July 9, 2021

What were the key drivers behind the decrease in Morningstar Direct’s annual revenue renewal / retention rate?
a. How did pandemic related headwinds impact that rate and have you seen those headwinds subside as you’ve moved into 2021?

In our 2020 10K, we disclosed that we modified our revenue renewal rate calculation; as such, the rate we reported in the 2019 10K for Morningstar Direct is not comparable with the 2020 rate. The primary driver of the methodology change for Morningstar Direct’s revenue renewal rate involves contract amendments; our historical revenue renewal rate calculation excluded the impact of any contract modification, whether positive or negative, from our renewal rate calculation. The updated methodology factors in net new business, along with the impact of any negative contract amendments. Under the current methodology, Morningstar Direct’s revenue renewal rate in 2019 was 97.2% vs. 96.4% in 2020. The primary driver of the underlying 80 bps of change was client consolidation, which negatively impacted both license and revenue growth. We believe the pandemic had little impact on Morningstar Direct’s revenue renewal rate in 2020, nor have we seen any material impact to date in 2021.

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