Morningstar Inc

Item 1A.Risk Factors 

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors in Part I, Item 1A. Risk Factors in our Annual Report, as updated in this Quarterly Report, when deciding whether to invest in our common stock or otherwise evaluating our business. If any of those risks or uncertainties materialize, our business, financial condition, and/or operating results could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. Our operations could also be affected by other risks and uncertainties that are not presently known to us or that we currently consider immaterial to our operations.

Failing to maintain and protect our brand, independence, and reputation may harm our business. Our reputation and business may also be negatively impacted by allegations made about possible conflicts of interest, or by other negative publicity or media reports.

We believe that the reputation of our company and our brand generally, as well as the perception of our research and ratings products and services, is based on the trust that users of our products and services have in our commitment to our mission to empower investor success underscored by principles of independence, transparency, and long-term and in Part II, "Item 1A, Risk Factors" in our Quarterly Report on Form 10-Q focus. Any failures by us to instill in our employees tr the expectation of independence and integrity may devalue our reputation over time and negatively affect both hiring and retention efforts. Any failure to uphold these standards, and any real or perceived failure of our customers to have consistently positive experiences with us could damage our reputation. Our reputation may also be harmed if any errors are found in our products or services.

As our business has evolved, we have entered, and may in the future enter into, lines of business and business arrangements that may give rise to allegations of conflicts of interest or perceived failurequarter ended March 31, 2025 as well as of our independence and objectivity. For example, we provide ratings, analyst research, and investment recommendations on mutual funds, ETFs, and other investment products offered by our institutional clients. While we dont charge asset management firms for their products to be rated, we do charge licensing fees for the use of our ratings. We also provide investment advisory and investment management services, including through our own series of mutual funds, which expose us to the claim that we are acting as both a referee and a player in the investment management industry. In our credit ratings business and Mornther risks described in this Report, when decidingstar Sustainalytics Sustainable Finance Solutions products, we are participants in an issuer-pay business model under which we receive payments from issuers for our ratings rat whether than from the o investors who consume such ratings. These payments may create the perception that o in our ratings and research in these areas are not independently determined.

Certain of our product offerings, such as those offered by Morningstar Sustainalytics and certain of our methodologies have, and may in common stock or othe future, put us at the center of public debate over a variety of issues surrounding sustainability, social concerns, and corporate governance. This scrutiny may impact the demand for our products, lead to negative media coverage, reputrwise evaluational harm or increased government or regulatory scrutiny. Failure to successfully navigate these issues as they arise may have an adverse effect on our reputation and our ng our business.

Our reputation may also be harmed by factors outside of our control, such as news reports about our clients, consultants, or suppliers, regulatory scrutiny, and adverse publicity about certain types of investment and ratings products generally. Scrutiny of our competitors could damage the reputation of the industries that we operate in, which could harm the reputation of the company or certain of our products and services. We may also suffer brand dilution as our brand becomes associated with an increasingly broad array of products and services that may align less directly with our corporate mission.

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Changing If any of those risks or uncertainties economic conditions, including prolonged volatility, recessions, or downturns affecting the financial sector and global financial markets, and impacts of global trade policies may negatively impact omaterialize, our financial results.

Our business results are partly driven by factors outside of our control including, but not limited to, general economic and , financial market trends which may be impacted by availability of credit, changes in laws, trade policies and barriers, currency exchange rates and controls, and natconditional and international geopolitical circumstances and uncertainties. Prolonged economic and financial downturns, recessions, sustained volatility in the financial markets, interest and inflation rate fluctuations and , and/or operiods of stagflation, among other conditions impacting investor sentiment can reduce investor interest and investment activity and have, and may in the future, decrease demand for our software, data, analyst ratings, research products, and decrease net flows of funds into our investment management products. Recent market conditions impacted by potential imposition of tariffs and retaliatory trade measures, among other factors, have and may continue to decrease the value of assets under management. We cannot predict the occurrence, timing or duration of any economic cycle generally or in the markets in which our businesses operate, nor can we predict tating results could suffer. In that case, the extent to which ttrade policies, including tariffs, will, directly or indirectly, impact our business, operating results, and financial condition.

The amount of asset-based revenue we earn primarily depends on the value of assets on which we provide advisory services, and the size of our asset base can increase or decrease based on market performance. Our revenue from asset-based fees has been, and may in the future be, adversely affected by market declines. Asset levels can also be affected if inflows into the portfolios for which we provide investment advisory services drop or if these portfolios experience redemptions. A drop in inflows or an increase in redemptions can result from a variety of factors, including overall marketing price of our common stock conditions or uncompetitive investment performance. If the level of assets on which we provide investment advisory or investment management services deculd declines, we would expect our fee-based revenue to experience a corresponding decline. The industrywide trend toward lower asset-based fees , and you may also impact our fee-based revenue. A shift by investors to non-traditional asset classes such as cryptocurrencies, private debt, real estate, structured products, and collectibles may affect lose all or part of your assets under management if we are unable to incorporate them into our ininvestment strategies or if they fail to perform in the manner that our research anticipates.

For o. Our license-based businesses, many of our customers are asset management and financial advisory firms and other financial-services companies, who are also subject to global market trends. The ascendance of passive investment strategies may affect both the profitability of asset managers that focus on actively managed strategies, on whose success we in part depend, and the perceived value of our research regarding such actively managed strategies. A sustained global recession or other financial downturn or crisis would likely lead to material spending cutbacks among certain of our clients, and create longer sales cycles. Consolidation in the financial services sector reduces the number of potential clients for our products and services. Further, clients may discontinue their use of our products and services should they fail and/or merge with or become acquired boperations could also be affected by other entities that are not our clients or that use fewer of our products risks and services. These trends could impact demand for our products and services or change the financial services landscape in which we operate, resulting in lower revenue and operating income.

Fluctuations in interest rates and rate uncertainty brought on by central bank decisions have reduced credit issuance in prior periods and may reduce credit issuance in future periods, which has in the past and may in the future put negative pressure on our credit ratings business. Our credit ratings business, as well as our second-party opinions (SPO) business, have also been, and may again be, impacted by volatility in US and international financial markets due to their dependence on the number and dollar volume of debt securities issued in the capital markets. Market disruptions, rising interest rates, widening credit spreads, and economic slowdowns historically have impacted and may in the future impact the volume of debt securities issued in global capital markets and the demand for credit ratings. Demand for credit ratings can also be adversely affected by negative publicity about the credit ratings business, regulatory and political developments, growth in the use of alternative sources of credit, and defaults by significant issuers. Our ability to reduce costs in the event of such adverse developments may be negatively impacted by, among other things, our obligations to monitor and maintain outstanding ratings. Declines or other changes in the markets for debt securities may mauncertainties that are not presently known to us or that we currently consider immaterially and adversely affect our business, operating results, and financial condition.

Our PitchBook business is also subject to cyclical trends specific to the private capital markets. Many of PitchBooks clients are investment banks and other participants in the capital and MA markets, which are subject to periodic business downturns driven by changes in such markets. During these downturns, they often seek to reduce spending on third-party services, as well as the number of employees, which would directly and adversely affect the number of prospective users for the PitchBook platform.

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 to our operations.