MORNINGSTAR, INC., 10-Q filed on 7/30/2021
Quarterly Report
v3.21.2
Cover page - shares
6 Months Ended
Jun. 30, 2021
Jul. 23, 2021
Cover [Abstract]    
Document Quarterly Report true  
Entity Registrant Name MORNINGSTAR, INC.  
Entity Central Index Key 0001289419  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Document Type 10-Q  
Document Period End Date Jun. 30, 2021  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q2  
Amendment Flag false  
Title of 12(b) Security Common stock, no par value  
Entity Incorporation, State or Country Code IL  
Document Transition Report false  
Entity File Number 000-51280  
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   43,066,571
v3.21.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Jun. 30, 2021
Mar. 31, 2021
Dec. 31, 2020
Jun. 30, 2020
Mar. 31, 2020
Dec. 31, 2019
Current assets:            
Cash and cash equivalents $ 387.6   $ 422.5 $ 353.7   $ 334.1
Investments 61.4   41.7      
Accounts receivable, less allowance for credit losses of $4.2 million and $4.2 million, respectively 231.0   205.1      
Income tax receivable 14.4   2.2      
Deferred commissions 25.0   21.1      
Prepaid expenses 38.2   31.7      
Other current assets 1.6   5.7      
Total current assets 759.2   730.0      
Goodwill 1,208.7   1,205.0      
Intangible assets, net 353.0   380.1      
Property, equipment, and capitalized software, less accumulated depreciation and amortization of $493.6 million and $452.3 million, respectively 157.8   155.1      
Operating lease assets 136.9   147.7      
Investments in unconsolidated entities 47.4   32.6      
Deferred tax asset, net 12.4   12.6      
Deferred commissions 22.7   18.5      
Other assets 13.9   14.4      
Total assets 2,712.0   2,696.0      
Current liabilities:            
Deferred revenue 378.8   306.8      
Accrued compensation 185.1   169.2      
Accounts payable and accrued liabilities 55.8   64.5      
Operating lease liabilities 35.0   39.9      
Contingent consideration liability 18.2   35.0      
Other current liabilities 12.2   11.1      
Total current liabilities 685.1   626.5      
Operating lease liabilities 128.2   137.7      
Accrued compensation 14.6   35.1      
Deferred tax liabilities, net 107.4   108.9      
Long-term debt 374.3   449.1      
Deferred revenue 36.0   33.5      
Other long-term liabilities 16.6   33.8      
Total liabilities 1,362.2   1,424.6      
Morningstar, Inc. shareholders’ equity:            
Common stock, no par value, 200,000,000 shares authorized, of which 43,066,571 and 42,898,158 shares were outstanding as of June 30, 2021 and December 31, 2020, respectively 0.0   0.0      
Treasury stock at cost, 11,126,280 and 11,135,446 shares as of June 30, 2021 and December 31, 2020, respectively (765.1)   (767.3)      
Additional paid-in capital 679.5   671.3      
Retained earnings 1,450.1   1,389.4      
Accumulated other comprehensive loss:            
Currency translation adjustment (21.1)   (25.7)      
Unrealized gain on available-for-sale investments 6.4   3.7      
Total accumulated other comprehensive loss (14.7)   (22.0)      
Total equity 1,349.8 $ 1,321.4 1,271.4 $ 1,086.9 $ 1,032.7 $ 1,083.6
Total liabilities and equity $ 2,712.0   $ 2,696.0      
v3.21.2
Condensed Consolidated Statements of Income - USD ($)
shares in Millions, $ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
Income Statement [Abstract]        
Revenue $ 415.4 $ 327.9 $ 808.2 $ 651.9
Operating expense:        
Cost of revenue 168.4 131.1 325.7 268.1
Sales and marketing 66.5 47.2 128.4 98.1
General and administrative 95.7 54.6 165.5 112.0
Depreciation and amortization 37.6 33.7 74.2 67.9
Total operating expense 368.2 266.6 693.8 546.1
Operating income 47.2 61.3 114.4 105.8
Non-operating income (expense), net:        
Interest expense, net (2.2) (1.9) (5.0) (5.1)
Realized gains (losses) on sale of investments, reclassified from other comprehensive income 1.6 0.9 2.9 0.5
Other income (expense), net (0.8) 3.6 0.8 (4.1)
Non-operating income (expense), net (1.4) 2.6 (1.3) (8.7)
Income before income taxes and equity in net loss of unconsolidated entities 45.8 63.9 113.1 97.1
Equity in net income (loss) of unconsolidated entities 1.0 (0.5) 2.7 (1.3)
Income tax expense 13.9 15.2 28.0 23.7
Consolidated net income $ 32.9 $ 48.2 $ 87.8 $ 72.1
Net income per share:        
Basic (in dollars per share) $ 0.77 $ 1.13 $ 2.04 $ 1.68
Diluted (in dollars per share) 0.76 1.12 2.03 1.67
Dividends declared (in dollars per share) 0.32 0.30 0.63 0.60
Dividends paid per common share (in dollars per share) $ 0.32 $ 0.30 $ 0.63 $ 0.60
Weighted average shares outstanding:        
Basic (in shares) 43.0 42.9 43.0 42.9
Diluted (in shares) 43.3 43.2 43.3 43.2
v3.21.2
Condensed Consolidated Statements of Comprehensive Income - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
Statement of Comprehensive Income [Abstract]        
Consolidated net income $ 32.9 $ 48.2 $ 87.8 $ 72.1
Other comprehensive loss, net of tax:        
Foreign currency translation adjustment 7.6 12.8 4.6 (27.6)
Unrealized gains (losses) on securities:        
Unrealized holding gains (losses) arising during period 2.8 2.8 4.9 (1.3)
Reclassification of (gains) losses included in net income (1.2) (0.7) (2.2) (0.4)
Other comprehensive income (loss) 9.2 14.9 7.3 (29.3)
Comprehensive income $ 42.1 $ 63.1 $ 95.1 $ 42.8
v3.21.2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Jun. 30, 2021
Dec. 31, 2020
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts receivable $ 4.2 $ 4.2
Accumulated depreciation and amortization $ 472.1 $ 452.3
Common Stock, No Par Value $ 0 $ 0
Common Stock, Shares Authorized 200,000,000 200,000,000
Common Stock, Shares, Outstanding 43,066,571 42,898,158
Treasury Stock, Shares 11,126,280 11,135,446
v3.21.2
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, 2019 $ 1,083.6 $ 0.0 $ (728.7) $ 655.0 $ 1,217.9 $ (60.6)
Balance (in shares) at Dec. 31, 2019   42,848,359        
Increase (Decrease) in Stockholders' Equity            
Net income 23.9       23.9  
Other comprehensive loss:            
Unrealized holding gains (losses) arising during period (4.1)         (4.1)
Reclassification of adjustments for gain included in net income, net of income tax 0.3         0.3
Foreign currency translation adjustment (40.4)         (40.4)
Other comprehensive loss, net (44.2)         (44.2)
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)   121,689        
Stock Issued During Period, Value, Stock Options Exercised and Vesting of Restricted Stock (10.6)     (10.6)    
Reclassification of awards previously liability-classified that were converted to equity 5.5     5.5    
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition            
Stock-based compensation 7.3     7.3    
Common share repurchased (in shares)   (176,925)        
Common shares repurchased (20.0)   (20.0)      
Dividends declared (12.8)       (12.8)  
Balance at Mar. 31, 2020 1,032.7 $ 0.0 (748.7) 657.2 1,229.0 (104.8)
Balance (in shares) at Mar. 31, 2020   42,793,123        
Balance at Dec. 31, 2019 1,083.6 $ 0.0 (728.7) 655.0 1,217.9 (60.6)
Balance (in shares) at Dec. 31, 2019   42,848,359        
Increase (Decrease) in Stockholders' Equity            
Net income 72.1          
Other comprehensive loss:            
Unrealized holding gains (losses) arising during period (1.3)          
Reclassification of adjustments for gain included in net income, net of income tax (0.4)          
Foreign currency translation adjustment (27.6)          
Other comprehensive loss, net (29.3)          
Balance at Jun. 30, 2020 1,086.9 $ 0.0 (747.4) 659.9 1,264.3 (89.9)
Balance (in shares) at Jun. 30, 2020   42,921,183        
Balance at Mar. 31, 2020 1,032.7 $ 0.0 (748.7) 657.2 1,229.0 (104.8)
Balance (in shares) at Mar. 31, 2020   42,793,123        
Increase (Decrease) in Stockholders' Equity            
Net income 48.2       48.2  
Other comprehensive 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 (0.7)         (0.7)
Foreign currency translation adjustment 12.8         12.8
Other comprehensive loss, net 14.9         14.9
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)   128,060        
Stock Issued During Period, Value, Stock Options Exercised and Vesting of Restricted Stock (6.6)   1.3 (7.9)    
Reclassification of awards previously liability-classified that were converted to equity 0.3     0.3    
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition            
Stock-based compensation 10.3     10.3    
Common share repurchased (in shares)   0        
Common shares repurchased 0.0          
Dividends declared (12.9)       (12.9)  
Balance at Jun. 30, 2020 1,086.9 $ 0.0 (747.4) 659.9 1,264.3 (89.9)
Balance (in shares) at Jun. 30, 2020   42,921,183        
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 42,898,158        
Increase (Decrease) in Stockholders' Equity            
Net income $ 54.9       54.9  
Other comprehensive 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 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) $ 0.0 0.0 (6.3) 0.0 0.0
Reclassification of awards previously liability-classified that were converted to equity 8.7 $ 0.0 0.0 8.7 0.0 0.0
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition            
Stock-based compensation 8.1     8.1    
Common share repurchased (in shares)   0        
Common shares repurchased 0.0   0.0      
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 42,898,158        
Increase (Decrease) in Stockholders' Equity            
Net income $ 87.8          
Other comprehensive loss:            
Unrealized holding gains (losses) arising during period 4.9          
Reclassification of adjustments for gain included in net income, net of income tax (2.2)          
Foreign currency translation adjustment 4.6          
Other comprehensive loss, net 7.3          
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 43,066,571        
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 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 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) $ 0.0 2.2 (14.2) 0.0 0.0
Reclassification of awards previously liability-classified that were converted to equity 0.1 $ 0.0 0.0 0.1 0.0 0.0
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition            
Stock-based compensation 11.8     11.8    
Common share repurchased (in shares)   0        
Common shares repurchased 0.0   0.0      
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 43,066,571        
v3.21.2
Condensed Consolidated Statement of Equity (Parenthetical) - $ / shares
3 Months Ended 6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
Statement of Stockholders' Equity [Abstract]        
Dividends declared (in dollars per share) $ 0.32 $ 0.30 $ 0.63 $ 0.60
v3.21.2
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Operating activities    
Consolidated net income $ 87.8 $ 72.1
Adjustments to reconcile consolidated net income to net cash flows from operating activities:    
Depreciation and amortization 74.2 67.9
Deferred income taxes (4.8) 0.7
Stock-based compensation expense 19.9 17.6
Provision for bad debt 1.0 2.3
Equity in net (income) loss of unconsolidated entities (2.7) 1.3
Acquisition earn-out accrual 26.6 0.0
Other, net (3.6) 3.8
Changes in operating assets and liabilities:    
Accounts receivable (27.2) 2.1
Accounts payable and accrued liabilities (8.7) (0.7)
Accrued compensation and deferred commissions (28.2) (39.1)
Income taxes, current (11.4) 12.2
Deferred revenue 75.2 40.7
Other assets and liabilities (6.7) (4.6)
Cash provided by operating activities 191.4 176.3
Investing activities    
Purchases of investment securities (42.7) (31.2)
Proceeds from maturities and sales of investment securities 29.0 28.0
Capital expenditures (41.4) (32.1)
Acquisitions, net of cash acquired 0.0 (15.5)
Purchases of equity- and cost-method investments (14.5) (6.5)
Other, net 0.4 0.1
Cash used for investing activities (69.2) (57.2)
Financing activities    
Common shares repurchased 0.0 (20.0)
Dividends paid (27.0) (25.7)
Proceeds from revolving credit facility 0.0 55.0
Repayment of revolving credit facility 0.0 (80.6)
Repayment of term facility (75.0) 0.0
Proceeds from stock-option exercises 0.2 0.4
Employee taxes withheld for restricted stock units (18.5) (17.7)
Payment of acquisition-related earn-outs (34.4) 0.0
Other, net (0.6) (2.0)
Cash used for financing activities (155.3) (90.6)
Effect of exchange rate changes on cash and cash equivalents (1.8) (8.9)
Net decrease in cash and cash equivalents (34.9) 19.6
Cash and cash equivalents—beginning of period 422.5 334.1
Cash and cash equivalents—end of period 387.6 353.7
Supplemental disclosure of cash flow information:    
Cash paid for income taxes 44.2 10.6
Cash paid for interest 5.6 5.8
Supplemental information of non-cash investing and financing activities:    
Unrealized gain (loss) on available-for-sale investments $ 3.3 $ (2.2)
v3.21.2
Basis of Presentation of Interim Financial Information
6 Months Ended
Jun. 30, 2021
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, 2020, filed with the SEC on February 26, 2021 (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

COVID-19 Update

We continue to closely monitor the impact of the COVID-19 pandemic on all aspects of our business and in the geographies in which we operate, including how it affects our team members, customers, suppliers, and the global markets. Since the situation surrounding the COVID-19 pandemic remains fluid with the emergence of new variants of the virus and vaccine distribution and adoption at various stages across geographies, we are actively managing our response and have assessed potential impacts to our financial position and operating results related to our consolidated financial statements for the three and six months ended June 30, 2021.
v3.21.2
Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2021
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.

Recently adopted accounting pronouncements

Income Taxes: On December 18, 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (ASU No. 2019-12), which is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of ASC 740, Income Taxes, and providing for simplification in several other areas. The new standard became effective for us on January 1, 2021. The adoption of ASU No. 2019-12 did not have a material impact on our consolidated financial statements, related disclosures, or results of operations.
Recently issued accounting pronouncements not yet adopted

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. The optional expedients apply to our Credit Agreement and allow the Company to account for modifications due to reference rate reform by prospectively adjusting the effective interest rate on the Credit Agreement. As of June 30, 2021, we have not modified the Credit Agreement related to reference rate reform. We plan to apply the optional practical expedients and exceptions to modifications of the Credit Agreement affected by reference rate reform and are evaluating the effect on our consolidated financial statements, related disclosures, and results of operations.
v3.21.2
Credit Arrangements
6 Months Ended
Jun. 30, 2021
Debt Disclosure [Abstract]  
Credit Arrangements Credit Arrangements
Long-term Debt

The following table summarizes our long-term debt as of June 30, 2021 and December 31, 2020.
(in millions)As of June 30, 2021As of December 31, 2020
Term Facility, net of unamortized debt issuance costs of $0.0 million and $0.1 million, respectively
$26.0 $100.8 
2.32% Senior Notes due October 26, 2030, net of unamortized debt issuance costs of $1.7 million and $1.7 million, respectively348.3 348.3 
Long-term debt$374.3 $449.1 

Credit Agreement

On July 2, 2019, the Company entered into a senior credit agreement (the Credit Agreement). The Credit Agreement provides 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 Revolving Credit Facility) and a term loan facility of $450.0 million (the Term Facility). The 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 facility under the Revolving Credit Facility. The Credit Agreement will expire on July 2, 2024. As of June 30, 2021, our total outstanding debt under the Credit Agreement was $26.0 million with borrowing availability of $300.0 million under the Revolving Credit Facility.

The interest rate applicable to any loan under the Credit Agreement is, at our option, either: (i) the applicable LIBOR plus an applicable margin for such loans, which ranges between 1.00% and 1.50%, based on our consolidated leverage ratio or (ii) the lender's base rate plus the applicable margin for such loans, which ranges between 0.00% and 0.50%, based on our consolidated leverage ratio.
The proceeds of the Term Facility and initial borrowings under the Revolving Credit Facility were used to finance the acquisition of DBRS. The proceeds of future borrowings under the Revolving Credit Facility may be used for working capital, capital expenditures or any other lawful corporate purpose.
The portions of deferred debt issuance costs related to the Revolving Credit Facility are included in other current and other non-current assets, and the portion of deferred debt issuance costs related to the Term Facility is reported as a reduction to the carrying amount of the Term Facility. Debt issuance costs related to the Revolving Credit Facility are amortized on a straight-line basis to interest expense over the term of the Credit Agreement. Debt issuance costs related to the Term Facility are amortized to interest expense using the effective interest method over the term of the Credit Agreement.

364-Day Revolving Credit Facility

On June 30, 2020, we entered into a 364-day revolving credit facility (364-Day Revolving Credit Facility) providing for borrowings in an aggregate principal amount of up to $50.0 million. The 364-Day Revolving Credit Facility expired on June 29, 2021 and we chose not to renew the facility upon expiration.

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 Credit Agreement. Interest on the 2030 Notes will be paid semi-annually on each October 30 and April 30 during the term of the 2030 Notes and at maturity, with the first interest payment date occurring on April 30, 2021. As of June 30, 2021, our total outstanding debt (net of issuance costs) under the 2030 Notes was $348.3 million.

Compliance with Covenants

Each of the 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 tested on a quarterly basis. We were in compliance with these financial covenants as of June 30, 2021.
v3.21.2
Acquisitions, Goodwill and Other Intangible Assets
6 Months Ended
Jun. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Acquisitions, Goodwill and Other Intangible Assets Acquisitions, Goodwill, and Other Intangible Assets
2021 Acquisitions
We did not complete any acquisitions during the second quarter or first six months of 2021.

2020 Acquisitions
During the second quarter of 2021, we finalized the purchase price allocation related to our acquisition of Sustainalytics and did not record any significant adjustments compared with the preliminary estimates disclosed in the Notes to the Audited Consolidated Financial Statements included in our Annual Report.

Goodwill
The following table shows the changes in our goodwill balances from December 31, 2020 to June 30, 2021:

 (in millions)
Balance as of December 31, 2020$1,205.0 
Other, primarily foreign currency translation3.7 
Balance as of June 30, 2021$1,208.7 
We did not record any goodwill impairment losses in the first six months of 2021 and 2020. 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 June 30, 2021As of December 31, 2020
(in millions)GrossAccumulated
Amortization
NetWeighted
Average
Useful  Life
(years)
GrossAccumulated
Amortization
NetWeighted
Average
Useful  Life
(years)
Customer-related assets$419.5 $(179.7)$239.8 11$415.6 $(163.7)$251.9 11
Technology-based assets223.2 (147.2)76.0 7223.2 (135.2)88.0 7
Intellectual property & other84.4 (47.2)37.2 883.6 (43.4)40.2 8
Total intangible assets$727.1 $(374.1)$353.0 10$722.4 $(342.3)$380.1 10
 
The following table summarizes our amortization expense related to intangible assets:

 Three months ended June 30,Six months ended June 30,
(in millions)2021202020212020
Amortization expense$15.7 $13.7 $31.3 $27.7 
 
We amortize intangible assets using the straight-line method over their expected economic useful lives.

Based on acquisitions and divestitures completed through June 30, 2021, we expect intangible amortization expense for the remainder of 2021 and subsequent years to be as follows:
 (in millions)
Remainder of 2021 (July 1 through December 31)$30.4 
202253.7 
202349.9 
202443.6 
202536.9 
Thereafter138.5 
Total$353.0 
 
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.
v3.21.2
Income Per Share
6 Months Ended
Jun. 30, 2021
Earnings Per Share [Abstract]  
Income Per Share Income Per Share
The following table shows how we reconcile our net income and the number of shares used in computing basic and diluted net income per share:
 Three months ended June 30,Six months ended June 30,
(in millions, except share and per share amounts)2021202020212020
Basic net income per share:  
Consolidated net income $32.9 $48.2 $87.8 $72.1 
Weighted average common shares outstanding43.0 42.9 43.0 42.9 
Basic net income per share$0.77 $1.13 $2.04 $1.68 
Diluted net income per share:
Consolidated net income $32.9 $48.2 $87.8 $72.1 
Weighted average common shares outstanding43.0 42.9 43.0 42.9 
Net effect of dilutive stock options and restricted stock units0.3 0.3 0.3 0.3 
Weighted average common shares outstanding for computing diluted income per share43.3 43.2 43.3 43.2 
Diluted net income per share$0.76 $1.12 $2.03 $1.67 

During the periods presented, there were no anti-dilutive restricted stock units, performance share awards, or market stock units excluded from our calculation of diluted earnings per share.
v3.21.2
Revenue
6 Months Ended
Jun. 30, 2021
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 June 30,Six months ended June 30,
(in millions)2021202020212020
License-based $277.2 $221.1 $543.3 $437.1 
Asset-based64.8 51.8 126.2 109.0 
Transaction-based73.4 55.0 138.7 105.8 
Consolidated revenue$415.4 $327.9 $808.2 $651.9 

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 Advisor Workstation, Sustainalytics, 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 June 30, 2021 had a net increase of $74.5 million, primarily driven by cash payments received or payable in advance of satisfying our performance obligations. We recognized $228.4 million of revenue in the six months ended June 30, 2021 that was included in the contract liabilities balance as of December 31, 2020.

We expect to recognize revenue related to our contract liabilities for the remainder of 2021 and subsequent years as follows:
(in millions)As of June 30, 2021
Remainder of 2021 (from July 1 through December 31)$414.0 
2022298.4 
202390.4 
202424.0 
20258.8 
Thereafter34.8 
Total$870.4 

The aggregate amount of revenue we expect to recognize for the remainder of 2021 and subsequent years is higher than our contract liability balance of $414.8 million as of June 30, 2021. The difference represents the value of future obligations for signed contracts where we have not yet begun to satisfy the performance obligations or have partially satisfied performance obligations.

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 June 30, 2021. 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 June 30, 2021, 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 June 30, 2021. 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 June 30, 2021As of December 31, 2020
Accounts receivable, less allowance for credit losses$231.0 $205.1 
Deferred commissions47.7 39.6 
Total contract assets$278.7 $244.7 
v3.21.2
Segment and Geographical Area Information
6 Months Ended
Jun. 30, 2021
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 June 30,Six months ended June 30,
(in millions)2021202020212020
United States$284.6 $228.3 $554.1 $462.9 
Asia9.7 8.3 19.7 15.9 
Australia14.7 10.4 28.2 21.0 
Canada30.8 28.3 58.2 49.0 
Continental Europe38.9 23.9 75.1 46.9 
United Kingdom34.4 27.0 68.5 53.0 
Other2.3 1.7 4.4 3.2 
Total International130.8 99.6 254.1 189.0 
Consolidated revenue$415.4 $327.9 $808.2 $651.9 
Property, equipment, and capitalized software, net by geographical area
(in millions)As of June 30, 2021As of December 31, 2020
United States$128.7 $127.0 
Asia6.5 7.5 
Australia3.2 3.7 
Canada2.8 2.9 
Continental Europe8.8 6.2 
United Kingdom7.4 7.3 
Other0.4 0.5 
Total International29.1 28.1 
Consolidated property, equipment, and capitalized software, net$157.8 $155.1 
Operating lease assets by geographical area
(in millions)As of June 30, 2021As of December 31, 2020
United States$87.9 $89.2 
Asia7.0 12.6 
Australia4.9 5.2 
Canada6.8 7.4 
Continental Europe16.2 17.0 
United Kingdom13.5 15.6 
Other0.6 0.7 
Total International49.0 58.5 
Consolidated operating lease assets$136.9 $147.7 

The long-lived assets by geographical area do not include deferred commissions, non-current as the balance is not material.
v3.21.2
Fair Value Measurement of Investments
6 Months Ended
Jun. 30, 2021
Fair Value Disclosures [Abstract]  
Investments and Fair Value Measurements Fair Value MeasurementsAs of June 30, 2021 and December 31, 2020, our investment balances totaled $61.4 million and $41.7 million, respectively. We classify our investments into three categories: 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. With the exception of the convertible note described below, 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.
As of June 30, 2021, financial liabilities that are classified as Level 3 within the fair value hierarchy include a $5.0 million convertible note and contingent consideration liability of $18.2 million that reflect potential future payments that are contingent upon the achievement of certain revenue metrics related to our acquisition of Sustainalytics that will be paid on June 30, 2022. This additional purchase consideration, for which the amount is contingent, is recognized at fair value at the date of acquisition using a Monte Carlo simulation, which requires the use of management assumptions and inputs, such as projected financial information related to revenue growth and expected margin percentage, among other valuation related items, and is remeasured each reporting period until the contingency is resolved with any changes in fair value recorded in current period earnings. At June 30, 2021, the fair value of the contingent consideration liability was impacted by foreign currency translations and not by adjustments to key assumptions used in our fair value estimates compared to the assumptions used in the acquisition date fair value estimates.

The convertible note has been recorded as an available-for-sale security. As of June 30, 2021, cost was deemed to be a reasonable approximation of fair value. The convertible note will be remeasured each reporting period until it is converted.

In the second quarter of 2021, we made the second cash payment of $47.5 million related to our acquisition of Sustainalytics, which resulted in a decrease of $34.4 million to the contingent consideration liability balance. The payment was based on the achievement of certain revenue metrics for the year ended December 31, 2020.
v3.21.2
Leases
6 Months Ended
Jun. 30, 2021
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.
The following table summarizes our operating lease assets and lease liabilities:

Leases (in millions)Classification on the Balance SheetAs of June 30, 2021As of December 31, 2020
Assets
OperatingOperating lease assets$136.9 $147.7 
Liabilities
OperatingOperating lease liabilities, current$35.0 $39.9 
OperatingOperating lease liabilities, non-current128.2 137.7 
Total lease liabilities$163.2 $177.6 

Our operating lease expense for the three months ended June 30, 2021 was $11.0 million, compared with $10.1 million for the three months ended June 30, 2020. Charges related to our operating leases that are variable and, therefore, not included in the measurement of the lease liabilities, were $3.6 million for the three months ended June 30, 2021, compared with $3.5 million for the three months ended June 30, 2020. We made lease payments of $11.7 million during the three months ended June 30, 2021, compared with $10.6 million during the three months ended June 30, 2020.

Our operating lease expense for the six months ended June 30, 2021 was $21.9 million, compared with $19.8 million for the six months ended June 30, 2020. Charges related to our operating leases that are variable and, therefore, not included in the measurement of the lease liabilities, were $8.0 million for the six months ended June 30, 2021, compared with $6.9 million for the six months ended June 30, 2020. We made lease payments of $24.0 million during the six months ended June 30, 2021, compared with $21.1 million during the six months ended June 30, 2020.

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 2021 (July 1 through December 31)$23.2 
202232.8 
202331.5 
202422.4 
202519.9 
Thereafter56.2 
Total minimum lease commitments186.0 
Adjustment for discount to present value22.8 
Total$163.2 

The following table summarizes the weighted-average lease terms and weighted-average discount rates for our operating leases:
As of June 30, 2021
Weighted-average remaining lease term (in years)6.4
Weighted-average discount rate3.9 %
v3.21.2
Stock-Based Compensation
6 Months Ended
Jun. 30, 2021
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 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 June 30,Six months ended June 30,
(in millions)2021202020212020
Cost of revenue$4.9 $3.7 $7.3 $6.1 
Sales and marketing1.1 1.2 2.0 2.2 
General and administrative5.8 5.4 10.6 9.3 
Total stock-based compensation expense$11.8 $10.3 $19.9 $17.6 

As of June 30, 2021, the total unrecognized stock-based compensation cost related to outstanding restricted stock units, performance share awards, and market stock units expected to vest was $77.1 million, which we expect to recognize over a weighted average period of 33 months.
v3.21.2
Income Taxes
6 Months Ended
Jun. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Effective Tax Rate

The following table shows our effective tax rate for the three and six months ended June 30, 2021 and June 30, 2020:

 Three months ended June 30,Six months ended June 30,
(in millions)2021202020212020
Income before income taxes and equity in net income (loss) of unconsolidated entities$45.8 $63.9 $113.1 $97.1 
Equity in net income (loss) of unconsolidated entities1.0 (0.5)2.7 (1.3)
Total$46.8 $63.4 $115.8 $95.8 
Income tax expense$13.9 $15.2 $28.0 $23.7 
Effective tax rate29.7 %24.0 %24.2 %24.7 %
 
Our effective tax rate in the second quarter and first six months of 2021 was 29.7% and 24.2%, respectively, reflecting an increase of 5.7 percentage points and a decrease of 0.5 percentage points, compared with the same period in the prior year. The increase in the second quarter of 2021 is primarily attributable to compensation expense related to a higher estimate of the final earn-out payment due in 2022 for the Sustainalytics acquisition that is not deductible for tax purposes, which is partially offset by the recognition of excess tax benefits for stock-based compensation.

Unrecognized Tax Benefits

The table below provides information concerning our gross unrecognized tax benefits as of June 30, 2021 and December 31, 2020, 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 June 30, 2021As of December 31, 2020
Gross unrecognized tax benefits$11.0 $11.8 
Gross unrecognized tax benefits that would affect income tax expense$11.0 $11.8 
Decrease in income tax expense upon recognition of gross unrecognized tax benefits$10.9 $11.6 

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 June 30, 2021As of December 31, 2020
Current liability$6.3 $7.6 
Non-current liability5.7 5.1 
Total liability for unrecognized tax benefits$12.0 $12.7 

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 2021. It is not possible to estimate the effect of current audits on previously recorded unrecognized tax benefits.

Approximately 64% of our cash, cash equivalents, and investments balance as of June 30, 2021 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.
v3.21.2
Contingencies
6 Months Ended
Jun. 30, 2021
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. When a loss contingency is not 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 June 30, 2021 include an immaterial accrual related to certain in-progress audits and reviews.
Credit Ratings Matters
On February 16, 2021, the SEC filed a civil action in the United States District Court for the Southern District of New York against Morningstar Credit Ratings, LLC (MCR). MCR was formerly registered with the SEC as a Nationally Recognized Statistical Ratings Organization (NRSRO), but effective in December 2019, it withdrew its NRSRO registration. MCR no longer operates as a credit rating agency. The SEC’s complaint relates to MCR’s former commercial mortgage-backed securities ratings methodology during the period from 2015 to March 2017, and it alleges violations of certain filing and internal control requirements that applied to MCR when it was an NRSRO. On April 19, 2021, MCR filed a motion with the Court to dismiss the complaint. The motion to dismiss is fully briefed and awaiting a decision from the court. Our financial results as of June 30, 2021 include an immaterial accrual related to this matter.

On July 28, 2021, DBRS, Inc. (DBRS) reached an agreement in principle with the staff of the SEC to settle an investigation relating to certain of its policies and procedures used in connection with its credit ratings on five U.S. Collateralized Loan Obligation (CLO) combination notes that were assigned between 2016 and 2019. The staff of the Division of Enforcement of the SEC previously provided a Wells Notice to DBRS in connection with this matter in April 2021, to which DBRS responded in May 2021. Assuming it is approved by the SEC, the proposed settlement would involve a censure, a cease-and-desist order, certain undertakings by DBRS, and a civil money penalty of $1.0 million. The settlement remains subject to approval by the SEC. DBRS has not assigned a credit rating on a CLO combination note since 2019. At this time, only two DBRS credit ratings on CLO combination notes remain outstanding.

At this time, we do not believe the outcome in either 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 regulatory investigations and legal proceedings that arise in the normal course of our business. 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.
v3.21.2
Share Repurchase Program
6 Months Ended
Jun. 30, 2021
Equity [Abstract]  
Treasury Stock Share Repurchase Program
 
In December 2020, the board of directors approved a new 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. The new 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.
As of June 30, 2021, we have not repurchased any shares under the new program, leaving $400.0 million available for future repurchases.
v3.21.2
Subsequent Events (Notes)
6 Months Ended
Jun. 30, 2021
Subsequent Events [Abstract]  
Subsequent Events Subsequent EventsOn July 28, 2021, DBRS, Inc. (DBRS) reached an agreement in principle with the staff of the SEC to settle an investigation relating to certain of its policies and procedures used in connection with its credit ratings on five U.S. Collateralized Loan Obligation combination notes. Assuming it is approved by the SEC, the proposed settlement would involve a censure, a cease-and-desist order, certain undertakings by DBRS, and a civil money penalty of $1.0 million. The settlement remains subject to approval by the SEC.
v3.21.2
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2021
Accounting Policies [Abstract]  
Recent Accounting Pronouncements Policy
Recently adopted accounting pronouncements

Income Taxes: On December 18, 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (ASU No. 2019-12), which is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of ASC 740, Income Taxes, and providing for simplification in several other areas. The new standard became effective for us on January 1, 2021. The adoption of ASU No. 2019-12 did not have a material impact on our consolidated financial statements, related disclosures, or results of operations.
Recently issued accounting pronouncements not yet adopted

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. The optional expedients apply to our Credit Agreement and allow the Company to account for modifications due to reference rate reform by prospectively adjusting the effective interest rate on the Credit Agreement. As of June 30, 2021, we have not modified the Credit Agreement related to reference rate reform. We plan to apply the optional practical expedients and exceptions to modifications of the Credit Agreement affected by reference rate reform and are evaluating the effect on our consolidated financial statements, related disclosures, and results of operations.
v3.21.2
Fair Value Measures and Disclosures (Policies)
6 Months Ended
Jun. 30, 2021
Fair Value Disclosures [Abstract]  
Investments- Debt and Equity Securities Policy We classify our investments into three categories: available-for-sale, held-to-maturity, and trading securities
v3.21.2
Leases, Codification Topic 842 (Policies)
6 Months Ended
Jun. 30, 2021
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.
v3.21.2
Credit Arrangements (Tables)
6 Months Ended
Jun. 30, 2021
Debt Disclosure [Abstract]  
Summary of Total Debt and Long-term Debt
The following table summarizes our long-term debt as of June 30, 2021 and December 31, 2020.
(in millions)As of June 30, 2021As of December 31, 2020
Term Facility, net of unamortized debt issuance costs of $0.0 million and $0.1 million, respectively
$26.0 $100.8 
2.32% Senior Notes due October 26, 2030, net of unamortized debt issuance costs of $1.7 million and $1.7 million, respectively348.3 348.3 
Long-term debt$374.3 $449.1 
v3.21.2
Acquisitions, Goodwill and Other Intangible Assets (Tables)
6 Months Ended
Jun. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Goodwill
The following table shows the changes in our goodwill balances from December 31, 2020 to June 30, 2021:

 (in millions)
Balance as of December 31, 2020$1,205.0 
Other, primarily foreign currency translation3.7 
Balance as of June 30, 2021$1,208.7 
Schedule of Intangible Assets
The following table summarizes our intangible assets: 

 As of June 30, 2021As of December 31, 2020
(in millions)GrossAccumulated
Amortization
NetWeighted
Average
Useful  Life
(years)
GrossAccumulated
Amortization
NetWeighted
Average
Useful  Life
(years)
Customer-related assets$419.5 $(179.7)$239.8 11$415.6 $(163.7)$251.9 11
Technology-based assets223.2 (147.2)76.0 7223.2 (135.2)88.0 7
Intellectual property & other84.4 (47.2)37.2 883.6 (43.4)40.2 8
Total intangible assets$727.1 $(374.1)$353.0 10$722.4 $(342.3)$380.1 10
Schedule of Intangible Asset, Amortization Expense
The following table summarizes our amortization expense related to intangible assets:

 Three months ended June 30,Six months ended June 30,
(in millions)2021202020212020
Amortization expense$15.7 $13.7 $31.3 $27.7 
Schedule of Expected Amortization Expense
Based on acquisitions and divestitures completed through June 30, 2021, we expect intangible amortization expense for the remainder of 2021 and subsequent years to be as follows:
 (in millions)
Remainder of 2021 (July 1 through December 31)$30.4 
202253.7 
202349.9 
202443.6 
202536.9 
Thereafter138.5 
Total$353.0 
v3.21.2
Income Per Share (Tables)
6 Months Ended
Jun. 30, 2021
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share, Basic and Diluted
The following table shows how we reconcile our net income and the number of shares used in computing basic and diluted net income per share:
 Three months ended June 30,Six months ended June 30,
(in millions, except share and per share amounts)2021202020212020
Basic net income per share:  
Consolidated net income $32.9 $48.2 $87.8 $72.1 
Weighted average common shares outstanding43.0 42.9 43.0 42.9 
Basic net income per share$0.77 $1.13 $2.04 $1.68 
Diluted net income per share:
Consolidated net income $32.9 $48.2 $87.8 $72.1 
Weighted average common shares outstanding43.0 42.9 43.0 42.9 
Net effect of dilutive stock options and restricted stock units0.3 0.3 0.3 0.3 
Weighted average common shares outstanding for computing diluted income per share43.3 43.2 43.3 43.2 
Diluted net income per share$0.76 $1.12 $2.03 $1.67 
v3.21.2
Revenue (Tables)
6 Months Ended
Jun. 30, 2021
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 June 30,Six months ended June 30,
(in millions)2021202020212020
License-based $277.2 $221.1 $543.3 $437.1 
Asset-based64.8 51.8 126.2 109.0 
Transaction-based73.4 55.0 138.7 105.8 
Consolidated revenue$415.4 $327.9 $808.2 $651.9 
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction
We expect to recognize revenue related to our contract liabilities for the remainder of 2021 and subsequent years as follows:
(in millions)As of June 30, 2021
Remainder of 2021 (from July 1 through December 31)$414.0 
2022298.4 
202390.4 
202424.0 
20258.8 
Thereafter34.8 
Total$870.4 
Summary of Contract Assets and Change in Deferred Commissions
The following table summarizes our contract assets balance:
(in millions)As of June 30, 2021As of December 31, 2020
Accounts receivable, less allowance for credit losses$231.0 $205.1 
Deferred commissions47.7 39.6 
Total contract assets$