MORNINGSTAR, INC., 10-Q filed on 4/28/2023
Quarterly Report
v3.23.1
Cover page - shares
3 Months Ended
Mar. 31, 2023
Apr. 21, 2023
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Mar. 31, 2023  
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 2023  
Document Fiscal Period Focus Q1  
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   42,550,975
v3.23.1
Condensed Consolidated Statements of Income - USD ($)
shares in Millions, $ in Millions
3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Income Statement [Abstract]    
Revenue $ 479.7 $ 457.0
Operating expense:    
Cost of revenue 218.8 191.3
Sales and marketing 107.6 81.4
General and administrative 84.0 90.3
Depreciation and amortization 44.8 37.6
Total operating expense 455.2 400.6
Operating income 24.5 56.4
Non-operating income (loss), net:    
Interest expense, net (13.3) (2.4)
Realized gain on sale of investments, reclassified from other comprehensive income 0.2 1.0
Expense from equity method transaction, net (11.8) 0.0
Other income, net 2.5 8.0
Non-operating income (loss), net (22.4) 6.6
Income (loss) before income taxes and equity in investments of unconsolidated entities 2.1 63.0
Equity in investments of unconsolidated entities (1.3) 0.4
Income tax expense 8.4 17.3
Consolidated net income (loss) $ (7.6) $ 46.1
Net income per share:    
Basic (in dollars per share) $ (0.18) $ 1.07
Diluted (in dollars per share) (0.18) 1.06
Dividends declared (in dollars per share) 0.38 0.36
Dividends paid per common share (in dollars per share) $ 0.38 $ 0.36
Weighted average shares outstanding:    
Basic (in shares) 42.5 43.0
Diluted (in shares) 42.8 43.3
v3.23.1
Condensed Consolidated Statements of Comprehensive Income - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Statement of Comprehensive Income [Abstract]    
Consolidated net income (loss) $ (7.6) $ 46.1
Other comprehensive income (loss), net of tax:    
Foreign currency translation adjustment, net 7.1 (5.0)
Unrealized gains (losses) on securities:    
Unrealized holding gains (losses) arising during period 0.1 (4.8)
Reclassification of gains on investments included in net income (0.2) (0.7)
Other comprehensive income (loss), net 7.0 (10.5)
Comprehensive income (loss) $ (0.6) $ 35.6
v3.23.1
Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Mar. 31, 2023
Dec. 31, 2022
Current assets:    
Cash and cash equivalents $ 352.2 $ 376.6
Investments 33.2 38.0
Accounts receivable, less allowance for credit losses of $6.2 million and $6.6 million, respectively 297.9 307.9
Deferred commissions 42.1 40.7
Prepaid expenses 48.3 36.7
Other current assets 7.6 10.9
Total current assets 781.3 810.8
Goodwill 1,577.2 1,571.7
Intangible assets, net 532.6 548.6
Property, equipment, and capitalized software, less accumulated depreciation and amortization of $638.2 million and $610.7 million, respectively 201.5 199.4
Operating lease assets 184.6 191.6
Investments in unconsolidated entities 117.7 96.0
Deferred tax asset, net 11.2 10.8
Deferred commissions 34.3 35.4
Other assets 10.3 10.5
Total assets 3,450.7 3,474.8
Current liabilities:    
Deferred revenue 502.3 455.6
Accrued compensation 133.6 220.1
Accounts payable and accrued liabilities 69.6 76.2
Current portion of long-term debt 32.1 32.1
Operating lease liabilities 36.1 37.3
Contingent consideration liability 0.0 50.0
Other current liabilities 70.7 11.2
Total current liabilities 844.4 882.5
Operating lease liabilities 170.3 176.7
Accrued compensation 20.8 20.7
Deferred tax liabilities, net 65.7 62.9
Long-term debt 1,099.4 1,077.5
Deferred revenue 31.4 33.5
Other long-term liabilities 14.0 13.9
Total liabilities 2,246.0 2,267.7
Morningstar, Inc. shareholders’ equity:    
Common stock, no par value, 200,000,000 shares authorized, of which 42,550,943 and 42,480,051 shares were outstanding as of March 31, 2023 and December 31, 2022, respectively 0.0 0.0
Treasury stock at cost, 11,991,484 and 11,991,517 shares as of March 31, 2023 and December 31, 2022, respectively (986.7) (986.7)
Additional paid-in capital 772.0 757.8
Retained earnings 1,511.4 1,535.0
Accumulated other comprehensive loss:    
Currency translation adjustment (91.9) (99.0)
Unrealized gain on available-for-sale investments (0.1) 0.0
Total accumulated other comprehensive loss (92.0) (99.0)
Total equity 1,204.7 1,207.1
Total liabilities and equity $ 3,450.7 $ 3,474.8
v3.23.1
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Mar. 31, 2023
Dec. 31, 2022
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts receivable $ 6.2 $ 6.6
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) 42,550,943 42,480,051
Treasury Stock, Common, Shares 11,991,484 11,991,517
v3.23.1
Condensed Consolidated Statement of Equity - USD ($)
$ in Millions
Total
Common Stock
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Treasury Stock, Common
Balance at Dec. 31, 2021 $ 1,415.9 $ 0.0 $ 689.0 $ 1,526.5 $ (35.3) $ (764.3)
Balance (in shares) at Dec. 31, 2021   43,136,273        
Increase (Decrease) in Stockholders' Equity            
Consolidated net income (loss) 46.1     46.1    
Other comprehensive income (loss):            
Unrealized gain (loss) on available-for-sale investments, net of tax (4.8)       (4.8)  
Reclassification of adjustments for gain on investments included in net income, net of tax (0.7)       (0.7)  
Foreign currency translation adjustment, net (5.0)       (5.0)  
Other comprehensive income (loss), net (10.5)       (10.5)  
Issuance of common stock related to vesting of stock awards, net of shares withheld for taxes on settlements of stock awards   34,350        
Issuance of common stock related to vesting of stock awards, net of shares withheld for taxes on settlements of stock awards (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 $ 0.0 715.2 1,557.2 (45.8) (874.9)
Balance (in shares) at Mar. 31, 2022   42,767,652        
Balance at Dec. 31, 2022 $ 1,207.1 $ 0.0 757.8 1,535.0 (99.0) (986.7)
Balance (in shares) at Dec. 31, 2022 42,480,051 42,480,051        
Increase (Decrease) in Stockholders' Equity            
Consolidated net income (loss) $ (7.6)          
Other comprehensive income (loss):            
Unrealized gain (loss) on available-for-sale investments, net of tax 0.1       0.1  
Reclassification of adjustments for gain on investments included in net income, net of tax (0.2)       (0.2)  
Foreign currency translation adjustment, net 7.1       7.1  
Other comprehensive income (loss), net 7.0       7.0  
Issuance of common stock related to vesting of stock awards, net of shares withheld for taxes on settlements of stock awards   70,892        
Issuance of common stock related to vesting of stock awards, net of shares withheld for taxes on settlements of stock awards (9.4)   (9.4)      
Reclassification of awards previously liability-classified that were converted to equity 11.4   11.4      
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition            
Stock-based compensation 12.2   12.2      
Dividends declared (16.0)     (16.0)    
Balance at Mar. 31, 2023 $ 1,204.7 $ 0.0 $ 772.0 $ 1,511.4 $ (92.0) $ (986.7)
Balance (in shares) at Mar. 31, 2023 42,550,943 42,550,943        
v3.23.1
Condensed Consolidated Statement of Equity (Parenthetical) - $ / shares
3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Statement of Stockholders' Equity [Abstract]    
Dividends declared (in dollars per share) $ 0.38 $ 0.36
v3.23.1
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Operating activities    
Consolidated net income (loss) $ (7.6) $ 46.1
Adjustments to reconcile consolidated net income to net cash flows from operating activities:    
Depreciation and amortization 44.8 37.6
Deferred income taxes 2.0 (6.7)
Stock-based compensation expense 12.2 13.9
Provision for bad debt 1.0 0.0
Equity in investments of unconsolidated entities 1.3 (0.4)
Gain on equity method transaction (49.6) 0.0
Acquisition earn-out accrual 0.0 7.1
Other, net (2.7) (9.0)
Changes in operating assets and liabilities:    
Accounts receivable 9.8 (8.6)
Accounts payable and accrued liabilities (5.8) (2.7)
Accrued compensation and deferred commissions (75.2) (108.7)
Income taxes, current (2.6) 17.1
Deferred revenue 43.4 53.8
Other assets and liabilities 52.4 (16.0)
Cash provided by operating activities 23.4 23.5
Investing activities    
Purchases of investment securities (2.8) (15.9)
Proceeds from maturities and sales of investment securities 5.5 18.2
Capital expenditures (29.5) (28.0)
Acquisitions, net of cash acquired 0.0 (6.8)
Proceeds from sale of equity method investments, net 26.2 0.0
Purchases of investments in unconsolidated entities (0.1) (1.0)
Other, net 0.0 (0.2)
Cash used for investing activities (0.7) (33.7)
Financing activities    
Common shares repurchased 0.0 (110.6)
Dividends paid (15.9) (15.5)
Proceeds from revolving credit facility 95.0 175.0
Repayment of revolving credit facility (65.0) (30.0)
Repayment of term facility (8.1) 0.0
Employee taxes withheld for stock awards (9.3) (7.1)
Payment of acquisition-related earn-outs (45.5) 0.0
Cash provided by (used for) financing activities (48.8) 11.8
Effect of exchange rate changes on cash and cash equivalents 1.7 (1.9)
Net decrease in cash and cash equivalents (24.4) (0.3)
Cash and cash equivalents—beginning of period 376.6 483.8
Cash and cash equivalents—end of period 352.2 483.5
Supplemental disclosure of cash flow information:    
Cash paid for income taxes 9.1 7.0
Cash paid for interest $ 11.9 $ 2.6
v3.23.1
Basis of Presentation of Interim Financial Information
3 Months Ended
Mar. 31, 2023
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, 2022, filed with the SEC on February 24, 2023 (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
v3.23.1
Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2023
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.

Severance: We account for post-employment benefits in accordance with FASB ASC 712, Compensation - Non-retirement Post-employment Benefits (FASB ASC 712). Under FASB ASC 712, we recognize compensation expense associated with these benefits as a liability when probable and estimable.

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.

As a result of these activities, the Company incurred $25.9 million of severance expense in 2022, which represented substantially all of the severance costs expected to be incurred with the remainder to be recognized through the third quarter of 2023. We recorded an immaterial amount of additional severance expense during the first quarter of 2023. These amounts were recorded within "General and administrative" on our Consolidated Statements of Income. We have $16.2 million of accrued severance remaining as of March 31, 2023, which we expect will be paid through the third quarter of 2023. The liability is recorded within "Accrued compensation - current" on our Consolidated Balance Sheet.
v3.23.1
Credit Arrangements
3 Months Ended
Mar. 31, 2023
Debt Disclosure [Abstract]  
Credit Arrangements Credit Arrangements
Debt

The following table summarizes our debt as of March 31, 2023 and December 31, 2022:
(in millions)As of March 31, 2023As of December 31, 2022
Term Facility, net of unamortized debt issuance costs of $0.7 million and $0.7 million, respectively$633.0 $641.1 
Revolving Credit Facility150.0 120.0 
2.32% Senior Notes due October 26, 2030, net of unamortized debt issuance costs of $1.5 million and $1.5 million, respectively
348.5 348.5 
Total debt$1,131.5 $1,109.6 
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 Leveraged Commentary & Data (LCD) and to repay a portion of the 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 March 31, 2023, our total outstanding debt under the Amended 2022 Credit Agreement was $783.0 million, net of debt issuance costs, with borrowing availability of $500.0 million under the Amended 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 March 31, 2023, our total outstanding debt, net of issuance costs, under the 2030 Notes was $348.5 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 March 31, 2023.
v3.23.1
Acquisitions, Goodwill and Other Intangible Assets
3 Months Ended
Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Acquisitions, Goodwill and Other Intangible Assets Acquisitions, Goodwill, and Other Intangible Assets
2023 Acquisitions

We did not make any acquisitions during the first quarter of 2023.

Goodwill

The following table shows the changes in our goodwill balance from December 31, 2022 to March 31, 2023:

 (in millions)
Balance as of December 31, 2022$1,571.7 
Foreign currency translation5.5 
Balance as of March 31, 2023$1,577.2 
We did not record any goodwill impairment losses in the first three months of 2023 or 2022. 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 March 31, 2023As of December 31, 2022
(in millions)GrossAccumulated
Amortization
NetWeighted
Average
Useful  Life
(years)
GrossAccumulated
Amortization
NetWeighted
Average
Useful  Life
(years)
Customer-related assets$596.4 $(231.7)$364.7 14$595.1 $(221.3)$373.8 14
Technology-based assets313.9 (179.9)134.0 8312.8 (173.8)139.0 8
Intellectual property & other92.2 (58.3)33.9 892.1 (56.3)35.8 8
Total intangible assets$1,002.5 $(469.9)$532.6 12$1,000.0 $(451.4)$548.6 12
 
The following table summarizes our amortization expense related to intangible assets:

 Three months ended March 31,
(in millions)20232022
Amortization expense$17.5 $14.1 
 
We amortize intangible assets using the straight-line method over their expected economic useful lives.
As of March 31, 2023, we expect intangible amortization expense for the remainder of 2023 and subsequent years to be as follows:
 (in millions)
Remainder of 2023 (April 1 through December 31)$53.0 
202464.6 
202556.4 
202652.6 
202745.5 
Thereafter260.5 
Total$532.6 
 
Our estimates of future amortization expense for intangible assets may be affected by future acquisitions, divestitures, changes in the estimated useful lives, impairments, and foreign currency translation.
v3.23.1
Income Per Share
3 Months Ended
Mar. 31, 2023
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 March 31,
(in millions, except share and per share amounts)20232022
Basic net income (loss) per share:  
Consolidated net income (loss)$(7.6)$46.1 
Weighted average common shares outstanding42.5 43.0 
Basic net income (loss) per share$(0.18)$1.07 
Diluted net income (loss) per share:
Consolidated net income (loss)$(7.6)$46.1 
Weighted average common shares outstanding42.5 43.0 
Net effect of dilutive stock options and restricted stock units0.3 0.3 
Weighted average common shares outstanding for computing diluted income per share42.8 43.3 
Diluted net income (loss) per share$(0.18)$1.06 

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.
v3.23.1
Revenue
3 Months Ended
Mar. 31, 2023
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 March 31,
(in millions)20232022
License-based $364.0 $311.9 
Asset-based65.3 68.5 
Transaction-based50.4 76.6 
Consolidated revenue$479.7 $457.0 

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' license-based products, Morningstar Indexes data and services products, DBRS Morningstar's data products, 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, Morningstar Sustainalytics' Second Party Opinions, 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 March 31, 2023 had a net increase of $44.6 million, primarily driven by cash payments received or payable in advance of satisfying our performance obligations. We recognized $209.9 million of revenue in the three months ended March 31, 2023 that was included in the contract liabilities balance as of December 31, 2022.
We expect to recognize revenue related to our contract liabilities, including future billings, for the remainder of 2023 and subsequent years as follows:
(in millions)As of March 31, 2023
Remainder of 2023 (from April 1 through December 31)$739.9 
2024268.6 
202594.6 
202617.1 
20276.8 
Thereafter27.2 
Total$1,154.2 

The aggregate amount of revenue we expect to recognize for the remainder of 2023 and subsequent years is higher than our contract liability balance of $533.7 million as of March 31, 2023. 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 March 31, 2023. 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 March 31, 2023, 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 March 31, 2023. 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 March 31, 2023As of December 31, 2022
Accounts receivable, less allowance for credit losses$297.9 $307.9 
Deferred commissions76.4 76.1 
Total contract assets$374.3 $384.0 
v3.23.1
Segment and Geographical Area Information
3 Months Ended
Mar. 31, 2023
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 March 31,
(in millions)20232022
United States$347.3 $328.2 
Asia12.1 10.8 
Australia14.4 14.0 
Canada27.3 27.1 
Continental Europe43.1 41.3 
United Kingdom33.1 33.1 
Other2.4 2.5 
Total International132.4 128.8 
Consolidated revenue$479.7 $457.0 

Property, equipment, and capitalized software, net by geographical area
(in millions)As of March 31, 2023As of December 31, 2022
United States$169.2 $165.6 
Asia11.2 12.8 
Australia2.1 2.3 
Canada4.8 4.5 
Continental Europe8.1 8.5 
United Kingdom5.9 5.4 
Other0.2 0.3 
Total International32.3 33.8 
Consolidated property, equipment, and capitalized software, net$201.5 $199.4 
Operating lease assets by geographical area
(in millions)As of March 31, 2023As of December 31, 2022
United States$115.7 $120.0 
Asia23.3 22.6 
Australia3.7 3.9 
Canada5.1 5.5 
Continental Europe17.1 18.5 
United Kingdom19.2 20.6 
Other0.5 0.5 
Total International68.9 71.6 
Consolidated operating lease assets$184.6 $191.6 
v3.23.1
Fair Value Measurement of Investments
3 Months Ended
Mar. 31, 2023
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Investments

As of March 31, 2023 and December 31, 2022, our investment balances totaled $33.2 million and $38.0 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 March 31, 2023, 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.

Contingent Consideration

As of December 31, 2022, financial liabilities that were classified as Level 3 within the fair value hierarchy included a contingent consideration liability of $50.0 million, which represented the acquisition date fair value of $45.5 million plus changes due to remeasurement of this liability in subsequent reporting periods.

The contingent consideration reflected potential future payments that were contingent upon the achievement of certain conditions related to the separation of LCD's contractual relationships from S&P Global (S&P) contracts that included other S&P products and services. This additional purchase consideration, for which the amount was contingent, was 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 was remeasured each reporting period until the contingency was resolved with any changes in fair value recorded in current period earnings.

In the first quarter of 2023, we made a cash payment of $50.0 million, resolving our contingent consideration liability related to our acquisition of LCD.
v3.23.1
Investments in Unconsolidated Entities
3 Months Ended
Mar. 31, 2023
Investments in Unconsolidated Entities [Abstract]  
Equity Method Investments and Joint Ventures Disclosure Investments in Unconsolidated Entities
As of March 31, 2023 and December 31, 2022, our investment in unconsolidated entities balance totaled $117.7 million and $96.0 million, respectively. We have investments in both equity method investments and equity investments with and without a readily determinable fair value.

On January 27, 2023, we entered into a Termination Agreement (the Termination Agreement) with Morningstar Japan K.K. (now known as SBI Global Asset Management Co., Ltd. (Wealth Advisors)), and a Tender Offer Agreement (the Tender Offer Agreement) with SBI Global Asset Management Co., Ltd. (now known as SBI Asset Management Group Co., Ltd. (SBI)).
Pursuant to the Termination Agreement, Wealth Advisors agreed to cease use of the Morningstar brand and Morningstar and Wealth Advisors agreed to terminate the License Agreement originally entered into in 1998. As consideration for the transaction, Morningstar agreed to pay Wealth Advisors 8 billion Japanese yen ($61.4 million) upon the termination of the license agreement and the achievement of certain conditions related primarily to the termination of the use of the Morningstar brand by Wealth Advisors’ customers. The termination agreement liability is recorded within "Other current liabilities" on our Consolidated Balance Sheet as of March 31, 2023. The termination agreement expense is recorded within "Expense from equity method transaction, net" in our Consolidated Statements of Income for the three months ended March 31, 2023. See Note 15 for additional information on the Termination Agreement payments made in April 2023.

As part of this transaction, pursuant to the Tender Offer Agreement, Morningstar agreed to tender up to 10 million shares in Wealth Advisors to SBI. The tender offer closed on February 28, 2023, and SBI purchased 8,040,600 shares of Wealth Advisors from Morningstar, resulting in net proceeds of $26.2 million and a pre-tax gain of $18.4 million. The pre-tax gain is recorded within "Expense from equity method transaction, net" in our Consolidated Statements of Income for the three months ended March 31, 2023.

Subsequent to the tender offer, the Company's ownership percentage in Wealth Advisors decreased to 13.2% from 22.1%, and as a result, we no longer account for our investment in Wealth Advisors as an equity method investment. Each reporting period, we will measure our remaining investment in Wealth Advisors, an equity security with a readily determinable value, at fair value and recognize unrealized holding gains or losses in earnings. During the first quarter of 2023, we recognized an unrealized holding gain of $31.2 million, which is recorded within "Expense from equity method transaction, net" in our Consolidated Statements of Income for the three months ended March 31, 2023.
v3.23.1
Leases
3 Months Ended
Mar. 31, 2023
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 March 31, 2023 was $11.7 million, compared with $10.2 million for the three months ended March 31, 2022. Charges related to our operating leases that are variable and, therefore, not included in the measurement of the lease liabilities, were $4.1 million for the three months ended March 31, 2023, compared with $3.9 million for the three months ended March 31, 2022. We made lease payments of $11.3 million during the three months ended March 31, 2023, compared with $10.8 million during the three months ended March 31, 2022.

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 2023 (April 1 through December 31)$32.7 
202443.1 
202533.7 
202637.5 
202729.2 
Thereafter53.3 
Total minimum lease commitments229.5 
Adjustment for discount to present value23.1 
Present value of lease liabilities
$206.4 

The following table summarizes the weighted-average remaining lease terms and weighted-average discount rates for our operating leases:
As of March 31, 2023
Weighted-average remaining lease term (in years)6.0
Weighted-average discount rate3.3 %
v3.23.1
Stock-Based Compensation
3 Months Ended
Mar. 31, 2023
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 March 31,
(in millions)20232022
Cost of revenue$5.0 $2.5 
Sales and marketing1.6 1.4 
General and administrative5.6 10.0 
Total stock-based compensation expense$12.2 $13.9 

As of March 31, 2023, the total unrecognized stock-based compensation cost related to outstanding restricted stock units, performance share awards, and market stock units expected to vest was $86.9 million, which we expect to recognize over a weighted average period of 25 months.
v3.23.1
Income Taxes
3 Months Ended
Mar. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Effective Tax Rate

The following table shows our effective tax rate for the three months ended March 31, 2023 and March 31, 2022:

 Three months ended March 31,
(in millions)20232022
Income (loss) before income taxes and equity in investments of unconsolidated entities$2.1 $63.0 
Equity in investments of unconsolidated entities(1.3)0.4 
Total$0.8 $63.4 
Income tax expense$8.4 $17.3 
Effective tax rateNMF27.3 %
 ___________________________________________________________________________________________
NMF - not meaningful

For the three months ended March 31, 2023, income tax expense was $8.4 million, a decline of $8.9 million compared with the prior-year period. Our effective tax rate was not meaningful due to the low level of pretax income in the current period. For the first quarter of 2023, income tax expense includes a valuation allowance against an excess capital loss generated from an equity method transaction and a change in deferred taxes with respect to stock-based compensation. See Note 9 for additional information on the equity method transaction.

Unrecognized Tax Benefits

The table below provides information concerning our gross unrecognized tax benefits as of March 31, 2023 and December 31, 2022, 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 March 31, 2023As of December 31, 2022
Gross unrecognized tax benefits$26.5 $26.5 
Gross unrecognized tax benefits that would affect income tax expense$26.5 $26.5 
Decrease in income tax expense upon recognition of gross unrecognized tax benefits$26.2 $26.1 

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 March 31, 2023As of December 31, 2022
Current liability$18.4 $18.3 
Non-current liability6.1 6.0 
Total liability for unrecognized tax benefits$24.5 $24.3 

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 2023. It is not possible to estimate the effect of current audits on previously recorded unrecognized tax benefits.

Approximately 68% of our cash, cash equivalents, and investments balance as of March 31, 2023 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.
v3.23.1
Contingencies
3 Months Ended
Mar. 31, 2023
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.

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.
v3.23.1
Share Repurchase Program
3 Months Ended
Mar. 31, 2023
Equity [Abstract]  
Treasury Stock Share Repurchase Program
 
On December 6, 2022, the board of directors approved a new share repurchase program that authorizes the Company to repurchase up to $500.0 million in shares of the Company's outstanding common stock, effective January 1, 2023. The new authorization replaced the then-existing share repurchase program and expires on December 31, 2025. 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 March 31, 2023, we have not repurchased any shares under the new share repurchase program, leaving $500.0 million available for future repurchases under the program.
v3.23.1
Subsequent Events
Mar. 30, 2023
Subsequent Events [Abstract]  
Subsequent Events Subsequent Events
Morningstar Japan K.K. (now known as SBI Global Asset Management Co., Ltd. (Wealth Advisors))

On April 6, 2023, we made the first cash payment of 6 billion Japanese yen ($45.1 million) and on April 19, 2023, we made the second and final cash payment of 2 billion Japanese yen ($14.8 million), pursuant to the Termination Agreement. See Note 9 for additional information on the Termination Agreement.
v3.23.1
Summary of Significant Accounting Policies (Policies)
$ in Millions
3 Months Ended
Mar. 31, 2023
USD ($)
Accounting Policies [Abstract]  
Recent Accounting Pronouncements Policy
Severance: We account for post-employment benefits in accordance with FASB ASC 712, Compensation - Non-retirement Post-employment Benefits (FASB ASC 712). Under FASB ASC 712, we recognize compensation expense associated with these benefits as a liability when probable and estimable.

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.

As a result of these activities, the Company incurred $25.9 million of severance expense in 2022, which represented substantially all of the severance costs expected to be incurred with the remainder to be recognized through the third quarter of 2023. We recorded an immaterial amount of additional severance expense during the first quarter of 2023. These amounts were recorded within "General and administrative" on our Consolidated Statements of Income. We have $16.2 million of accrued severance remaining as of March 31, 2023, which we expect will be paid through the third quarter of 2023. The liability is recorded within "Accrued compensation - current" on our Consolidated Balance Sheet.
Employee related liabilities, Current - Accrued Severance $ 16.2
v3.23.1
Fair Value Measurements (Policies)
3 Months Ended
Mar. 31, 2023
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.
v3.23.1
Leases, Codification Topic 842 (Policies)
3 Months Ended
Mar. 31, 2023
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.
v3.23.1
Credit Arrangements (Tables)
3 Months Ended
Mar. 31, 2023
Debt Disclosure [Abstract]  
Summary of Total Debt and Long-term Debt
The following table summarizes our debt as of March 31, 2023 and December 31, 2022:
(in millions)As of March 31, 2023As of December 31, 2022
Term Facility, net of unamortized debt issuance costs of $0.7 million and $0.7 million, respectively$633.0 $641.1 
Revolving Credit Facility150.0 120.0 
2.32% Senior Notes due October 26, 2030, net of unamortized debt issuance costs of $1.5 million and $1.5 million, respectively
348.5 348.5 
Total debt$1,131.5 $1,109.6 
v3.23.1
Acquisitions, Goodwill and Other Intangible Assets (Tables)
3 Months Ended
Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Goodwill
The following table shows the changes in our goodwill balance from December 31, 2022 to March 31, 2023:

 (in millions)
Balance as of December 31, 2022$1,571.7 
Foreign currency translation5.5 
Balance as of March 31, 2023$1,577.2 
Schedule of Intangible Assets
The following table summarizes our intangible assets: 

 As of March 31, 2023As of December 31, 2022
(in millions)GrossAccumulated
Amortization
NetWeighted
Average
Useful  Life
(years)
GrossAccumulated
Amortization
NetWeighted
Average
Useful  Life
(years)
Customer-related assets$596.4 $(231.7)$364.7 14$595.1 $(221.3)$373.8 14
Technology-based assets313.9 (179.9)134.0 8312.8 (173.8)139.0 8
Intellectual property & other92.2 (58.3)33.9 892.1 (56.3)35.8 8
Total intangible assets$1,002.5 $(469.9)$532.6 12$1,000.0 $(451.4)$548.6 12
Schedule of Intangible Asset, Amortization Expense
The following table summarizes our amortization expense related to intangible assets:

 Three months ended March 31,
(in millions)20232022
Amortization expense$17.5 $14.1 
Schedule of Expected Amortization Expense March 31, 2023, we expect intangible amortization expense for the remainder of 2023 and subsequent years to be as follows:
 (in millions)
Remainder of 2023 (April 1 through December 31)$53.0 
202464.6 
202556.4 
202652.6 
202745.5 
Thereafter260.5 
Total$532.6 
v3.23.1
Income Per Share (Tables)
3 Months Ended
Mar. 31, 2023
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share, Basic and Diluted
The following table shows how we reconcile our net income (loss) and the number of shares used in computing basic and diluted net income (loss) per share:
 Three months ended March 31,
(in millions, except share and per share amounts)20232022
Basic net income (loss) per share:  
Consolidated net income (loss)$(7.6)$46.1 
Weighted average common shares outstanding42.5 43.0 
Basic net income (loss) per share$(0.18)$1.07 
Diluted net income (loss) per share:
Consolidated net income (loss)$(7.6)$46.1 
Weighted average common shares outstanding42.5 43.0 
Net effect of dilutive stock options and restricted stock units0.3 0.3 
Weighted average common shares outstanding for computing diluted income per share42.8 43.3 
Diluted net income (loss) per share$(0.18)$1.06 
v3.23.1
Revenue (Tables)
3 Months Ended
Mar. 31, 2023
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 March 31,
(in millions)20232022
License-based $364.0 $311.9 
Asset-based65.3 68.5 
Transaction-based50.4 76.6 
Consolidated revenue$479.7 $457.0 
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 2023 and subsequent years as follows:
(in millions)As of March 31, 2023
Remainder of 2023 (from April 1 through December 31)$739.9 
2024268.6 
202594.6 
202617.1 
20276.8 
Thereafter27.2 
Total$1,154.2 
Summary of Contract Assets and Change in Deferred Commissions
The following table summarizes our contract assets balance:
(in millions)As of March 31, 2023As of December 31, 2022
Accounts receivable, less allowance for credit losses$297.9 $307.9 
Deferred commissions76.4 76.1 
Total contract assets$374.3 $384.0 
v3.23.1
Segment and Geographical Area Information (Tables)
3 Months Ended
Mar. 31, 2023
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 March 31,
(in millions)20232022
United States$347.3 $328.2 
Asia12.1 10.8 
Australia14.4 14.0 
Canada27.3 27.1 
Continental Europe43.1 41.3 
United Kingdom33.1 33.1 
Other2.4 2.5 
Total International132.4 128.8 
Consolidated revenue$479.7 $457.0 

Property, equipment, and capitalized software, net by geographical area
(in millions)As of March 31, 2023As of December 31, 2022
United States$169.2 $165.6 
Asia11.2 12.8 
Australia2.1 2.3 
Canada4.8 4.5 
Continental Europe8.1 8.5 
United Kingdom5.9 5.4 
Other0.2 0.3 
Total International32.3 33.8 
Consolidated property, equipment, and capitalized software, net$201.5 $199.4 
Operating lease assets by geographical area
(in millions)As of March 31, 2023As of December 31, 2022
United States$115.7 $120.0 
Asia23.3 22.6 
Australia3.7 3.9 
Canada5.1 5.5 
Continental Europe17.1 18.5 
United Kingdom19.2 20.6 
Other0.5 0.5 
Total International68.9 71.6 
Consolidated operating lease assets$184.6 $191.6 
v3.23.1
Leases (Tables)
3 Months Ended
Mar. 31, 2023
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 March 31, 2023
Weighted-average remaining lease term (in years)6.0
Weighted-average discount rate3.3 %
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 2023 (April 1 through December 31)$32.7 
202443.1 
202533.7 
202637.5 
202729.2 
Thereafter53.3 
Total minimum lease commitments229.5 
Adjustment for discount to present value23.1 
Present value of lease liabilities
$206.4 
v3.23.1
Stock-Based Compensation (Tables)
3 Months Ended
Mar. 31, 2023
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 March 31,
(in millions)20232022
Cost of revenue$5.0 $2.5 
Sales and marketing1.6 1.4 
General and administrative5.6 10.0 
Total stock-based compensation expense$12.2 $13.9 
v3.23.1
Income Taxes (Tables)
3 Months Ended
Mar. 31, 2023
Income Tax Disclosure [Abstract]  
Schedule of Effective Income Tax Rate Reconciliation
The following table shows our effective tax rate for the three months ended March 31, 2023 and March 31, 2022:

 Three months ended March 31,
(in millions)20232022
Income (loss) before income taxes and equity in investments of unconsolidated entities$2.1 $63.0 
Equity in investments of unconsolidated entities(1.3)0.4 
Total$0.8 $63.4 
Income tax expense$8.4 $17.3 
Effective tax rateNMF27.3 %
Schedule of Gross Unrecognized Tax Benefits
The table below provides information concerning our gross unrecognized tax benefits as of March 31, 2023 and December 31, 2022, 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 March 31, 2023As of December 31, 2022
Gross unrecognized tax benefits$26.5 $26.5 
Gross unrecognized tax benefits that would affect income tax expense$26.5 $26.5 
Decrease in income tax expense upon recognition of gross unrecognized tax benefits$26.2 $26.1 
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 March 31, 2023As of December 31, 2022
Current liability$18.4 $18.3 
Non-current liability6.1 6.0 
Total liability for unrecognized tax benefits$24.5 $24.3 
v3.23.1
Credit Arrangements - Schedule of Long-term Debt (Details) - USD ($)
$ in Millions
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2022
Sep. 13, 2022
May 06, 2022
Oct. 26, 2020
Jul. 02, 2019
Debt Instrument [Line Items]              
Long-term debt $ 1,099.4 $ 1,077.5          
Long-term debt 1,131.5 1,109.6          
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 633.0 641.1          
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 348.5 348.5          
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   $ 120.0          
Maximum borrowing capacity             300.0
Revolving Credit Facility | Line of Credit [Member] | May 2022 Revolving Credit Facility              
Debt Instrument [Line Items]              
Long-term debt $ 150.0            
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    
v3.23.1
Credit Arrangements (Details) - USD ($)
$ in Millions
Sep. 30, 2022
May 06, 2022
Jul. 02, 2019
Mar. 31, 2023
Dec. 31, 2022
Sep. 13, 2022
Oct. 26, 2020
Line of Credit Facility [Line Items]              
Maximum borrowing capacity $ 650.0         $ 600.0  
Remaining borrowing capacity       $ 500.0      
Long-term debt, outstanding       783.0      
Debt Instrument, Interest Rate, Stated Percentage             2.32%
Long-term debt       1,099.4 $ 1,077.5    
Medium-term Notes [Member] | Term Loan Facility [Member]              
Line of Credit Facility [Line Items]              
Maximum borrowing capacity     $ 450.0        
Long-term debt       633.0 641.1    
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         $ 120.0    
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       $ 150.0      
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       $ 348.5 $ 348.5    
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          
v3.23.1
Acquisitions, Goodwill and Other Intangible Assets - Narrative (Details) - USD ($)
$ in Millions
3 Months Ended
Jun. 01, 2022
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Business Acquisition [Line Items]        
Payment for Contingent Consideration Liability, Operating Activities $ 50.0 $ 50.0    
Contingent consideration liability   0.0   $ 50.0
Goodwill, impairment loss   $ 0.0 $ 0.0  
LCD        
Business Acquisition [Line Items]        
Contingent consideration liability $ 45.5      
v3.23.1
Acquisitions, Goodwill and Other Intangible Assets (Schedule of Goodwill) (Details)
$ in Millions
3 Months Ended
Mar. 31, 2023
USD ($)
Business Acquisition [Line Items]  
Goodwill $ 1,577.2
Goodwill [Roll Forward]  
Goodwill, Beginning Balance 1,571.7
Foreign currency translation 5.5
Goodwill, Ending Balance $ 1,577.2
v3.23.1
Acquisitions, Goodwill and Other Intangible Assets (Schedule of Intangible Assets) (Details) - USD ($)
$ in Millions
Mar. 31, 2023
Dec. 31, 2022
Mar. 31, 2022
Finite-Lived Intangible Assets [Line Items]      
Gross $ 1,002.5 $ 1,000.0  
Accumulated Amortization (469.9) (451.4)  
Total $ 532.6 548.6  
Weighted-Average Useful Life (years) 12 years   12 years
Customer-related assets      
Finite-Lived Intangible Assets [Line Items]      
Gross $ 596.4 595.1  
Accumulated Amortization (231.7) (221.3)  
Total $ 364.7 373.8  
Weighted-Average Useful Life (years) 14 years   14 years
Intellectual property & other      
Finite-Lived Intangible Assets [Line Items]      
Gross $ 92.2 92.1  
Accumulated Amortization (58.3) (56.3)  
Total $ 33.9 35.8  
Weighted-Average Useful Life (years) 8 years   8 years
Technology-Based Intangible Assets      
Finite-Lived Intangible Assets [Line Items]      
Gross $ 313.9 312.8  
Accumulated Amortization (179.9) (173.8)  
Total $ 134.0 $ 139.0  
Weighted-Average Useful Life (years) 8 years   8 years
v3.23.1
Acquisitions, Goodwill and Other Intangible Assets (Amortization Expense) (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]      
Amortization expense $ 17.5 $ 14.1  
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]      
Remainder of 2023 (April 1 through December 31) 53.0    
2024 64.6    
2025 56.4    
2026 52.6    
2027 45.5    
Thereafter 260.5    
Total $ 532.6   $ 548.6
v3.23.1
Acquisitions, Goodwill and Other Intangible Assets - Acquired Intangibles (Details) - USD ($)
$ in Millions
Mar. 31, 2023
Dec. 31, 2022
Mar. 31, 2022
Acquired Finite-Lived Intangible Assets [Line Items]      
Gross $ 1,002.5 $ 1,000.0  
Accumulated Amortization (469.9) (451.4)  
Intangible assets, net $ 532.6 548.6  
Weighted-Average Useful Life (years) 12 years   12 years
Customer-related assets      
Acquired Finite-Lived Intangible Assets [Line Items]      
Gross $ 596.4 595.1  
Accumulated Amortization (231.7) (221.3)  
Intangible assets, net $ 364.7 373.8  
Weighted-Average Useful Life (years) 14 years   14 years
Intellectual property & other      
Acquired Finite-Lived Intangible Assets [Line Items]      
Gross $ 92.2 92.1  
Accumulated Amortization (58.3) (56.3)  
Intangible assets, net $ 33.9 35.8  
Weighted-Average Useful Life (years) 8 years   8 years
Technology-Based Intangible Assets      
Acquired Finite-Lived Intangible Assets [Line Items]      
Gross $ 313.9 312.8  
Accumulated Amortization (179.9) (173.8)  
Intangible assets, net $ 134.0 $ 139.0  
Weighted-Average Useful Life (years) 8 years   8 years
v3.23.1
Income Per Share (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Earnings Per Share, Basic [Abstract]    
Consolidated net income (loss) $ (7.6) $ 46.1
Weighted average common shares outstanding 42.5 43.0
Basic net income per share attributable to Morningstar, Inc. $ (0.18) $ 1.07
Earnings Per Share, Diluted [Abstract]    
Consolidated net income (loss) $ (7.6) $ 46.1
Weighted average common shares outstanding 42.5 43.0
Net effect of dilutive stock options and restricted stock units 0.3 0.3
Weighted average common shares outstanding for computing diluted income per share 42.8 43.3
Diluted net income per share attributable to Morningstar, Inc. $ (0.18) $ 1.06
v3.23.1
Revenue (Disaggregation of Revenue) (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Disaggregation of Revenue [Line Items]    
Consolidated revenue $ 479.7 $ 457.0
License-based    
Disaggregation of Revenue [Line Items]    
Consolidated revenue 364.0 311.9
Asset-based    
Disaggregation of Revenue [Line Items]    
Consolidated revenue 65.3 68.5
Transaction-based    
Disaggregation of Revenue [Line Items]    
Consolidated revenue $ 50.4 $ 76.6
v3.23.1
Revenue (Disaggregation of Revenue, Narrative) (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]    
Revenues $ 479.7 $ 457.0
Minimum [Member]    
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]    
Revenue performance period 1 year  
Maximum [member]    
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]    
Revenue performance period 3 years  
Licensed-based Revenue    
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]    
Revenues $ 364.0 311.9
Licensed-based Revenue | Minimum [Member]    
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]    
Revenue performance period 1 year  
Licensed-based Revenue | Maximum [member]    
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]    
Revenue performance period 3 years  
Asset-based Revenue    
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]    
Revenues $ 65.3 $ 68.5
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 9 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  
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  
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  
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  
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 5 years  
v3.23.1
Revenue (Schedule of Contract Liabilities) (Details)
$ in Millions
Mar. 31, 2023
USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, Remaining Performance Obligation, Amount $ 1,154.2
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 $ 739.9
Revenue performance period 9 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 $ 268.6
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 $ 94.6
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 $ 17.1
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 $ 6.8
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 $ 27.2
Revenue performance period 5 years
v3.23.1
Revenue (Contract Liabilities, Additional Information Narrative) (Details)
$ in Millions
3 Months Ended
Mar. 31, 2023
USD ($)
Revenue from Contract with Customer [Abstract]  
Increase in contract liabilities from cash payments received $ 44.6
Contract with Customer, Liability, Change in Timeframe, Performance Obligation Satisfied, Revenue Recognized 209.9
Accounts payable and accrued liabilities $ 533.7
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 March 31,
(in millions)20232022
License-based $364.0 $311.9 
Asset-based65.3 68.5 
Transaction-based50.4 76.6 
Consolidated revenue$479.7 $457.0 

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' license-based products, Morningstar Indexes data and services products, DBRS Morningstar's data products, 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, Morningstar Sustainalytics' Second Party Opinions, 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 March 31, 2023 had a net increase of $44.6 million, primarily driven by cash payments received or payable in advance of satisfying our performance obligations. We recognized $209.9 million of revenue in the three months ended March 31, 2023 that was included in the contract liabilities balance as of December 31, 2022.
We expect to recognize revenue related to our contract liabilities, including future billings, for the remainder of 2023 and subsequent years as follows:
(in millions)As of March 31, 2023
Remainder of 2023 (from April 1 through December 31)$739.9 
2024268.6 
202594.6 
202617.1 
20276.8 
Thereafter27.2 
Total$1,154.2 

The aggregate amount of revenue we expect to recognize for the remainder of 2023 and subsequent years is higher than our contract liability balance of $533.7 million as of March 31, 2023. 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 March 31, 2023. 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 March 31, 2023, 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 March 31, 2023. 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 March 31, 2023As of December 31, 2022
Accounts receivable, less allowance for credit losses$297.9 $307.9 
Deferred commissions76.4 76.1 
Total contract assets$374.3 $384.0 
v3.23.1
Revenue (Summary of Contract Assets) (Details) - USD ($)
$ in Millions
Mar. 31, 2023
Dec. 31, 2022
Revenue from Contract with Customer [Abstract]    
Accounts receivable, less allowance for credit losses $ 297.9 $ 307.9
Deferred commissions, current and non-current 76.4 76.1
Total contract assets $ 374.3 $ 384.0
v3.23.1
Segment and Geographical Area Information (External Revenue and Long-Lived Assets) (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Dec. 31, 2022
Revenues from External Customers and Long-Lived Assets [Line Items]      
External revenue $ 479.7 $ 457.0  
Long-lived assets 201.5   $ 199.4
United States      
Revenues from External Customers and Long-Lived Assets [Line Items]      
External revenue 347.3 328.2  
Long-lived assets 169.2   165.6
Total International      
Revenues from External Customers and Long-Lived Assets [Line Items]      
External revenue 132.4 128.8  
Long-lived assets 32.3   33.8
Canada      
Revenues from External Customers and Long-Lived Assets [Line Items]      
External revenue 33.1 33.1  
Long-lived assets 5.9   5.4
Continental Europe      
Revenues from External Customers and Long-Lived Assets [Line Items]      
External revenue 43.1 41.3  
Long-lived assets 8.1   8.5
Australia      
Revenues from External Customers and Long-Lived Assets [Line Items]      
External revenue 14.4 14.0  
Long-lived assets 2.1   2.3
Canada      
Revenues from External Customers and Long-Lived Assets [Line Items]      
External revenue 27.3 27.1  
Long-lived assets 4.8   4.5
United Kingdom      
Revenues from External Customers and Long-Lived Assets [Line Items]      
External revenue 12.1 10.8  
Long-lived assets 11.2   12.8
Other      
Revenues from External Customers and Long-Lived Assets [Line Items]      
External revenue 2.4 $ 2.5  
Long-lived assets $ 0.2   $ 0.3
v3.23.1
Segment and Geographical Area Information Segment and Geographical Area Information - Operating Lease Assets by Geographical Area (Details) - USD ($)
$ in Millions
Mar. 31, 2023
Dec. 31, 2022
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets $ 184.6 $ 191.6
United States    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets 115.7 120.0
Total International    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets 68.9 71.6
Canada    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets 19.2 20.6
Continental Europe    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets 17.1 18.5
Australia    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets 3.7 3.9
Canada    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets 5.1 5.5
United Kingdom    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets 23.3 22.6
Other    
Revenues from External Customers and Long-Lived Assets [Line Items]    
Consolidated operating lease assets $ 0.5 $ 0.5
v3.23.1
Fair Value Measurements - Narrative (Details) - USD ($)
$ in Millions
3 Months Ended
Jun. 01, 2022
Mar. 31, 2023
Dec. 31, 2022
Fair Value Measurement Inputs and Valuation Techniques [Line Items]      
Investment balances   $ 33.2 $ 38.0
Payment for Contingent Consideration Liability, Operating Activities $ 50.0 $ 50.0  
v3.23.1
Investments in Unconsolidated Entities (Details)
$ in Millions, ¥ in Billions
1 Months Ended 2 Months Ended 3 Months Ended
Feb. 28, 2023
USD ($)
shares
Jan. 27, 2023
USD ($)
shares
Jan. 27, 2023
JPY (¥)
shares
Jun. 01, 2022
USD ($)
Mar. 31, 2023
USD ($)
Feb. 27, 2023
Mar. 31, 2023
USD ($)
Mar. 31, 2022
USD ($)
Dec. 31, 2022
USD ($)
Investments in Unconsolidated Entities [Line Items]                  
Investments in unconsolidated entities         $ 117.7   $ 117.7   $ 96.0
Payment for Contingent Consideration Liability, Operating Activities       $ 50.0     50.0    
Sale of Stock, Percentage of Ownership after Transaction         13.20%        
Sale of Stock, Percentage of Ownership before Transaction           22.10%      
Realized gain on sale of investments, reclassified from other comprehensive income             $ 0.2 $ 1.0  
Equity Method Investments and Joint Ventures Disclosure             Investments in Unconsolidated Entities
As of March 31, 2023 and December 31, 2022, our investment in unconsolidated entities balance totaled $117.7 million and $96.0 million, respectively. We have investments in both equity method investments and equity investments with and without a readily determinable fair value.

On January 27, 2023, we entered into a Termination Agreement (the Termination Agreement) with Morningstar Japan K.K. (now known as SBI Global Asset Management Co., Ltd. (Wealth Advisors)), and a Tender Offer Agreement (the Tender Offer Agreement) with SBI Global Asset Management Co., Ltd. (now known as SBI Asset Management Group Co., Ltd. (SBI)).
Pursuant to the Termination Agreement, Wealth Advisors agreed to cease use of the Morningstar brand and Morningstar and Wealth Advisors agreed to terminate the License Agreement originally entered into in 1998. As consideration for the transaction, Morningstar agreed to pay Wealth Advisors 8 billion Japanese yen ($61.4 million) upon the termination of the license agreement and the achievement of certain conditions related primarily to the termination of the use of the Morningstar brand by Wealth Advisors’ customers. The termination agreement liability is recorded within "Other current liabilities" on our Consolidated Balance Sheet as of March 31, 2023. The termination agreement expense is recorded within "Expense from equity method transaction, net" in our Consolidated Statements of Income for the three months ended March 31, 2023. See Note 15 for additional information on the Termination Agreement payments made in April 2023.

As part of this transaction, pursuant to the Tender Offer Agreement, Morningstar agreed to tender up to 10 million shares in Wealth Advisors to SBI. The tender offer closed on February 28, 2023, and SBI purchased 8,040,600 shares of Wealth Advisors from Morningstar, resulting in net proceeds of $26.2 million and a pre-tax gain of $18.4 million. The pre-tax gain is recorded within "Expense from equity method transaction, net" in our Consolidated Statements of Income for the three months ended March 31, 2023.

Subsequent to the tender offer, the Company's ownership percentage in Wealth Advisors decreased to 13.2% from 22.1%, and as a result, we no longer account for our investment in Wealth Advisors as an equity method investment. Each reporting period, we will measure our remaining investment in Wealth Advisors, an equity security with a readily determinable value, at fair value and recognize unrealized holding gains or losses in earnings. During the first quarter of 2023, we recognized an unrealized holding gain of $31.2 million, which is recorded within "Expense from equity method transaction, net" in our Consolidated Statements of Income for the three months ended March 31, 2023.
   
Wealth Advisors [Member]                  
Investments in Unconsolidated Entities [Line Items]                  
Business Exit Costs   $ 61.4 ¥ 8.0            
SBI                  
Investments in Unconsolidated Entities [Line Items]                  
Sale of Stock, Number of Shares Issued in Transaction | shares 8,040,600 10,000,000 10,000,000            
Sale of Stock, Consideration Received Per Transaction $ 26.2                
Gain on equity method transaction             $ 31.2    
Realized gain on sale of investments, reclassified from other comprehensive income             $ 18.4    
v3.23.1
Leases - Narrative (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Lessee, Lease, Description [Line Items]    
Operating lease expense $ 11.7 $ 10.2
Variable lease, cost 4.1 3.9
Operating lease payments $ 11.3 $ 10.8
Minimum [Member]    
Lessee, Lease, Description [Line Items]    
Operating lease, weighted average remaining lease term 1 year  
Maximum [member]    
Lessee, Lease, Description [Line Items]    
Operating lease, weighted average remaining lease term 12 years  
v3.23.1
Leases - Operating Lease Minimum Future Lease Commitments (Details)
$ in Millions
Mar. 31, 2023
USD ($)
Leases [Abstract]  
Remainder of 2019 $ 32.7
2020 43.1
2021 33.7
2022 37.5
2023 29.2
Thereafter 53.3
Total minimum lease commitments 229.5
Adjustment for discount to present value 23.1
Present value of lease liabilities $ 206.4
v3.23.1
Leases - Weighted Average Remaining Lease Terms and Discount Rates (Details)
Mar. 31, 2023
Weighted-average remaining lease term (in years)  
Weighted-average remaining lease term (in years) 6 years
Weighted-average discount rate  
Weighted-average discount rate 3.30%
v3.23.1
Stock-Based Compensation (Allocation of Stock-Based Compensation Costs by Plan) (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Total stock-based compensation expense $ 12.2 $ 13.9
Cost of revenue    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Total stock-based compensation expense 5.0 2.5
Sales and marketing    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Total stock-based compensation expense 1.6 1.4
General and administrative    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Total stock-based compensation expense $ 5.6 $ 10.0
v3.23.1
Stock-Based Compensation (Narrative) (Details) - Restricted Stock Units and Performance Share Awards
$ in Millions
3 Months Ended
Mar. 31, 2023
USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Unrecognized stock-based compensation expense $ 86.9
Expected amortization period (months) 25 months
v3.23.1
Income Taxes (Income Tax Reconciliation and Unrecognized Tax Benefits) (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Mar. 31, 2023
Dec. 31, 2022
Effective Income Tax Rate Reconciliation, Amount [Abstract]        
Income before income taxes and equity in net income (loss) of unconsolidated entities $ 2.1 $ 63.0    
Equity in investments of unconsolidated entities (1.3) 0.4    
Total 0.8 63.4    
Income tax expense 8.4 $ 17.3    
Effective income tax rate   27.30%    
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued [Abstract]        
Current liability 18.4   $ 18.4 $ 18.3
Non-current liability 6.1   6.1 6.0
Total liability for unrecognized tax benefits 24.5   24.5 24.3
Concentration Risk [Line Items]        
Unrecognized Tax Benefits $ 26.5   26.5 $ 26.5
Effective tax rate NMF      
Income Tax Expense (Benefit), Increase/Decrease vs Prior Year     $ (8.9)  
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 68.00%      
v3.23.1
Income Taxes (Income Tax Contingency) (Details) - USD ($)
$ in Millions
Mar. 31, 2023
Dec. 31, 2022
Income Tax Disclosure [Abstract]    
Gross unrecognized tax benefits $ 26.5 $ 26.5
Gross unrecognized tax benefits that would affect income tax expense 26.5 26.5
Decrease in income tax expense upon recognition of gross unrecognized tax benefits $ 26.2 $ 26.1
v3.23.1
Contingencies Contingencies (Details)
3 Months Ended
Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]  
Document Period End Date Mar. 31, 2023
v3.23.1
Share Repurchase Program (Details)
$ in Millions
Mar. 31, 2023
USD ($)
Subsequent Event [Line Items]  
Share repurchase program, authorized amount $ 500.0
Stock repurchase program, remaining authorized repurchase amount $ 500.0
v3.23.1
Subsequent Events (Details)
$ in Millions, ¥ in Billions
3 Months Ended
Apr. 19, 2023
USD ($)
Apr. 19, 2023
JPY (¥)
Apr. 06, 2023
USD ($)
Apr. 06, 2023
JPY (¥)
Jun. 01, 2022
USD ($)
Mar. 31, 2023
USD ($)
Subsequent Event [Line Items]            
Payment for Contingent Consideration Liability, Operating Activities         $ 50.0 $ 50.0
Subsequent Event | Wealth Advisors [Member]            
Subsequent Event [Line Items]            
Payment for Contingent Consideration Liability, Operating Activities $ 14.8 ¥ 2 $ 45.1 ¥ 6    
v3.23.1
Restructuring and Related Activities (Details)
$ in Millions
3 Months Ended
Mar. 31, 2023
USD ($)
Restructuring and Related Activities [Abstract]  
Severance Costs $ 25.9
v3.23.1
Label Element Value
Retained Earnings [Member]  
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest us-gaap_ProfitLoss $ (7,600,000)