Morningstar Inc
For the period ended Jun 30, 2024. Filed Jul 26, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 26, 2024
MORN$244.15-1.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-26.
0001289419-24-000028
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-26.
0001289419-24-000059
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 163 previous paragraphs and 186 current paragraphs.
87 unchanged; 65 reworded; 31 added; 11 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 19 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (31)
Current report
•failing to close, or achieve the anticipated economic or other benefits of, a strategic transaction on a timely basis or at all;
Current report
Asset-based revenue increased $17.4 million, or 25.9% on a reported and organic basis, in the second quarter of 2024. Reported and organic revenue growth was primarily driven by increases in Morningstar Wealth, Morningstar Retirement, and Morningstar Indexes.
Current report
In thefirst six months of 2024, consolidated revenue increased 13.2% to$1,114.7 million. Foreign currency translations had a negative impact in the first six months of 2024, decreasing revenue by $0.2 million.
Current report
Transaction-based revenue increased $39.3 million, or 35.2%, in thefirst six months of 2024. On an organic basis, transaction-based revenue increased 32.7% primarily driven by Morningstar Credit revenue.
Current report
Increases in compensation expense, depreciation expense, and certain infrastructure-related costs were mostly offset by lower facilities-related expenses and professional fees during the second quarter of 2024.
Current report
Higher depreciation expense and SaaS-based software subscriptions of $4.6 million and $4.2 million, respectively, also helped offset decreases in other expenses during the first six months of 2024, due to the factors noted above.
Current report
Cost of revenue increased $6.3 million in the second quarter of 2024 and$5.6 million in the first six months of 2024. Higher compensation expense of $4.3 million and $4.2 million in the second quarter and first six months of 2024, respectively, were the primarily drivers of the increase due to the factors noted above.
Current report
Sales and marketing expense increased $1.8 million in the second quarter of 2024. Advertising and marketing costs increased $1.5 million during the second quarter of 2024 due to higher marketing campaign and conference expense.
Current report
General and administrative expense decreased $13.5 million in the first six months of 2024. A decline in professional fees of $9.2 million was the largest contributor to the decline due to the factors noted above. Facilities-related expenses also declined $6.7 million during the first six months of 2024 due to the factors noted above. These decreases were partially offset by higher compensation expense primarily due to an increase in bonus expense and company-sponsored benefits.
Current report
Intangible amortization expense was relatively flat during the second quarter of 2024 andthe first six months of 2024.
Current report
Consolidated operating income increased $134.9 million in thefirst six months of 2024, reflecting an increase in revenue of$130.3 million and a decrease in operating expense of$4.6 million. Operating margin was 18.0%, an increase of 11.3 percentage points compared with thefirst six months of 2023.
Current report
Morningstar Data and Analytics total revenue increased $27.8 million, or 7.6%, for the six months ended June 30, 2024. Revenue grew 7.5% on an organic basis, primarily driven by growth in Morningstar Data and Morningstar Direct.
Current report
Morningstar Data and Analytics adjusted operating income increased $17.5 million, or 10.9%, and adjusted operating margin increased 1.4 percentage points for the six months ended June 30, 2024.
Current report
PitchBook total revenue increased $14.9 million, or 10.9% on a reported and organic basis, for the three months ended June 30, 2024.
Current report
PitchBook adjusted operating income increased $10.1 million, or 27.2%, and adjusted operating margin increased 4.0 percentage points for the three months ended June 30, 2024. The increase in margin was partially driven by the forfeiture of stock in the now-terminated PitchBook management bonus plan, which was a compensation vehicle designed primarily to incentivize PitchBook's former CEO.
Current report
PitchBook total revenue increased $31.4 million, or 11.7% on a reported and organic basis, for the six months ended June 30, 2024. Revenue growth was primarily driven by the PitchBook platform.
Current report
PitchBook adjusted operating income increased $19.7 million, or 29.1%, and adjusted operating margin increased 4.0 percentage points for the six months ended June 30, 2024.
Current report
PitchBook depreciation expense was $8.3 million and $6.4 million for the three months ended June 30, 2024 and 2023, respectively, and $15.7 million and $12.7 millionfor the six months ended June 30, 2024 and 2023, respectively.
Current report
Morningstar Wealth adjusted operating loss decreased$10.1 million, or 82.1%, and adjusted operating margin increased 18.5 percentage pointsfor the three months ended June 30, 2024. In conjunction with the recent announcement of the expected sale of assets from the Morningstar Wealth Turnkey Asset Management Platform to AssetMark, the company recorded $3.3 million in severance expense in the quarter. These costs are excluded from Morningstar Wealth adjusted operating income and consolidated adjusted operating income.
Current report
Morningstar Wealth total revenue increased $10.9 million, or 9.8%, for the six months ended June 30, 2024. Revenue grew 10.1% on an organic basis, primarily driven by growth in Investment Management.
Current report
Morningstar Wealth adjusted operating loss decreased$19.1 million, or 71.0%, and adjusted operating margin increased 17.9 percentage points for the six months ended June 30, 2024.
Current report
Morningstar Credit total revenue increased $36.9 million, or 36.5%, for the six months ended June 30, 2024. Revenue grew 36.6% on an organic basis. Year-to-date growth, similar to the three months ended June 30, 2024, was supported by ratings-related revenue increasing across asset classes and geographies.
Current report
Morningstar Credit adjusted operating income increased $39.2 million and adjusted operating margin increased 28.2 percentage points for the six months ended June 30, 2024.
Current report
Morningstar Retirement total revenue increased $9.1 million, or 17.3% on a reported and organic basisfor the six months ended June 30, 2024. Year-to-date growth, similar to the three months ended June 30, 2024, was supported by higher AUMA, reflecting market gains and net positive flows to Managed Accounts, including Advisor Managed Accounts.
Current report
Morningstar Retirement adjusted operating income increased $6.9 million, or 28.0%, and adjusted operating margin increased 4.3 percentage points for the six months ended June 30, 2024.
Current report
Corporate and All Other revenue increased $5.3 million, or 11.9% on a reported basis, and$14.2 million, or 16.4% on a reported basisfor thethree and six months ended June 30, 2024, respectively.
Current report
Morningstar Indexes contributed$11.0 million to Corporate and All Other revenue growth with revenue increasing 37.2%, or 37.5%, on an organic basis for thefor the six months ended June 30, 2024.
Current report
Morningstar Sustainalytics revenues were relatively flat compared to the prior period for both license- and transaction-based products for thethree months ended June 30, 2024. In Europe, regulatory use cases and demand from institutional clients were areas of strength. This strength was largely offset by increased cancellations due to vendor consolidation and softness in parts of the asset management and wealth client segments. Revenue was also negatively impacted by actions taken to streamline the corporate solutions product lineup, specifically the licensed ratings product.
Current report
Morningstar Sustainalytics contributed $3.5 millionto Corporate and All Other revenue growth with revenue increasing 6.2%, or 6.3%, on an organic basis for the six months ended June 30, 2024.
Current report
During the second quarter of 2023, the company made the final cash payments of $59.9 million related to the Termination Agreement, which were reflected in operating cash flows. Excluding the impact of the payments related to the Termination Agreement and $3.2 million of severance paid related to the significant reduction and shift of the company's operations in China, free cash flow would have been positive $57.3 million for the three months ended June 30, 2023.
Current report
During the first quarter of 2023, the company made its final $50.0 million payment related to the acquisition of LCD, of which $4.5 million is reflected in operating cash flows and $45.5 million is reflected in financing cash flows. Excluding the impact of the LCD payment, payments related to the Termination Agreement, and $10.1 million of severance paid related to the significant reduction and shift of the company's operations in China, free cash flow would have been positive $62.6 million for the six months ended June 30, 2023.
Removed paragraphs (11)
Previous report
Higher compensation expense (which primarily consists of salaries, bonuses, and other company-sponsored benefits) and SaaS-based software subscriptions partially offset the declines noted above during the first quarter of 2024. Foreign currency translations had an unfavorable impact on operating expense of $1.3 million during the first quarter of 2024.
Previous report
Cost of revenue decreased slightly in the first quarter of 2024.
Previous report
Intangible amortization expense increased slightly during the first quarter of 2024.
Previous report
(3) Reflects the impact of M&A-related earn-outs included in operating expense.
Previous report
PitchBook total revenue increased $16.5 million, or 12.6% on a reported and organic basis, for the three months ended March 31, 2024.
Previous report
PitchBook adjusted operating income increased $9.6 million, or 31.6%, and adjusted operating margin increased 3.9 percentage points for the three months ended March 31, 2024.
Previous report
PitchBook depreciation expense was $7.4 million and $6.3 million for the three months ended March 31, 2024 and 2023, respectively.
Previous report
Morningstar Wealth adjusted operating loss decreased$9.0 million, or (61.6)%, and adjusted operating margin increased 17.1 percentage pointsfor the three months ended March 31, 2024. The loss narrowed compared to the prior-year period due in part to cost containment efforts, including targeted reorganizations in 2023, and a focus on discretionary expenses.
Previous report
Corporate and All Other increased $8.9 million, or 21.2% on a reported basis, driven by growth in Morningstar Indexes and Morningstar Sustainalytics.
Previous report
Morningstar Sustainalytics contributed $3.5 million to Corporate and All Other revenue growth with revenue increasing 12.8%, or 12.2% on an organic basis. License-based revenue for Morningstar Sustainalytics increased 9.0%, or 8.2% on an organic basis, primarily driven by regulatory use cases in Europe. Transaction-based revenue increased 83.4% or 84.8% on an organic basis, due to increased issuance of sustainable bonds.
Previous report
Corporate and All Other adjusted operating income increased $10.8 millionfor the three months ended March 31, 2024.
Reworded paragraphs (65)
Previous wording
A more complete description of these risks and uncertainties can be found in our other filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2023 (our Annual Report) as supplemented by our recent Quarterly Reports on Form 10-Q. If any of these risks and uncertainties materialize, our actual future results and other future events may vary significantly from what we expect. We do not undertake to update our forward-looking statements as a result of new information, future events, or otherwise, except as may be required by law. You are, however, advised to review any further disclosures we make on related subjects, and about new or additional risks, uncertainties, and assumptions in our future filings with the SEC on Forms 10-K, 10-Q, and 8-K.
Current wording
A more complete description of these risks and uncertainties can be found in our other filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2023 (our Annual Report) as supplemented by our recent Quarterly Reports on Form 10-Q. If any of these risks and uncertainties materialize, our actual future results and other future events may vary significantly from what we expect. We do not undertake to update our forward-looking statements as a result of new information, future events, or otherwise, except as may be required by law. You are, however, advised to review any further disclosures we make on related subjects, and about new or additional risks, uncertainties, and assumptions in our filings with the SEC on Forms 10-K, 10-Q, and 8-K.
Previous wording
The company has seven operating segments which are presented as the following five reportable segments: Morningstar Data and Analytics, PitchBook, Morningstar Wealth, Morningstar Credit, and Morningstar Retirement. The operating segments of Morningstar Sustainalytics and Morningstar Indexes do not individually meet the quantitative segment reporting thresholds and have been combined and presented as part of Corporate and All Other, which is not a reportable segment. Prior period segment information is presented on a comparable basis to the basis on which current period segment information is presented and reviewed by the chief operating decision maker (CODM). For additional information about our segment reporting, refer to Note 7 of the Notes to our Unaudited Condensed Financial Statements.
Current wording
The company has seven operating segments which are presented as the following five reportable segments: Morningstar Data and Analytics, PitchBook, Morningstar Wealth, Morningstar Credit, and Morningstar Retirement. The operating segments of Morningstar Sustainalytics and Morningstar Indexes do not individually meet the quantitative segment reporting thresholds and have been combined and presented as part of Corporate and All Other, which is not a reportable segment. Prior period segment information is presented on a comparable basis to the basis on which current period segment information is presented and reviewed by the chief operating decision maker (CODM). For additional information about our segment reporting, refer to Note 7 of the Notes to our Unaudited Financial Statements.
Previous wording
Three Months Ended March 31, 2024 vs. Three Months Ended March 31, 2023
Current wording
Three and Six Months Ended June 30, 2024 vs. Three and Six Months Ended June 30, 2023
Previous wording
•consolidated operating income, excluding intangible amortization expense, all merger and acquisition (M&A)-related expenses (including M&A-related earn-outs), and expenses related to the significant reduction and shift of the company's operations in China (adjusted operating income);
Current wording
•consolidated operating income, excluding intangible amortization expense, all merger and acquisition related expenses (related to merger, acquisition, and divestiture activity including severance and earn-outs (M&A-related expenses)), and expenses related to the significant reduction and shift of the company's operations in China (adjusted operating income);
Previous wording
•consolidated operating margin, excluding intangible amortization expense, all M&A-related expenses (including M&A-related earn-outs), and expenses related to the significant reduction and shift of the company's operations in China (adjusted operating margin); and
Current wording
•consolidated operating margin, excluding intangible amortization expense, all M&A-related expenses, and expenses related to the significant reduction and shift of the company's operations in China (adjusted operating margin); and
Previous wording
In the first quarter of 2024, consolidated revenue increased 13.2% to $542.8 million. Foreign currency movements had a positive impact in the quarter, increasing revenue by $1.2 million.
Current wording
In the second quarter of 2024, consolidated revenue increased 13.3% to $571.9 million. Foreign currency translations had a negative impact in the quarter, decreasing revenue by $1.4 million.
Previous wording
License-based revenue grew $36.2 million, or 9.9%, during the first quarter of 2024. On an organic basis, license-based revenue increased 9.9%. Reported and organic revenue growth was primarily driven by strong demand for PitchBook and Morningstar Data and Analytics products.
Current wording
License-based revenue grew $25.7 million, or 6.8%, during the second quarter of 2024. On an organic basis, license-based revenue increased 7.5%. Reported and organic revenue growth was primarily driven by strong demand for PitchBook and Morningstar Data and Analytics products.
Previous wording
Transaction-based revenue increased $15.2 million, or 30.2%, in the first quarter of 2024. On an organic basis, transaction-based revenue increased 27.3% primarily driven by Morningstar Credit revenue.
Current wording
Transaction-based revenue increased $24.1 million, or 39.3%, in the second quarter of 2024. On an organic basis, transaction-based revenue increased 37.2%, primarily driven by Morningstar Credit revenue.
Previous wording
Asset-based revenue increased $11.7 million, or 17.9%, in the first quarter of 2024. Organic revenue increased 18.2%, due to increases in Morningstar Indexes, Morningstar Wealth, and Morningstar Retirement.
Current wording
Asset-based revenue increased $29.1 million, or 21.9%, in thefirst six months of 2024. Organic revenue increased 22.1%, due to increases in Morningstar Wealth, Morningstar Indexes, and Morningstar Retirement.
Previous wording
Organic revenue increased 12.9% in the first quarter, driven by organic growth in PitchBook, Morningstar Data and Analytics, and Morningstar Credit. Foreign currency translations had a favorable impact of $1.2 million on revenue during the first quarter of 2024.
Current wording
Organic revenue increased 13.6% in the second quarter, driven by organic growth in Morningstar Credit, PitchBook, and Morningstar Data and Analytics. Organic revenue increased 13.3% during the first six months of 2024, driven by growth in Morningstar Credit, PitchBook, and Morningstar Data and Analytics. Foreign currency translations had a $1.4 million impact on revenue during the second quarter of 2024 and $0.2 million during the first six months of 2024.
Previous wording
International revenue comprised approximately 28% of our consolidated revenue for the first quarter of 2024 and 2023. Approximately 58% of international revenue was generated in Continental Europe and the United Kingdom during the first quarter of 2024 and 2023.
Current wording
International revenue comprised 28% of our consolidated revenue for the second quarter and first six months of 2024 and 2023. 57% and 58% of international revenue was generated in Continental Europe and the United Kingdom during the second quarter and first six months of 2024 and 2023, respectively.
Previous wording
Consolidated operating expense decreased $5.0 million, or 1.1%, in the first quarter of 2024. Excluding the impact of M&A-related expenses, and amortization in both periods, and costs related to the transition of the Company's China activities in the prior-year period, operating expense increased 1.0% in the quarter.
Current wording
Consolidated operating expense was relatively flat in the second quarter of 2024 and decreased $4.6 million, or 0.5%, during thesix months ended June 30, 2024. Excluding the impact of M&A-related expenses, amortization, and costs related to the transition of the company's China activities in the prior-year periods, operating expense increased 1.4% in the second quarter and 1.2% during the first six months of 2024. Foreign currency translations also had a favorable $1.7 million and $0.4 million impact on operating expense during the second quarter of 2024 and the first six months of 2024, respectively.
Previous wording
Compensation expense increased $3.7 million in the first quarter of 2024. These higher costs primarily reflect an increase in company-sponsored benefits.
Current wording
Compensation expense (which primarily consists of salaries, bonuses, and other company-sponsored benefits) increased $3.8 million in the second quarter of 2024. These higher costs primarily reflect an increase in bonus expense.
Previous wording
Depreciation expense increased $2.0 million in the first quarter of 2024, driven mainly by higher levels of capitalized software development over the past several years.
Current wording
Depreciation expense increased $2.6 million in the second quarter of 2024, driven mainly by higher levels of capitalized software development over the past several years.
Previous wording
Higher software subscriptions of $2.4 million were also a driver during the first three months of 2024 due to the company's investment in and renewal of various SaaS-based platforms across the business.
Current wording
Higher SaaS-based software subscriptions of $1.8 million were also an operating expense driver during the second quarter of 2024 due to the company's investment in and renewal of various SaaS-based platforms across the business.
Previous wording
Professional fees declined $4.4 million during the first quarter of 2024, due to lower expenses for third-party resources supporting M&A integration-related activity.
Current wording
Professional fees declined $4.0 million during the second quarter of 2024 due to lower expenses for third-party resources supporting M&A integration-related activity. The company’s strategic focus on building internal capabilities and optimizing resource allocation also resulted in a reduction of professional fees.
Previous wording
Facilities-related expenses decreased $2.5 million during the first quarter of 2024 due to reduction of office space in certain geographies.
Current wording
Facilities-related expenses decreased $4.5 million during the second quarter of 2024 partially due to reduction of office space in certain geographies.
Previous wording
Declines in professional fees and facilities-related expenses were the biggest contributors to the decrease in consolidated operating expense during the first quarter of 2024. Commission expense was also down during the first quarter of 2024.
Current wording
Declines in professional fees, facilities-related expenses, and commission expense were the biggest contributors to the decrease in consolidated operating expense during the first six months of 2024.
Previous wording
Commission expense also decreased $2.2 million during the first quarter of 2024, primarily due to sales performance against targets in certain areas relative to the prior year.
Current wording
Professional fees and facilities-related expenses decreased $8.5 million and $6.9 million, respectively, in the first six months of 2024, due to the factors noted above. Commission expense also decreased $2.0 million during the first six months of 2024, primarily due to sales performance against targets in certain areas relative to the prior year.
Previous wording
These decreases were partially offset by higher compensation expense primarily due to an increase in company-sponsored benefits and bonus expense.
Current wording
These declines were partially offset by higher compensation expense of $7.5 million in the first six months of 2024. These higher costs primarily reflect an increase in bonus expense and company-sponsored benefits.
Previous wording
Cost of revenue is our largest category of operating expense, representing about 40% of our total operating expense. Our business relies heavily on human capital, and cost of revenue includes the compensation expense for employees who develop our products and deliver our services. We include compensation expense for approximately 77% of our employees in this category.
Current wording
Cost of revenue is our largest category of operating expense, representing about half of our total operating expense. Our business relies heavily on human capital, and cost of revenue includes the compensation expense for employees who develop our products and deliver our services. We include compensation expense for approximately 76%of our employees in this category.
Previous wording
Sales and marketing expense decreased $3.0 million in the first quarter of 2024. Sales commission expense declined by $1.7 million due to the factors noted above. Compensation expense decreased $1.6 million primarily due to lower bonus expense. Advertising and marketing costs also decreased $0.6 million during the first quarter of 2024 due to lower pay-per-click advertising and marketing campaign expense for PitchBook.
Current wording
Sales and marketing expense decreased$1.2 million in thefirst six months of 2024. Compensation expense decreased $2.9 million primarily due to lower bonus expense. Sales commission expense also declined by $1.0 million, primarily due to sales performance against targets in certain areas relative to the prior year. These declines were offset by increases in advertising and marketing costs and professional fees during the first six months of 2024 due to the factors noted above.
Previous wording
General and administrative expense decreased $3.7 million during the first quarter of 2024. A decline in professional fees of $4.2 million was the largest contributor to the decline during the quarter. Facilities-related expenses also declined $2.2 million during the first quarter of 2024 due to the factors noted above.
Current wording
General and administrative expense decreased $9.8 million in the second quarter of 2024. A decline in professional fees of $5.0 million was the largest contributor to the decline during the quarter due to the factors noted above. Facilities-related expenses also declined $4.5 million during the second quarter of 2024 due to the factors noted above.
Previous wording
Consolidated operating income increased $68.1 million in the first quarter of 2024, reflecting an increase in revenue of $63.1 million and a decrease in operating expenses of $5.0 million. Operating margin was 17.1%, an increase of 12.0 percentage points compared with the first quarter of 2023.
Current wording
Consolidated operating income increased $66.8 million in the second quarter of 2024, reflecting an increase in revenue of $67.2 million and an increase in operating expense of $0.4 million. Operating margin was 19.0%, an increase of 10.7 percentage points compared with the second quarter of 2023.
Previous wording
We reported adjusted operating income of $110.8 million in the first quarter of 2024, which excludes intangible amortization expense, M&A-related expenses (including M&A-related earn-outs), and expenses related to the significant reduction and shift of the company's operations in China. Adjusted operating income is a non-GAAP financial measure; the table below shows a reconciliation to the most directly comparable GAAP financial measure.
Current wording
We reported adjusted operating income of $131.0 million and$241.8 million in the second quarter of 2024 andfirst six months of 2024, respectively, which excludes intangible amortization expense, M&A-related expenses, and expenses related to the significant reduction and shift of the company's operations in China. Adjusted operating income is a non-GAAP financial measure; the table below shows a reconciliation to the most directly comparable GAAP financial measure.
Previous wording
We reported adjusted operating margin of 20.4% in the first quarter of 2024, which excludes intangible amortization expense, M&A-related expenses (including M&A-related earn-outs), and expenses related to the significant reduction and shift of the company's operations in China. Adjusted operating margin is a non-GAAP financial measure; the table below shows a reconciliation to the most directly comparable GAAP financial measure.
Current wording
We reported adjusted operating margin of 22.9% in the second quarter of 2024 and 21.7% first six months of 2024, which excludes intangible amortization expense, M&A-related expenses, and expenses related to the significant reduction and shift of the company's operations in China. Adjusted operating margin is a non-GAAP financial measure; the table below shows a reconciliation to the most directly comparable GAAP financial measure.
Previous wording
(1) Excludes finance lease amortization expense of $0.3 million and $0.1 million during the first three months of 2024 and 2023, respectively.
Current wording
(1) Excludes finance lease amortization expense of $0.1 million and $0.4 million during the three months ended June 30, 2024 and 2023, respectively, and $0.4 million and $0.5 million during the six months ended June 30, 2024 and 2023, respectively.
Previous wording
(2) Reflects non-recurring expenses related to M&A activity including pre-deal due diligence, transaction costs, and post-close integration costs.
Current wording
(2) Reflects non-recurring expenses related to merger, acquisition, and divestiture activity including pre-deal due diligence, transaction costs, severance, and post-close integration costs.
Previous wording
Severance and personnel expenses include severance charges, incentive payments related to early signing of severance agreements, transition bonuses, and stock-based compensation related to the accelerated vesting of restricted stock unit and market share unit awards. In addition, the reversal of accrued sabbatical liabilities is included in this category.
Current wording
Severance and personnel expenses include severance charges, incentive payments related to early signing of severance agreements, transition bonuses, and stock-based compensation related to the accelerated vesting of restricted stock unit and market stock unit awards. In addition, the reversal of accrued sabbatical liabilities is included in this category.
Previous wording
(5) Corporate and All Other includes unallocated corporate expenses of $40.9 million and $36.1 million during the first three months of 2024 and 2023, respectively, as well as adjusted operating income (loss) from Morningstar Sustainalytics and Morningstar Indexes. Unallocated corporate expenses include finance, human resources, legal, and other management-related costs that are not considered when segment performance is evaluated.
Current wording
(4) Corporate and All Other includes unallocated corporate expenses as well as adjusted operating income (loss) from Morningstar Sustainalytics and Morningstar Indexes. During the second quarter of 2024 and 2023, unallocated corporate expenses were $46.1 million and $38.9 million, respectively. During first six months of 2024 and 2023, unallocated corporate expenses were $87.0 million and $75.0 million, respectively. Unallocated corporate expenses include finance, human resources, legal, marketing, and other management-related costs that are not considered when segment performance is evaluated.
Previous wording
Morningstar Data and Analytics total revenue increased $16.9 million, or 9.4%, for the three months ended March 31, 2024. Revenue grew 8.9% on an organic basis, primarily driven by strength in Morningstar Data and Morningstar Direct. Morningstar Advisor Workstation also made a positive contribution to growth in the quarter.
Current wording
Morningstar Data and Analytics total revenue increased $10.9 million, or 5.9%, for the three months ended June 30, 2024. Revenue grew 6.2% on an organic basis, primarily driven by growth in Morningstar Data and Morningstar Direct.
Previous wording
Morningstar Data contributed $7.3 million to Morningstar Data and Analytics revenue growth, with revenue increasing 10.8% or 10.0%on an organic basis, supported by growth in North America and Europe. Managed investment data, including mutual fund data, also continued to be a key driver of higher revenue.
Current wording
Morningstar Data contributed $3.1 million to Morningstar Data and Analytics revenue growth, with revenue increasing 4.5% or 4.7%on an organic basis. Managed investment (mutual fund) data, especially in Europe, continued to be a key driver of higher revenue, partially offset by lower contributions to growth from Morningstar Essentials and equity and exchange market data.
Previous wording
Morningstar Direct cont ributed $5.8 million to Morningstar Data and Analytics revenue growth, with revenue increasing 11.9%, or 11.5%, on an organic basis, reflecting growth across North America and Europe. Direct licenses increased 0.7%.
Current wording
Morningstar Direct cont ributed $5.5 million to Morningstar Data and Analytics revenue growth, with revenue increasing 11.0%, or 11.6%, on an organic basis, reflecting growth across all geographies. Direct licenses increased 0.7%.
Previous wording
Morningstar Data and Analytics adjusted operating income increased $10.3 million, or 12.7%, and adjusted operating margin increased 1.4 percentage points for the three months ended March 31, 2024.
Current wording
Morningstar Data and Analytics adjusted operating income increased $7.2 million, or 9.0%, and adjusted operating margin increased 1.2 percentage points for the three months ended June 30, 2024.
Previous wording
Morningstar Data and Analytics depreciation expense was $8.2 million and $7.4 million for thethree months ended March 31, 2024 and 2023, respectively.
Current wording
Morningstar Data and Analytics depreciation expense was $9.5 million and $7.8 million for thethree months ended June 30, 2024 and 2023, respectively, and $17.7 million and $15.2 millionfor the six months ended June 30, 2024 and 2023, respectively.
Previous wording
Revenue for the PitchBook platform, direct data, and Leveraged Commentary & Data (LCD), contributed $16.7 million to PitchBook revenue growth, with revenue increasing 13.0% ona reported and organic basis. Growth was primarily driven by the PitchBook platform with licensed users growing 10.5%. With the substantial completion of the LCD integration, LCD's core news, research, and data are now available on the platform. Legacy LCD clients are starting to successfully migrate to the PitchBook platform and are included in PitchBook licensed user counts. PitchBook platform growth drivers were consistent with recent quarters with revenue increasing primarily due to strength in PitchBook's core investor and advisor client groups which offset some softness in corporates.
Current wording
Revenue for the PitchBook platform, direct data, and Leveraged Commentary & Data (LCD) combined contributed $14.8 million to PitchBook revenue growth, with revenue increasing 11.0% ona reported and organic basis. Growth was primarily driven by the PitchBook platform with licensed users growing 16.6%, including the impact of legacy LCD clients who have moved to PitchBook licenses. PitchBook platform growth drivers were consistent with prior recent quarters and reflected strength in PitchBook's core investor and advisor client segments, including venture capital, private equity, and investment banks. This was partially offset by continued softness in the corporate client segment, especially with smaller firms with more limited use cases.
Previous wording
Morningstar Wealth asset-based revenue represented 56.9% of total segment revenue in 2024. Revenue is based on quarter-end, prior quarter-end, or average asset levels during each quarter, which are often reported on a one-quarter lag for certain Investment Management products including Morningstar Managed Portfolios. The timing of this client asset reporting and the structure of our contracts often results in a lag between market movements and the impact on revenue. The following table summarizes our approximate Morningstar Wealth AUMA:
Current wording
Morningstar Wealth asset-based revenue represented 57.1% of total segment revenue for the six months ended June 30, 2024. Revenue is based on quarter-end, prior quarter-end, or average asset levels during each quarter, which are often reported on a one-quarter lag for certain Investment Management products including Morningstar Managed Portfolios. The timing of this client asset reporting and the structure of our contracts often results in a lag between market movements and the impact on revenue. The following table summarizes our approximate Morningstar Wealth AUMA:
Previous wording
Morningstar Wealth total revenue increased $4.1 million, or 7.5%, for the three months ended March 31, 2024. Revenue grew 7.7% on an organic basis, primarily driven by growth in Investment Management.
Current wording
Morningstar Wealth total revenue increased $6.8 million, or 12.2%, for the three months ended June 30, 2024. Revenue grew 12.4% on an organic basis, primarily driven by growth in Investment Management.
Previous wording
Investment Management contributed $4.0 million to consolidated revenue growth, with revenue increasing 13.5% ona reported or 13.9% organic basis. Growth was primarily supported by higher revenue for strategist model portfolios offered on third-party platforms and revenue growth for the international wealth platform. Reported AUMA increased 12.3% to $57.6 billion compared with the prior-year period, supported by strong market performance which drove higher asset values. Positive net flows to Morningstar Managed Portfolios over the trailing 12 months primarily reflected strong net inflows outside the U.S. Those offset lower AUM for Institutional Asset Management which experienced significant expected outflows from a large institutional client.
Current wording
Investment Management contributed $6.4 million to consolidated revenue growth, with revenue increasing 21.8% ona reported or 22.0% organic basis. Growth was primarily supported by higher revenue for strategist model portfolios offered on third-party platforms and revenue growth for the International Wealth Platform. Reported AUMA increased 11.3% to $59.1 billion compared with the prior-year period, supported by strong market performance which drove higher asset values. Positive net flows to Morningstar Managed Portfolios over the trailing 12 months primarily reflected strong net inflows outside the U.S.
Previous wording
Morningstar Wealth depreciation expense was $4.7 million and $3.8 million for the three months ended March 31, 2024 and 2023, respectively.
Current wording
Morningstar Wealth depreciation expense was $5.0 million and $3.9 million for the three months ended June 30, 2024 and 2023, respectively, and $9.7 million and $7.7 millionfor the six months ended June 30, 2024 and 2023, respectively.
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Current report — wording carried from elsewhere
License-based revenue grew $61.9 million, or 8.4%, during thefirst six months of 2024. On an organic basis, license-based revenue increased 8.7%. Reported and organic revenue growth was primarily driven by strong demand for PitchBook and Morningstar Data and Analytics products.
Current report — wording carried from elsewhere
Depreciation expense increased $2.6 million in the second quarter of 2024 and$4.6 million in the first six months of 2024, driven mainly by higher levels of capitalized software development over the past several years.
Current report — wording carried from elsewhere
We generated free cash flow of $120.8 million in the second quarter of 2024 compared with negative $5.8 million in the second quarterof 2023. The change reflects a $128.2 million increase in cash provided by operating activities and an increase in capital expenditures compared to the prior-year period. The increase in cash flow from operations was primarily driven by higher cash earnings and improvements in working capital.