instrument, Term   5 years        
Maximum borrowing capacity   $ 1,100.0        
Line of Credit [Member] | May 2022 Revolving Credit Facility | Revolving Credit Facility            
Line of Credit Facility [Line Items]            
Maximum borrowing capacity   450.0        
Long-term debt $ 160.0          
Line of Credit [Member] | May 2022 Revolving Credit Facility | Letters of credit [Member]            
Line of Credit Facility [Line Items]            
Maximum borrowing capacity   50.0        
Line of Credit [Member] | September 30, 2022, Credit Agreement Second Amendment | Line of Credit [Member]            
Line of Credit Facility [Line Items]            
Maximum borrowing capacity $ 1,300.0          
Notes Payable, Other Payables | Private Placement            
Line of Credit Facility [Line Items]            
Other Long-term Debt           $ 350.0
Debt Instrument, Interest Rate, Stated Percentage 2.32%       2.32%  
Long-term debt $ 348.4       $ 348.4  
Long-Term Debt | May 6, 2022 Revolving Credit Facility            
Line of Credit Facility [Line Items]            
Maximum borrowing capacity   650.0        
Line of Credit [Member] | July 2019 Revolving Credit Facility [Member] | Revolving Credit Facility            
Line of Credit Facility [Line Items]            
Maximum borrowing capacity     $ 100.0      
Line of Credit [Member] | May 2022 Revolving Credit Facility | Revolving Credit Facility            
Line of Credit Facility [Line Items]            
Maximum borrowing capacity   $ 100.0        
v3.22.2.2
Acquisitions, Goodwill and Other Intangible Assets - Narrative (Details) - USD ($)
$ in Millions
 9 Months Ended
Jun. 30, 2022
Jun. 01, 2022
Sep. 30, 2022
Sep. 30, 2021
Dec. 31, 2021
Business Acquisition [Line Items]          
Payment for Contingent Consideration Liability, Operating Activities   $ 50.0      
Contingent consideration liability     $ 46.4   $ 17.3
Goodwill, impairment loss     $ 0.0 $ 0.0  
LCD          
Business Acquisition [Line Items]          
Payments to Acquire Businesses, Gross   600.0      
Payment for Contingent Consideration Liability, Operating Activities   50.0      
Business Combination, Consideration Transferred   645.5      
Contingent consideration liability   45.5      
Goodwill, Acquired During Period   386.0      
Finite-lived Intangible Assets Acquired   275.6      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Deferred Revenue   (25.8)      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net   259.5      
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables   9.7      
LCD | Customer-Related Intangible Assets          
Business Acquisition [Line Items]          
Finite-lived Intangible Assets Acquired   $ 197.3      
Weighted average useful life (years)   20 years      
LCD | Technology-Based Intangible Assets          
Business Acquisition [Line Items]          
Finite-lived Intangible Assets Acquired   $ 65.7      
Weighted average useful life (years)   10 years      
Praemium          
Business Acquisition [Line Items]          
Business Combination, Consideration Transferred $ 44.9        
Goodwill, Acquired During Period 21.5        
Finite-lived Intangible Assets Acquired 22.7        
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Deferred Revenue (0.3)        
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net 23.4        
Preliminary net tax deferred liability (5.6)        
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Other (2.2)        
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents 5.5        
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables 3.3        
Praemium | Customer-Related Intangible Assets          
Business Acquisition [Line Items]          
Finite-lived Intangible Assets Acquired $ 3.4        
Weighted average useful life (years) 10 years        
Praemium | Technology-Based Intangible Assets          
Business Acquisition [Line Items]          
Finite-lived Intangible Assets Acquired $ 19.3        
Weighted average useful life (years) 10 years        
v3.22.2.2
Acquisitions, Goodwill and Other Intangible Assets (Schedule of Goodwill) (Details) - USD ($)
$ in Millions
 9 Months Ended
Jun. 30, 2022
Jun. 01, 2022
Sep. 30, 2022
Business Acquisition [Line Items]      
Goodwill     $ 1,542.4
Goodwill [Roll Forward]      
Goodwill, Beginning Balance     1,207.0
Foreign currency translation     (72.1)
Goodwill, Ending Balance     $ 1,542.4
LCD      
Business Acquisition [Line Items]      
Finite-lived Intangible Assets Acquired   $ 275.6  
Goodwill, Acquired During Period   $ 386.0  
Praemium      
Business Acquisition [Line Items]      
Finite-lived Intangible Assets Acquired $ 22.7    
Goodwill, Acquired During Period $ 21.5    
v3.22.2.2
Acquisitions, Goodwill and Other Intangible Assets (Schedule of Intangible Assets) (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Jun. 30, 2022
Jun. 01, 2022
Mar. 31, 2022
Sep. 30, 2022
Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]          
Gross       $ 987.2 $ 729.0
Accumulated Amortization       (428.1) (400.8)
Total       $ 559.1 328.2
Weighted-Average Useful Life (years)     10 years 12 years  
LCD          
Finite-Lived Intangible Assets [Line Items]          
Finite-lived Intangible Assets Acquired   $ 275.6      
Praemium          
Finite-Lived Intangible Assets [Line Items]          
Finite-lived Intangible Assets Acquired $ 22.7        
Customer-related assets          
Finite-Lived Intangible Assets [Line Items]          
Gross       $ 586.7 413.7
Accumulated Amortization       (206.9) (192.8)
Total       $ 379.8 220.9
Weighted-Average Useful Life (years)     11 years 14 years  
Intellectual property & other          
Finite-Lived Intangible Assets [Line Items]          
Gross       $ 90.8 83.0
Accumulated Amortization       (53.5) (50.3)
Total       $ 37.3 32.7
Weighted-Average Useful Life (years)     8 years 8 years  
Intellectual property & other | LCD          
Finite-Lived Intangible Assets [Line Items]          
Finite-lived Intangible Assets Acquired   $ 12.6      
Weighted average useful life (years)   10 years      
Customer-Related Intangible Assets | LCD          
Finite-Lived Intangible Assets [Line Items]          
Finite-lived Intangible Assets Acquired   $ 197.3      
Weighted average useful life (years)   20 years      
Customer-Related Intangible Assets | Praemium          
Finite-Lived Intangible Assets [Line Items]          
Finite-lived Intangible Assets Acquired $ 3.4        
Weighted average useful life (years) 10 years        
Technology-Based Intangible Assets          
Finite-Lived Intangible Assets [Line Items]          
Gross       $ 309.7 232.3
Accumulated Amortization       (167.7) (157.7)
Total       $ 142.0 $ 74.6
Weighted-Average Useful Life (years)     7 years 8 years  
Technology-Based Intangible Assets | LCD          
Finite-Lived Intangible Assets [Line Items]          
Finite-lived Intangible Assets Acquired   $ 65.7      
Weighted average useful life (years)   10 years      
Technology-Based Intangible Assets | Praemium          
Finite-Lived Intangible Assets [Line Items]          
Finite-lived Intangible Assets Acquired $ 19.3        
Weighted average useful life (years) 10 years        
v3.22.2.2
Acquisitions, Goodwill and Other Intangible Assets (Amortization Expense) (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]          
Amortization expense $ 18.7 $ 15.6 $ 48.4 $ 46.9  
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]          
Remainder of 2022 (October 1 through December 31) 14.8   14.8    
2023 69.1   69.1    
2024 63.3   63.3    
2025 55.2   55.2    
2026 51.4   51.4    
Thereafter 305.3   305.3    
Total $ 559.1   $ 559.1   $ 328.2
v3.22.2.2
Acquisitions, Goodwill and Other Intangible Assets - Acquired Intangibles (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Mar. 31, 2022
Sep. 30, 2022
Dec. 31, 2021
Acquired Finite-Lived Intangible Assets [Line Items]      
Gross   $ 987.2 $ 729.0
Accumulated Amortization   (428.1) (400.8)
Intangible assets, net   $ 559.1 328.2
Weighted-Average Useful Life (years) 10 years 12 years  
Customer-related assets      
Acquired Finite-Lived Intangible Assets [Line Items]      
Gross   $ 586.7 413.7
Accumulated Amortization   (206.9) (192.8)
Intangible assets, net   $ 379.8 220.9
Weighted-Average Useful Life (years) 11 years 14 years  
Intellectual property & other      
Acquired Finite-Lived Intangible Assets [Line Items]      
Gross   $ 90.8 83.0
Accumulated Amortization   (53.5) (50.3)
Intangible assets, net   $ 37.3 32.7
Weighted-Average Useful Life (years) 8 years 8 years  
Technology-Based Intangible Assets      
Acquired Finite-Lived Intangible Assets [Line Items]      
Gross   $ 309.7 232.3
Accumulated Amortization   (167.7) (157.7)
Intangible assets, net   $ 142.0 $ 74.6
Weighted-Average Useful Life (years) 7 years 8 years  
v3.22.2.2
Income Per Share (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Sep. 30, 2022
Sep. 30, 2021
Earnings Per Share, Basic [Abstract]                
Consolidated net income (loss) $ (9.0) $ 30.1 $ 46.1 $ 49.0 $ 32.9 $ 54.9 $ 67.2 $ 136.8
Weighted average common shares outstanding 42.5     43.1     42.7 43.0
Basic net income per share attributable to Morningstar, Inc. $ (0.21)     $ 1.14     $ 1.57 $ 3.18
Earnings Per Share, Diluted [Abstract]                
Consolidated net income (loss) $ (9.0)     $ 49.0     $ 67.2 $ 136.8
Weighted average common shares outstanding 42.5     43.1     42.7 43.0
Net effect of dilutive stock options and restricted stock units 0.2     0.3     0.3 0.3
Weighted average common shares outstanding for computing diluted income per share 42.7     43.4     43.0 43.3
Diluted net income per share attributable to Morningstar, Inc. $ (0.21)     $ 1.13     $ 1.56 $ 3.16
v3.22.2.2
Revenue (Disaggregation of Revenue) (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Disaggregation of Revenue [Line Items]        
Consolidated revenue $ 468.2 $ 428.9 $ 1,395.6 $ 1,237.1
License-based        
Disaggregation of Revenue [Line Items]        
Consolidated revenue 342.6 287.0 982.0 830.3
Asset-based        
Disaggregation of Revenue [Line Items]        
Consolidated revenue 67.3 68.4 203.4 194.6
Transaction-based        
Disaggregation of Revenue [Line Items]        
Consolidated revenue $ 58.3 $ 73.5 $ 210.2 $ 212.2
v3.22.2.2
Revenue (Disaggregation of Revenue, Narrative) (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]        
Revenues $ 468.2 $ 428.9 $ 1,395.6 $ 1,237.1
Minimum [Member]        
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]        
Revenue performance period 1 year   1 year  
Maximum [member]        
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]        
Revenue performance period 3 years   3 years  
Licensed-based Revenue        
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]        
Revenues $ 342.6 287.0 $ 982.0 830.3
Licensed-based Revenue | Minimum [Member]        
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]        
Revenue performance period 1 year   1 year  
Licensed-based Revenue | Maximum [member]        
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]        
Revenue performance period 3 years   3 years  
Asset-based Revenue        
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]        
Revenues $ 67.3 $ 68.4 $ 203.4 $ 194.6
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01        
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]        
Revenue performance period 3 months   3 months  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01        
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]        
Revenue performance period 1 year   1 year  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01        
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]        
Revenue performance period 2 years   2 years  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01        
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]        
Revenue performance period 3 years   3 years  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01        
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]        
Revenue performance period 4 years   4 years  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01        
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]        
Revenue performance period    
v3.22.2.2
Revenue (Schedule of Contract Liabilities) (Details)
$ in Millions
Sep. 30, 2022
USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, Remaining Performance Obligation, Amount $ 965.2
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, Remaining Performance Obligation, Amount $ 277.9
Revenue performance period 3 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, Remaining Performance Obligation, Amount $ 485.3
Revenue performance period 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, Remaining Performance Obligation, Amount $ 118.3
Revenue performance period 2 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, Remaining Performance Obligation, Amount $ 35.9
Revenue performance period 3 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, Remaining Performance Obligation, Amount $ 13.9
Revenue performance period 4 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, Remaining Performance Obligation, Amount $ 33.9
Revenue performance period
v3.22.2.2
Revenue (Contract Liabilities, Additional Information Narrative) (Details)
$ in Millions
 9 Months Ended
Sep. 30, 2022
USD ($)
Revenue from Contract with Customer [Abstract]  
Increase in contract liabilities from cash payments received $ 46.3
Contract with Customer, Liability, Change in Timeframe, Performance Obligation Satisfied, Revenue Recognized 291.2
Accounts payable and accrued liabilities $ 460.1
Revenue Revenue
Disaggregation of Revenue
The following table presents our revenue disaggregated by revenue type. Sales and usage-based taxes are excluded from revenue.
Three months ended September 30,Nine months ended September 30,
(in millions)2022202120222021
License-based $342.6 $287.0 $982.0 $830.3 
Asset-based67.3 68.4 203.4 194.6 
Transaction-based58.3 73.5 210.2 212.2 
Consolidated revenue$468.2 $428.9 $1,395.6 $1,237.1 

License-based performance obligations are generally satisfied over time as the customer has access to the product or service during the term of the subscription license and the level of service is consistent during the contract period. License-based agreements typically have a term of 1 to 3 years, and are accounted for as subscription services available to customers and not as a license under the accounting guidance. License-based revenue is generated from the sale of PitchBook, Morningstar Data, Morningstar Direct, Morningstar Sustainalytics, Morningstar Advisor Workstation, and other similar product licenses.
Asset-based performance obligations are satisfied over time as the customer receives continuous access to a service for the term of the agreement. Asset-based arrangements typically have a term of 1 to 3 years. Asset-based fees represent variable consideration and the customer does not make separate purchasing decisions that result in additional performance obligations. Significant changes in the underlying fund assets and significant disruptions in the market are evaluated to determine whether estimates of earned asset-based fees need to be revised for the current quarter. The timing of client asset reporting and the structure of certain contracts can result in a one-quarter lag between market movements and the impact on earned revenue. An estimate of variable consideration is included in the initial transaction price only to the extent it is probable that a significant reversal in the amount of the revenue recognized will not occur. Estimates of asset-based fees are based on the most recently completed quarter and, as a result, it is unlikely a significant reversal of revenue would occur. Asset-based revenue is generated by Investment Management, Workplace Solutions, and Morningstar Indexes.

Transaction-based performance obligations are satisfied when the product or service is completed or delivered. Transaction-based revenue is generated by DBRS Morningstar, Internet advertising, and Morningstar-sponsored conferences. DBRS Morningstar revenue includes revenue from surveillance services, which is recognized over time, as the customer has access to the service during the surveillance period.

Contract liabilities

Our contract liabilities represent deferred revenue. We record contract liabilities when cash payments are received or due in advance of our performance, including amounts which may be refundable. The contract liabilities balance as of September 30, 2022 had a net increase of $46.3 million, primarily driven by cash payments received or payable in advance of satisfying our performance obligations. We recognized $291.2 million of revenue in the nine months ended September 30, 2022 that was included in the contract liabilities balance as of December 31, 2021.

We expect to recognize revenue related to our contract liabilities, including future billings, for the remainder of 2022 and subsequent years as follows:
(in millions)As of September 30, 2022
Remainder of 2022 (from October 1 through December 31)$277.9 
2023485.3 
2024118.3 
202535.9 
202613.9 
Thereafter33.9 
Total$965.2 

The aggregate amount of revenue we expect to recognize for the remainder of 2022 and subsequent years is higher than our contract liability balance of $460.1 million as of September 30, 2022. The difference represents the value of future obligations for signed contracts that have yet to be billed.

The table above does not include variable consideration for unsatisfied performance obligations related to certain of our license-based, asset-based, and transaction-based contracts as of September 30, 2022. We are applying the optional exemption available under ASC Topic 606, as the variable consideration relates to these unsatisfied performance obligations being fulfilled as a series. The performance obligations related to these contracts are expected to be satisfied over the next 1 to 3 years as services are provided to the client. For license-based contracts, the consideration received for services performed is based on the number of future users, which is not known until the services are performed. The variable consideration for this revenue can be affected by the number of user licenses, which cannot be reasonably estimated. For asset-based contracts, the consideration received for services performed is based on future asset values, which are not known until the services are performed. The variable consideration for this revenue can be affected by changes in the underlying value of fund assets due to client redemptions, additional investments, or movements in the market. For transaction-based contracts for Internet advertising, the consideration received for services performed is based on the number of impressions, which is not known until the impressions are created. The variable consideration for this revenue can be affected by the timing and quantity of impressions in any given period and cannot be reasonably estimated.
As of September 30, 2022, the table above also does not include revenue for unsatisfied performance obligations related to certain of our license-based and transaction-based contracts with durations of one year or less since we are applying the optional exemption under ASC Topic 606. For certain license-based contracts, the remaining performance obligation is expected to be less than one year based on the corresponding subscription terms or the existence of cancellation terms that may be exercised causing the contract term to be less than one year from September 30, 2022. For transaction-based contracts, such as new credit rating issuances and Morningstar-sponsored conferences, the related performance obligations are expected to be satisfied within the next 12 months.

Contract Assets

Our contract assets represent accounts receivable, less allowance for credit losses, and deferred commissions.

The following table summarizes our contract assets balance:
(in millions)As of September 30, 2022As of December 31, 2021
Accounts receivable, less allowance for credit losses$284.5 $268.9 
Deferred commissions69.4 62.3 
Total contract assets$353.9 $331.2 
v3.22.2.2
Revenue (Summary of Contract Assets) (Details) - USD ($)
$ in Millions
Sep. 30, 2022
Dec. 31, 2021
Revenue from Contract with Customer [Abstract]    
Accounts receivable, less allowance for credit losses $ 284.5 $ 268.9
Deferred commissions, current and non-current 69.4 62.3
Total contract assets $ 353.9 $ 331.2
v3.22.2.2
Segment and Geographical Area Information (External Revenue and Long-Lived Assets) (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Dec. 31, 2021
Revenues from External Customers and Long-Lived Assets [Line Items]          
External revenue $ 468.2 $ 428.9 $ 1,395.6 $ 1,237.1  
Long-lived assets 187.8   187.8   $ 171.8
United States          
Revenues from External Customers and Long-Lived Assets [Line Items]          
External revenue 340.9 302.6 1,007.2 856.7  
Long-lived assets 155.6   155.6   139.3
Total International          
Revenues from External Customers and Long-Lived Assets [Line Items]          
External revenue 127.3 126.3 388.4 380.4  
Long-lived assets 32.2   32.2   32.5
Canada          
Revenues from External Customers and Long-Lived Assets [Line Items]          
External revenue 33.6 32.1 99.6 100.6  
Long-lived assets 4.7   4.7   6.4
Continental Europe          
Revenues from External Customers and Long-Lived Assets [Line Items]          
External revenue 39.1 41.1 121.6 116.2  
Long-lived assets 8.0   8.0   10.1
Australia          
Revenues from External Customers and Long-Lived Assets [Line Items]          
External revenue 13.6 14.0 42.3 42.2  
Long-lived assets 2.3   2.3   3.1
Canada          
Revenues from External Customers and Long-Lived Assets [Line Items]          
External revenue 27.2 25.9 83.8 84.1  
Long-lived assets 4.5   4.5   3.8
United Kingdom          
Revenues from External Customers and Long-Lived Assets [Line Items]          
External revenue 11.2 10.6 33.5 30.3  
Long-lived assets 12.4   12.4   8.8
Other          
Revenues from External Customers and Long-Lived Assets [Line Items]          
External revenue 2.6 $ 2.6 7.6 $ 7.0  
Long-lived assets $ 0.3   $ 0.3   $ 0.3
v3.22.2.2
Segment and Geographical Area Information Segment and Geographical Area Information - Operating Lease Assets by Geographical Area (Details) - USD ($)
$ in Millions
Sep. 30, 2022
Dec. 31, 2021
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets $ 185.5 $ 149.2
United States    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets 111.3 82.7
Total International    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets 74.2 66.5
Canada    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets 20.0 14.4
Continental Europe    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets 19.0 15.8
Australia    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets 4.1 4.6
Canada    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets 5.9 7.1
United Kingdom    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets 24.8 24.1
Other    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets $ 0.4 $ 0.5
v3.22.2.2
Fair Value Measurements - Narrative (Details) - USD ($)
$ in Millions
 3 Months Ended
Jun. 01, 2022
Jun. 30, 2022
Sep. 30, 2022
Dec. 31, 2021
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Investment balances     $ 34.4 $ 62.3
Equity Method Investments     $ 10.0  
Payment for Contingent Consideration Liability, Operating Activities $ 50.0      
Sustainalytics        
Fair Value Measurement Inputs and Valuation Techniques [Line Items]        
Payment for Contingent Consideration Liability, Operating Activities   $ 56.2    
v3.22.2.2
Leases - Narrative (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Lessee, Lease, Description [Line Items]        
Operating lease expense $ 10.5 $ 11.0 $ 30.7 $ 32.9
Variable lease, cost 4.8 4.2 12.8 12.2
Operating lease payments $ 10.7 $ 12.0 $ 32.2 $ 36.0
Minimum [Member]        
Lessee, Lease, Description [Line Items]        
Operating lease, weighted average remaining lease term 1 year   1 year  
Maximum [member]        
Lessee, Lease, Description [Line Items]        
Operating lease, weighted average remaining lease term 12 years   12 years  
v3.22.2.2
Leases - Operating Lease Minimum Future Lease Commitments (Details)
$ in Millions
Sep. 30, 2022
USD ($)
Leases [Abstract]  
Remainder of 2019 $ 10.2
2020 40.4
2021 39.2
2022 28.9
2023 32.6
Thereafter 67.4
Total minimum lease commitments 218.7
Adjustment for discount to present value 19.1
Present value of lease liabilities $ 199.6
v3.22.2.2
Leases - Weighted Average Remaining Lease Terms and Discount Rates (Details)
Sep. 30, 2022
Weighted-average remaining lease term (in years)  
Weighted-average remaining lease term (in years) 6 years 1 month 6 days
Weighted-average discount rate  
Weighted-average discount rate 2.90%
v3.22.2.2
Stock-Based Compensation (Allocation of Stock-Based Compensation Costs by Plan) (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Total stock-based compensation expense $ 22.1 $ 11.1 $ 58.1 $ 31.0
Cost of revenue        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Total stock-based compensation expense 6.8 4.7 16.0 12.0
Sales and marketing        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Total stock-based compensation expense 2.3 1.3 6.3 3.3
General and administrative        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Total stock-based compensation expense $ 13.0 $ 5.1 $ 35.8 $ 15.7
v3.22.2.2
Stock-Based Compensation (Narrative) (Details) - Restricted Stock Units and Performance Share Awards
$ in Millions
 3 Months Ended
Sep. 30, 2022
USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Unrecognized stock-based compensation expense $ 88.7
Expected amortization period (months) 28 months
v3.22.2.2
Income Taxes (Income Tax Reconciliation and Unrecognized Tax Benefits) (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Dec. 31, 2021
Effective Income Tax Rate Reconciliation, Amount [Abstract]          
Income before income taxes and equity in net income (loss) of unconsolidated entities $ (2.3) $ 63.2 $ 100.0 $ 176.3  
Equity in net income (loss) of unconsolidated entities (1.3) 1.9 (2.7) 4.6  
Total (3.6) 65.1 97.3 180.9  
Income tax expense 5.4 $ 16.1 $ 30.1 $ 44.1  
Effective income tax rate   24.70% 30.90% 24.40%  
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued [Abstract]          
Current liability 9.6   $ 9.6   $ 7.2
Non-current liability 5.8   5.8   5.2
Total liability for unrecognized tax benefits 15.4   $ 15.4   12.4
Concentration Risk [Line Items]          
Effective Income Tax Rate Reconciliation, Increase (Decrease) From Prior Year, PercentTaxes     650.00%    
Unrecognized Tax Benefits 14.0   $ 14.0   $ 11.4
Unrecognized Tax Benefits, Period Increase (Decrease) $ 2.6        
Total Liability For Unrecognized Tax Benefits, Period Increase (Decrease)     $ 3.0    
Effective tax rate NMF        
Income Tax Examination [Line Items]          
Effective tax rate NMF        
Geographic Concentration Risk | Cash, Cash Equivalents and Investments | Total International          
Concentration Risk [Line Items]          
Percentage of cash, cash equivalents and investments held by operations outside of US     61.00%    
v3.22.2.2
Income Taxes (Income Tax Contingency) (Details) - USD ($)
$ in Millions
Sep. 30, 2022
Dec. 31, 2021
Income Tax Disclosure [Abstract]    
Gross unrecognized tax benefits $ 14.0 $ 11.4
Gross unrecognized tax benefits that would affect income tax expense 14.0 11.4
Decrease in income tax expense upon recognition of gross unrecognized tax benefits $ 13.8 $ 11.2
v3.22.2.2
Contingencies Contingencies (Details)
 9 Months Ended
Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]  
Document Period End Date Sep. 30, 2022
v3.22.2.2
Share Repurchase Program (Details) - USD ($)
$ in Millions
 1 Months Ended 3 Months Ended 9 Months Ended
Oct. 28, 2022
Sep. 30, 2022
Sep. 30, 2022
Subsequent Event [Line Items]      
Share repurchase program, authorized amount   $ 400.0 $ 400.0
Shares repurchased (in shares)   78,053 855,382
Shares repurchased, value   $ 17.1 $ 220.2
Shares repurchased, cumulative (in shares)   860,282 860,282
Shares repurchased, cumulative, value   $ 221.5 $ 221.5
Stock repurchase program, remaining authorized repurchase amount   $ 178.5 $ 178.5
Subsequent Event      
Subsequent Event [Line Items]      
Shares repurchased, value $ 2.5    
v3.22.2.2
Restructuring and Related Activities (Details)
$ in Millions
 3 Months Ended
Sep. 30, 2022
USD ($)
Restructuring and Related Activities [Abstract]  
Severance Costs $ 26.3