Morningstar offers a smorgasbord of financial information to individual, professional, and institutional investors via Internet, software, and print-based products. The company provides data on some 375,000 investment products, including stocks and mutual funds. It also provides real-time global market data on more than 8 million equities, indexes, futures, options, and commodities. Its Morningstar Style Box, which provides a visual summary of a mutual fund's underlying investment style, and Morningstar Ratings, which rate past performance based on risk- and cost-adjusted returns, have become fixtures on the investment landscape. Company founder Joe Mansueto owns about 50% of Morningstar.
Morningstar has operations in about 25 countries. It operates through two segments: Investment Information (data, software, and research services) and Investment Management (asset management operations). The company earns the majority of its revenues through subscriptions, license agreements, advertising on its websites, and asset-based fees.
In 2011 Morningstar's net income was $98.4 million, compared with $86.4 million in 2010. The company benefitted from an increase in revenue by 13.7% to $631.4 million, up from $555.4 million in 2010. Morningstar gained revenues from acquisitions it completed in 2010, and was also favorably impacted by foreign currency translations, as well as higher revenue from Licensed Data (a set of investment data spanning several databases), Morningstar.com ad sales, and Morningstar Direct (a product for institutional investment researchers).
Licensed Data is the company's largest money-maker, earning nearly 18% of total revenues. Another major activity is Investment Consulting, which accounts for about 12% of revenues, and includes institutional investment advisory and management services for asset management firms, broker/dealers, insurance providers, and investment fiduciaries. Other major revenue-generators include Morningstar Advisor Workstation, a Web-based investment planning system for financial advisors (12% of revenues); the Morningstar.com website, which features content for individual investors on portfolio planning, mutual funds, and stocks (9%); and Morningstar Direct (8%).
In 2012 Morningstar divested a couple of assets. It sold its Australian financial services trade publishing business to Sterling Publishing Pty Ltd. It also sold its investor relations business, which maintained investor relations pages of corporate websites, to UK-based Investis, a specialist in digital corporate communications for public companies. Morningstar made the sales to streamline its product line and focus on its core research, software, data, and investment management businesses.
Historically, the company used acquisitions to expand its products' functionality, sell more subscriptions, and reach new market segments. Though it did not make any acquisitions in 2011, it grew through previous purchases such as 10KWizard, Logical Information Machines, key assets from Hemscott, and Realpoint (a statistical ratings organization, renamed Morningstar Credit Ratings). – less
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