Third quarter 2026
Filed Oct 28, 2026Morningstar, Inc. Reports Third-Quarter 2026 Financial Results
Third-quarter reported revenue increased 8.9%, operating income increased 31.0%, adjusted operating income increased 26.1%, and diluted net income per share increased 41.0%. Growth was led by Morningstar Credit and Morningstar Retirement, while margins expanded despite lower cash flow and weakness in Morningstar Wealth and PitchBook platform demand.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 revenueGAAP | $672.1M | – | 8.9% |
| Q3 2026 organic revenuenon-GAAP | $655.3M | – | 6.8% |
| Q3 2026 organic revenue excluding sunsetting certain productsnon-GAAP | 7.8% | – | – |
| Q3 2026 cost of revenueGAAP | $240.7M | – | (0.4)% |
| Q3 2026 sales and marketing expenseGAAP | $117.8M | – | 2.0% |
| Q3 2026 general and administrative expenseGAAP | $93.1M | – | 8.4% |
| Q3 2026 depreciation and amortizationGAAP | $53.1M | – | 13.0% |
| Q3 2026 total operating expenseGAAP | $504.7M | – | 3.0% |
| Q3 2026 operating incomeGAAP | $167.4M | – | 31.0% |
| Q3 2026 operating marginGAAP | 24.9% | – | 4.2 pp |
| Q3 2026 adjusted operating incomenon-GAAP | $189.9M | – | 26.1% |
| Q3 2026 adjusted operating marginnon-GAAP | 28.3% | – | 3.9 pp |
| Q3 2026 interest expense, netGAAP | −$17.6M | – | NMF |
| Q3 2026 income before income taxes and equity in investments of unconsolidated entitiesGAAP | $152.4M | – | 23.8% |
| Q3 2026 income tax expenseGAAP | $38.4M | – | 22.3% |
| Q3 2026 effective tax rateGAAP | 25.0% | – | – |
| Q3 2026 consolidated net incomeGAAP | $115.5M | – | 26.1% |
| Q3 2026 basic net income per shareGAAP | $3.09 per share | – | 41.7% |
| Q3 2026 diluted net income per shareGAAP | $3.06 per diluted share | – | 41.0% |
| Q3 2026 adjusted diluted net income per sharenon-GAAP | $3.48 per diluted share | – | 36.5% |
| Q3 2026 cash provided by operating activitiesGAAP | $190.7M | – | (2.6)% |
| Q3 2026 capital expendituresGAAP | −$35.3M | – | (0.8)% |
| Q3 2026 free cash flownon-GAAP | $155.4M | – | (2.9)% |
| Nine months ended September 30, 2026 revenueGAAP | $1.98B | – | 9.7% |
| Nine months ended September 30, 2026 organic revenuenon-GAAP | $1.91B | – | 7.0% |
| Nine months ended September 30, 2026 operating incomeGAAP | $483.9M | – | 31.9% |
| Nine months ended September 30, 2026 operating marginGAAP | 24.4% | – | 4.1 pp |
| Nine months ended September 30, 2026 adjusted operating incomenon-GAAP | $544.4M | – | 26.8% |
| Nine months ended September 30, 2026 adjusted operating marginnon-GAAP | 27.5% | – | 3.7 pp |
| Nine months ended September 30, 2026 consolidated net incomeGAAP | $330.4M | – | 27.5% |
| Nine months ended September 30, 2026 diluted net income per shareGAAP | $8.61 per diluted share | – | 41.6% |
| Nine months ended September 30, 2026 adjusted diluted net income per sharenon-GAAP | $9.76 per diluted share | – | 35.9% |
| Nine months ended September 30, 2026 cash provided by operating activitiesGAAP | $437.9M | – | 13.5% |
| Nine months ended September 30, 2026 free cash flownon-GAAP | $331.5M | – | 17.8% |
| Morningstar Retirement AUMA as of September 30, 2026other | $333.9B | – | 12.1% |
| Investment Management AUMA as of September 30, 2026other | $64.8B | – | (8.5)% |
| Asset value linked to Morningstar Indexes as of September 30, 2026other | $3.61T | – | NMF |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Morningstar Direct PlatformHigher revenue was primarily driven by Morningstar Data and Morningstar Direct. Morningstar Data growth reflected continued expansion with existing clients supported by new use cases, while Morningstar Direct growth reflected increased revenue per license and expansion with existing clients in reporting solutions. | $222.5M | – | 5.4% |
| PitchBookThe increase was primarily driven by strong growth across multiple core client segments in direct data. PitchBook platform growth slowed with particular softness in corporate and venture capital client segments, which continued to experience higher churn. | $175.6M | – | 3.9% |
| Morningstar CreditGrowth was supported by robust issuance across geographies and asset classes, with particular strength in corporates and US asset-backed and residential mortgage-backed securities ratings. | $107.8M | – | 18.3% |
| Morningstar WealthThe decline reflected the sunsetting of Morningstar Office. Excluding the impact of sunsetting Morningstar Office, organic revenue would have increased 2.1%, supported by Investment Management growth partially offset by lower advertising sales. | $59.4M | – | (4.3)% |
| Morningstar RetirementRevenue increased 21.3% on a reported and organic basis. AUMA increased primarily due to market gains, while positive net flows, primarily driven by Advisor Managed Accounts, also contributed. | $41.5M | – | 21.3% |
| Corporate and All OtherReported growth was driven primarily by the CRSP acquisition within Morningstar Indexes. Morningstar Sustainalytics revenue declined on a reported and organic basis primarily due to the sunsetting of the second-party opinions product. | $65.3M | – | 30.9% |
Capital returns
- Third-quarter share repurchases totaled 486,573 shares for $100.0 million.
- Nine-month share repurchases totaled 2,777,829 shares for $500.0 million.
- During the quarter, the Company paid $18.7 million in dividends.
- Nine months ended September 30, 2026 dividends paid were $57.6 million.
What drove it
- Morningstar Credit and Morningstar Direct Platform were the largest contributors to organic revenue growth.
- The acquisition of CRSP was accretive to adjusted operating margin in the quarter.
- Operating expense increased primarily due to a $7.1 million increase in certain technology infrastructure costs and a $5.3 million increase in advertising and marketing expense.
- The expense increases were partially offset by a $7.9 million decline in compensation costs, although severance costs increased $6.9 million.
- Higher cash earnings were more than offset by less favorable working capital movements compared with the prior-year period.
Concerns
- PitchBook platform growth slowed, with particular softness in corporate and venture capital client segments and higher churn.
- Morningstar Wealth revenue decreased 4.3%, and organic revenue decreased 6.0%, reflecting the sunsetting of Morningstar Office.
- Morningstar Sustainalytics revenue declined on a reported and organic basis due to the sunsetting of the second-party opinions product.
- PitchBook adjusted operating income decreased 1.1% and adjusted operating margin decreased 1.5 percentage points, primarily due to higher compensation and technology infrastructure costs.
- Third-quarter cash provided by operating activities and free cash flow declined 2.6% and 2.9%, respectively.
What to watch
- The pace of Morningstar Credit issuance-supported growth across corporates, US asset-backed securities, and residential mortgage-backed securities ratings.
- PitchBook churn and demand trends in corporate and venture capital client segments.
- The revenue impact from sunsetting Morningstar Office and the second-party opinions product.
- Technology infrastructure costs associated with cloud migration and AI initiatives.
- Adoption of Direct AI and MCP offerings, including the PitchBook Data Premium Connector.
- Cash flow and working-capital movements following the third-quarter free-cash-flow decline.
Balance sheet and cash flow
- As of Sept. 30, 2026, cash, cash equivalents, and investments totaled $524.6 million, compared with $528.7 million as of Dec. 31, 2025.
- As of Sept. 30, 2026, the Company had $1.7 billion of debt, compared with $1.1 billion as of Dec. 31, 2025.
- During the quarter, the Company reduced its debt by $34.7 million, net.
- Cash and cash equivalents were $496.7 million as of September 30, 2026, compared with $474.5 million as of December 31, 2025.
- Long-term debt was $1,660.5 million as of September 30, 2026, compared with $1,072.6 million as of December 31, 2025.
- Nine-month acquisitions, net of cash acquired, were $(359.6) million.
Analysis
Morningstar reported broad third-quarter growth, with GAAP revenue increasing 8.9% to $672.1 million and organic revenue increasing 6.8%. Operating income rose 31.0% to $167.4 million, outpacing revenue as total operating expense increased 3.0%. GAAP operating margin expanded to 24.9% from 20.7%, while adjusted operating margin expanded to 28.3% from 24.4%. Diluted net income per share increased 41.0% to $3.06, and adjusted diluted net income per share increased 36.5% to $3.48.
Morningstar Credit was the largest growth engine among the operating segments, with revenue increasing 18.3% and adjusted operating income increasing 44.5%, supported by robust issuance. Morningstar Retirement revenue increased 21.3%, and its adjusted operating margin reached 57.1%. Morningstar Direct Platform added $11.4 million to consolidated revenue growth, driven by Morningstar Data and Morningstar Direct. Corporate and All Other revenue rose 30.9% on a reported basis, primarily because of the CRSP acquisition, while its organic growth was 1.8%.
Mix was uneven. PitchBook revenue increased 3.9%, but platform growth slowed amid softness and higher churn in corporate and venture capital clients. Its adjusted operating income declined 1.1% and adjusted operating margin decreased to 29.8%, reflecting higher compensation and technology infrastructure costs. Morningstar Wealth revenue declined 4.3%, largely due to the Morningstar Office sunset. Its AUMA declined 8.5% to $64.8 billion after the loss of an Asset Allocation Services client in Japan, although the client accounted for a negligible share of Investment Management revenue and combined Morningstar Model Portfolios and International Wealth Platform AUMA increased 12.1% to $56.5 billion.
Expense discipline supported margin gains despite targeted spending. Technology infrastructure costs increased $7.1 million, largely from cloud migration and AI initiatives, and advertising and marketing expense increased $5.3 million. These costs were partially offset by a $7.9 million decline in compensation costs, though severance costs increased $6.9 million. The CRSP acquisition was accretive to adjusted operating margin, and reported Morningstar Indexes growth was primarily driven by that acquisition.
Cash generation was softer in the quarter. Cash provided by operating activities declined 2.6% to $190.7 million and free cash flow declined 2.9% to $155.4 million because less favorable working-capital movements more than offset higher cash earnings. The company repurchased $100.0 million of shares and paid $18.7 million in dividends during the quarter, while reducing debt by $34.7 million, net. As of Sept. 30, 2026, cash, cash equivalents, and investments were $524.6 million and debt was $1.7 billion. The filing provided no forward financial guidance.
Management, verbatim
We continue to put important product enhancements in the hands of our clients while delivering profitable growth.
Kunal Kapoor, Morningstar CEO
This month, we launched Direct AI, which features agentic workflows backed by our trusted data, research, and analytics.
Kunal Kapoor, Morningstar CEO
As clients increasingly engage with our data within AI-driven workflows, we're also seeing strong adoption across our MCP offerings, with cumulative tool calls through the PitchBook Data Premium Connector surpassing 13 million in October, up from 1 million in July.
Kunal Kapoor, Morningstar CEO
Not in the filing
stated, not guessed- Forward revenue guidance
- Forward gross margin guidance
- Forward operating expense guidance
- Forward tax-rate guidance
- Prior outlook for comparison
- Gross margin for the third quarter of 2026
- Dividend per share
- Prior-quarter comparisons for reported metrics
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.