What the changes say
- Morningstar added risks regarding AI market sentiment impacts and third-party data reliance, while expanding disclosures on compliance, IP protection, and vendor dependencies across its global operations.
What changed since the prior 10-K
New
- NewRisks Related to Our Business and Industry
Changing economic conditions, including prolonged volatility, recessions, or downturns affecting the financial sector and global financial markets, fluctuating interest rates, and the impacts of global trade policies, may negatively impact our business
Market sentiment concerning the impact of AI on software and data companies has driven recent sector-wide stock price declines for Morningstar.
- NewRisks Related to Our Information Technology and Security
We could face liability stemming from the accuracy and use of our research, ratings, and published data, and our dependence on ingested third-party data, licensed content, and open-source components
Clients or third parties may bring legal claims against Morningstar for losses linked to product errors, data inaccuracies, or non-public information misuse.
Dropped
- DroppedRisks Related to Our Business and Industry
Prolonged volatility or downturns affecting the financial sector, global financial markets, and the global economy may impact our financial results
- DroppedRisks Related to Our Information Technology and Security
We could face liability for failing to properly protect or use the information and data we collect, store, use, create, and distribute or the reports and other documents we publish or that are produced by our software products
- DroppedRisks Related to Our Operations
Our business is complex and has experienced significant growth in recent years which could strain our resources and infrastructure, and if we are unable to effectively scale our operations and increase productivity, we may not be able to successfully implement our business plan
Prolonged volatility or downturns affecting financial markets and the global economy may impact financial results.
- DroppedRisks Related to Our Operations
Changes in geopolitics and the regulatory landscape could adversely affect our ability to expand (and the demand for) our product and service offerings
Reworded
- 97% rewrittenRisks Related to Our Business and Industry
Failing to create and maintain innovative, proprietary, and insightful product and service offerings, keep pace with new investor requirements, technology developments, and trends, or anticipate our clients’ changing needs may negatively affect our competitive position and business
Added failure to incorporate or deploy AI technologies to meet evolving customer needs as a competitive threat.
Was: Failing to create innovative, proprietary and insightful product and service offerings, keep pace with new investor requirements, technology developments, and trends, or anticipate our clients’ changing needs may negatively affect our competitive position and business results
- 94% rewrittenRisks Related to Legal and Regulatory Matters
Errors in our automated advisory tools may subject us to liability for any losses that result
Added that ongoing training costs are required to maintain in-house expertise for automated retirement and portfolio tools.
- 94% rewrittenRisks Related to Our Operations
Our operations are dependent on third-party service providers
Added risks that vendors are often competitors and that Morningstar relies on third-party AI product engines and open-source software.
Was: We are dependent on third-party service providers in our operations
- 94% rewrittenRisks Related to Our Business and Industry
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, lack of independence, or by other negative publicity or media reports
Added that negative news about clients, suppliers, or competitors can impact Morningstar's reputation.
Was: 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
- 94% rewrittenRisks Related to Our Operations
Our future success depends on our ability to recruit, develop, and retain qualified employees
Added compliance complexities and geopolitical unrest risks associated with managing a distributed workforce across global geographies.
- 90% rewrittenRisks Related to Legal and Regulatory Matters
Compliance failures, regulatory action, or changes in laws could adversely affect our business
Added that the global nature of operations makes monitoring and implementing regulatory changes more complex.
- 90% rewrittenRisks Related to Our Information Technology and Security
Failure to protect our intellectual property rights, or claims of intellectual property infringement against us, could harm our brand, our financial results, and our competitive position
Added that non-US jurisdictions may lack strong intellectual property protections, increasing vulnerability to unauthorized use.
Was: Failure to protect our intellectual property rights, or claims of intellectual property infringement against us, could harm our brand, our financial performance and our ability to compete effectively
- 87% rewrittenRisks Related to Legal and Regulatory Matters
Several of our businesses are highly regulated throughout the world, and the regulatory environment is increasingly complicated and rapidly evolving
Named Morningstar DBRS specifically and listed its regulated jurisdictions in Canada, the US, the UK, Australia, and the EU.
- 87% rewrittenRisks Related to Our Information Technology and Security
We could face significant reputational, operational, and financial consequences relating to cybersecurity and the protection of confidential information, including personal information about individuals
Was: We could face significant reputational and financial consequences relating to cybersecurity and the protection of confidential information, including personal information about individuals
- 86% rewrittenRisks Related to Legal and Regulatory Matters
Environmental, social, and governance considerations could result in enhanced regulatory obligations and expose us to potential liabilities and increased costs
- 81% rewrittenRisks Related to Our Operations
The goodwill of our business and other intangible assets could be impaired in the future, requiring us to record substantial impairments that could impact future earnings
Was: The goodwill of our business and other intangible assets from our acquisitions could be impaired as a result of business conditions in the future, requiring us to record substantial impairments that would impact our operating income
- 79% rewrittenRisks Related to Our Information Technology and Security
AI technologies may present business, legal, compliance, and reputational risks as they are incorporated into our products and tools
Was: AI technologies may present business, legal, and reputational risks as they are incorporated into our products and tools
- 69% rewrittenRisks Related to Our Operations
Our insurance coverage may be inadequate or expensive
- 68% rewrittenRisks Related to Ownership of Our Common Stock
Our stock price may not reflect our assessment of intrinsic value and future sales of our common stock by our significant shareholders and fluctuations in our operating results may negatively affect our stock price
Was: Future sales of our common stock and fluctuations in our operating results may negatively affect our stock price
- 58% rewrittenRisks Related to Our Operations
Our strategic transactions, acquisitions, dispositions, and investments in companies or technologies may not result in the expected business or financial benefits, ultimately having an adverse effect on our operating results and our ability to deliver long-term value to our shareholders
Was: Our strategic transactions, acquisitions and investments in companies or technologies may not result in the expected business or financial benefits, ultimately having an adverse effect on our operating results and our ability to deliver long-term value to our shareholders
- 56% rewrittenRisks Related to Our Operations
As a global taxpayer, we face challenges due to increasing complexities in accounting for taxes (e.g., base erosion, minimum taxes, and tax transparency), which are high priorities in jurisdictions in which we operate and could materially affect our tax obligations and effective tax rate
- 25% rewrittenRisks Related to Ownership of Our Common Stock
The concentrated ownership position of Joe Mansueto could adversely affect our other shareholders
- 23% rewrittenRisks Related to Our Operations
Our indebtedness could adversely affect our cash flow and financial flexibility. Our variable rate indebtedness could subject us to interest rate risk, which could cause our debt service obligations to increase significantly
All 22 risk factors
Headings as the filing states them, in filing order.
Risks Related to Our Business and Industry
- 01Failing 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, lack of independence, or by other negative publicity or media reports94% rewritten
- 02Failing to create and maintain innovative, proprietary, and insightful product and service offerings, keep pace with new investor requirements, technology developments, and trends, or anticipate our clients’ changing needs may negatively affect our competitive position and business97% rewritten
- 03Changing economic conditions, including prolonged volatility, recessions, or downturns affecting the financial sector and global financial markets, fluctuating interest rates, and the impacts of global trade policies, may negatively impact our businessNew
Risks Related to Our Information Technology and Security
- 04We could face significant reputational, operational, and financial consequences relating to cybersecurity and the protection of confidential information, including personal information about individuals87% rewritten
- 05AI technologies may present business, legal, compliance, and reputational risks as they are incorporated into our products and tools79% rewritten
- 06We could face liability stemming from the accuracy and use of our research, ratings, and published data, and our dependence on ingested third-party data, licensed content, and open-source componentsNew
- 07Failure to protect our intellectual property rights, or claims of intellectual property infringement against us, could harm our brand, our financial results, and our competitive position90% rewritten
Risks Related to Legal and Regulatory Matters
- 08Compliance failures, regulatory action, or changes in laws could adversely affect our business90% rewritten
- 09Several of our businesses are highly regulated throughout the world, and the regulatory environment is increasingly complicated and rapidly evolving87% rewritten
- 10Environmental, social, and governance considerations could result in enhanced regulatory obligations and expose us to potential liabilities and increased costs86% rewritten
- 11Errors in our automated advisory tools may subject us to liability for any losses that result94% rewritten
Risks Related to Our Operations
- 12Our future success depends on our ability to recruit, develop, and retain qualified employees94% rewritten
- 13Our operations are dependent on third-party service providers94% rewritten
- 14Our strategic transactions, acquisitions, dispositions, and investments in companies or technologies may not result in the expected business or financial benefits, ultimately having an adverse effect on our operating results and our ability to deliver long-term value to our shareholders58% rewritten
- 15The goodwill of our business and other intangible assets could be impaired in the future, requiring us to record substantial impairments that could impact future earnings81% rewritten
- 16As a global taxpayer, we face challenges due to increasing complexities in accounting for taxes (e.g., base erosion, minimum taxes, and tax transparency), which are high priorities in jurisdictions in which we operate and could materially affect our tax obligations and effective tax rate56% rewritten
- 17Our revenues, expenses, assets, and liabilities are subject to fluctuations in foreign currency exchange rates
- 18Our indebtedness could adversely affect our cash flow and financial flexibility. Our variable rate indebtedness could subject us to interest rate risk, which could cause our debt service obligations to increase significantly23% rewritten
- 19Our insurance coverage may be inadequate or expensive69% rewritten
Risks Related to Ownership of Our Common Stock
- 20The concentrated ownership position of Joe Mansueto could adversely affect our other shareholders25% rewritten
- 21Our stock price may not reflect our assessment of intrinsic value and future sales of our common stock by our significant shareholders and fluctuations in our operating results may negatively affect our stock price68% rewritten
- 22We cannot guarantee we will pay dividends in the future or make any repurchases of our common stock under our repurchase program
Other Morningstar 10-Ks
- FY2024 10-K risk factors24 risks
Morningstar faces intense risks regarding its research independence, regulatory compliance across global markets, and data/cybersecurity protection.
Filed Feb 28, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.