Morningstar EPS Jumps 41% on Credit Ratings Surge and Wider Margins

Morningstar's third-quarter earnings per share jumped 41% on Wednesday as a surge in its credit ratings business and tighter cost control widened margins, while the company leaned into AI tools built on its data.

The Chicago-based investment research firm reported revenue of $672.1 million, up 8.9% from a year earlier, with organic revenue up 6.8%, according to the earnings release it filed with an 8-K on Wednesday. Net income rose to $115.5 million, or $3.06 per diluted share, from $91.6 million, or $2.17 a share. Adjusted diluted EPS climbed 36.5% to $3.48 from $2.55.

Margins widen

Operating income rose 31.0% to $167.4 million, and operating margin expanded to 24.9% from 20.7%. Adjusted operating margin reached 28.3%, up from 24.4%, and the company said its acquisition of CRSP was accretive to that figure.

Operating expense rose just 3.0% to $504.7 million. Higher cloud and AI-related technology costs and a new brand campaign were partly offset by a $7.9 million decline in compensation costs, mainly from lower bonus expense, even as severance costs rose $6.9 million.

AI push

"This month, we launched Direct AI, which features agentic workflows backed by our trusted data, research, and analytics," CEO Kunal Kapoor said in the release. He added that cumulative tool calls through the PitchBook Data Premium Connector topped 13 million in October, up from 1 million in July.

Credit ratings shine, PitchBook slows

Morningstar Credit was the standout. Revenue rose 18.3% to $107.8 million, or 19.1% organically, on robust issuance across corporates and U.S. asset-backed and residential mortgage-backed securities. Adjusted operating income in the unit jumped 44.5% to $40.6 million.

Morningstar Direct Platform, the largest segment, grew revenue 5.4% to $222.5 million, while its adjusted operating margin rose 2.4 percentage points to 46.8%.

PitchBook was weaker. Revenue rose 3.9% to $175.6 million, but platform growth slowed, with particular softness and higher churn among corporate and venture capital clients. Its adjusted operating income slipped 1.1% to $52.3 million.

Morningstar Retirement revenue rose 21.3% to $41.5 million. Morningstar Wealth revenue fell 4.3% to $59.4 million, reflecting the sunsetting of Morningstar Office. Excluding sunset products across the company, organic revenue would have grown 7.8%.

Cash and capital

Free cash flow fell 2.9% to $155.4 million, as higher cash earnings were more than offset by less favorable working capital movements. During the quarter, Morningstar repurchased 486,573 shares for $100.0 million, paid $18.7 million in dividends and cut debt by a net $34.7 million.

Year to date, the company has bought back 2,777,829 shares for $500.0 million. It ended September with $524.6 million in cash and investments and $1.7 billion of debt, up from $1.1 billion at the end of 2025.

For the first nine months, revenue rose 9.7% to $2.0 billion and diluted EPS rose 41.6% to $8.61.

Sources

1. Morningstar Form 8-K with third-quarter 2026 earnings release (Exhibit 99.1), filed Oct. 28, 2026 (accession 0001289419-26-000056)

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