It is fair to say that, over the course of our history, our subscription-based model allowed us to grow the business by taking advantage of the float created by getting paid upfront for the services we delivered over time. That model remains important today, even as our product portfolio is more diversified now.

Generally speaking, our license-based products, such as Morningstar Data, Morningstar Direct, PitchBook, and Advisor Workstation, are contracted on one to three year terms. These contracts are billed annually, and while revenue is recognized ratably over the life of an agreement, cash is generally collected at the beginning of the annual term. 

Our asset-based solutions, including Investment Management and Workplace Solutions, have several fee structures that take into account the work we perform or investments we manage or advise. The majority of our contracts include variable asset-based fees, and we generally invoice clients and collect cash quarterly based on average assets for the quarter. An exception here is Morningstar Mutual Funds, where fees get calculated and collected monthly.

DBRS Morningstar contributes the majority of our transaction-based revenue, where fees are typically paid as services are delivered. A typical credit rating fee is partially collected upfront at issuance with the remainder collected over the life of the transaction. In general, cash collections in U.S. and European structured finance vary based on issuance volumes and generally arrive monthly on a staggered basis. Any associated surveillance work is billed annually in most instances, and usually last as long as the associated rating is outstanding. In the Canadian corporate market, DBRS Morningstar contracts are generally more recurring due to long-standing relationships with clients.

Seasonality has a minimal impact on the cash collections of our business in aggregate as new contracts and renewals are staggered throughout the year. Since we sell most of our products with license terms of at least one year, we recognize revenue ratably over the term of each license agreement. This tends to mitigate revenue variability in our license-based business over the long term.

We believe market movements and general market conditions have more influence on our performance than seasonality. The revenue we earn from asset-based fees depends on the value of assets on which we provide advisory services, and the size of our asset base can increase or decrease along with trends in market performance. In addition, our credit rating business is subject to market effects on the level of fixed income issuance.