Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 20, 2018 | |
Document and Entity Information Abstract | ||
Entity Registrant Name | MORNINGSTAR, INC. | |
Entity Central Index Key | 1,289,419 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 42,517,468 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Revenue | $ 243.5 | $ 209.5 |
Operating expense: | ||
Cost of revenue | 102.4 | 97 |
Sales and marketing | 38.5 | 32.4 |
General and administrative | 32.2 | 30.2 |
Depreciation and amortization | 22.9 | 21.5 |
Total operating expense | 196 | 181.1 |
Operating income | 47.5 | 28.4 |
Non-operating income (expense): | ||
Interest expense, net | (0.3) | (0.9) |
Gain on sale of investments, reclassified from other comprehensive income | 0.5 | 0.5 |
Gain on sale of product line | 10.5 | 0 |
Other expense, net | (1.4) | (0.9) |
Non-operating income (expense), net | 9.3 | (1.3) |
Income before income taxes and equity in net loss of unconsolidated entities | 56.8 | 27.1 |
Equity in net loss of unconsolidated entities | (1.5) | (0.8) |
Income tax expense | 13.4 | 8.3 |
Consolidated net income | $ 41.9 | $ 18 |
Net income per share: | ||
Basic (in dollars per share) | $ 0.99 | $ 0.42 |
Diluted (in dollars per share) | 0.98 | 0.42 |
Dividends declared per common share (in dollars per share) | 0.25 | 0.23 |
Dividends paid per common share (in dollars per share) | $ 0.25 | $ 0.23 |
Weighted average shares outstanding: | ||
Basic (in shares) | 42.5 | 42.9 |
Diluted (in shares) | 42.9 | 43.2 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Consolidated net income | $ 41.9 | $ 18 |
Other comprehensive income: | ||
Foreign currency translation adjustment | 7.5 | 7.4 |
Unrealized gains (losses) on securities, net of tax: | ||
Unrealized holding gains arising during period | 0 | 1.6 |
Reclassification gains included in net income | (0.4) | (0.3) |
Other comprehensive income | 7.1 | 8.7 |
Comprehensive income | $ 49 | $ 26.7 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 311 | $ 308.2 |
Investments | 44.4 | 45.1 |
Accounts receivable, less allowance of $3.4 and $3.2, respectively | 158.2 | 148.2 |
Deferred commissions | 16.7 | 0 |
Other | 19.4 | 28.3 |
Total current assets | 549.7 | 529.8 |
Property, equipment, and capitalized software, less accumulated depreciation and amortization of $300.3 and $284.7, respectively | 147.4 | 147.4 |
Investments in unconsolidated entities | 61.2 | 62 |
Goodwill | 567.4 | 564.9 |
Intangible assets, net | 90.2 | 95.4 |
Deferred commissions, non-current | 9.4 | 0 |
Other assets | 11.2 | 6.2 |
Total assets | 1,436.5 | 1,405.7 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 49.1 | 49.2 |
Accrued compensation | 52.8 | 92 |
Deferred revenue | 205.8 | 171.3 |
Other | 19.6 | 10.7 |
Total current liabilities | 327.3 | 323.2 |
Accrued compensation | 11.9 | 11.7 |
Deferred tax liability, net | 28.8 | 23.6 |
Long-term debt | 150 | 180 |
Deferred rent | 25.8 | 26.9 |
Deferred revenue, non-current | 13.8 | 14.2 |
Other long-term liabilities | 20.6 | 21.2 |
Total liabilities | 578.2 | 600.8 |
Morningstar, Inc. shareholders' equity: | ||
Common stock, no par value, 200,000,000 shares authorized, of which 42,534,228 and 42,547,707 shares were outstanding as of March 31, 2018 and December 31, 2017, respectively | 0 | 0 |
Treasury stock at cost, 10,726,166 and 10,633,637 shares as of March 31, 2018 and December 31, 2017, respectively | (717.1) | (708.2) |
Additional paid-in capital | 607.9 | 601 |
Retained earnings | 1,007 | 958.7 |
Accumulated other comprehensive loss: | ||
Currency translation adjustment | (40.4) | (47.9) |
Unrealized gain on available-for-sale securities | 0.9 | 1.3 |
Total accumulated other comprehensive loss | (39.5) | (46.6) |
Total Morningstar, Inc. shareholders' equity | 858.3 | 804.9 |
Noncontrolling interest | 0 | 0 |
Total equity | 858.3 | 804.9 |
Total liabilities and equity | $ 1,436.5 | $ 1,405.7 |
Condensed Consolidated Balance5
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 3.4 | $ 3.2 |
Accumulated depreciation and amortization | $ 300.3 | $ 284.7 |
Common Stock, No Par Value | $ 0 | $ 0 |
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 |
Common Stock, Shares, Outstanding | 42,534,228 | 42,547,707 |
Treasury Stock, Shares | 10,726,166 | 10,633,637 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Equity - USD ($) $ in Millions | Total | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Non Controlling Interests |
Increase (Decrease) in Stockholders' Equity | |||||||
Cumulative effect of accounting change related to the adoption of ASU No. 2014-09 | $ 17 | $ 17 | |||||
Balance at Dec. 31, 2017 | $ 804.9 | $ 0 | $ (708.2) | $ 601 | 958.7 | $ (46.6) | $ 0 |
Balance (in shares) at Dec. 31, 2017 | 42,547,707 | 42,547,707 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | $ 41.9 | 41.9 | 0 | ||||
Other comprehensive income: | |||||||
Unrealized loss on available-for-sale investments, net of income tax of $0.4 | 0 | ||||||
Reclassification of adjustments for gain included in net income, net of income tax of $0.1 | (0.4) | (0.4) | 0 | ||||
Foreign currency translation adjustment | 7.5 | 7.5 | 0 | ||||
Other comprehensive income, net | 7.1 | 7.1 | 0 | ||||
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net of shares withheld for taxes on settlements of restricted stock units | (4.1) | $ 0 | 0 | (4.1) | |||
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net of shares withheld for taxes on settlements of restricted stock units (in shares) | 79,050 | ||||||
Reclassification of awards previously liability-classified that were converted to equity | 4.4 | $ 0 | 0 | 4.4 | 0 | 0 | 0 |
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition | |||||||
Stock-based compensation | 6.6 | 6.6 | |||||
Common share repurchased | (8.9) | (8.9) | |||||
Common share repurchased (in shares) | (92,529) | ||||||
Dividends declared | (10.6) | (10.6) | |||||
Balance at Mar. 31, 2018 | $ 858.3 | $ 0 | $ (717.1) | $ 607.9 | $ 1,007 | $ (39.5) | $ 0 |
Balance (in shares) at Mar. 31, 2018 | 42,534,228 | 42,534,228 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Equity (Parenthetical) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax | $ 0 |
Other Comprehensive Income (Loss), Reclassification Adjustment for Sale of Securities Included in Net Income, Tax | $ 0.1 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Operating activities | ||
Consolidated net income | $ 41.9 | $ 18 |
Adjustments to reconcile consolidated net income to net cash flows from operating activities: | ||
Depreciation and amortization | 22.9 | 21.5 |
Deferred income taxes | 5.7 | (2.3) |
Stock-based compensation expense | 6.6 | 5.3 |
Provision for bad debt | 0.8 | 0.5 |
Equity in net loss of unconsolidated entities | 1.5 | 0.8 |
Gain on sale of product line | (10.5) | 0 |
Other, net | 0.9 | 0.4 |
Changes in operating assets and liabilities, net of effects of acquisitions: | ||
Accounts receivable | (9.8) | 4 |
Other assets | 3.8 | (6.6) |
Deferred commissions | 21.6 | 0 |
Accounts payable and accrued liabilities | 0 | 2.3 |
Accrued compensation | (65.3) | (25.7) |
Income taxes- current | 8.7 | 6.6 |
Deferred revenue | 33.1 | 22.1 |
Deferred rent | (1) | (0.5) |
Other liabilities | (1) | 0.1 |
Cash provided by operating activities | 59.9 | 46.5 |
Investing activities | ||
Purchases of investments | (7.8) | (9.2) |
Proceeds from maturities and sales of investments | 7.7 | 5.7 |
Capital expenditures | (17.6) | (14.3) |
Proceeds from sale of a product line | 10.5 | 0 |
Purchases of equity investments | (0.1) | (0.2) |
Other, net | 0 | 0.5 |
Cash used for investing activities | (7.3) | (17.5) |
Financing activities | ||
Common shares repurchased | (8.9) | (0.9) |
Dividends paid | (10.6) | (9.9) |
Repayment of long-term debt | (30) | (15) |
Employee taxes paid from withholding of restricted stock units | (4.1) | 0 |
Other, net | (0.5) | (0.2) |
Cash used for financing activities | (54.1) | (26) |
Effect of exchange rate changes on cash and cash equivalents | 4.3 | 3.7 |
Net increase in cash and cash equivalents | 2.8 | 6.7 |
Cash and cash equivalents-beginning of period | 308.2 | 259.1 |
Cash and cash equivalents-end of period | 311 | 265.8 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | 4.8 | 4.1 |
Cash paid for interest | 0.8 | 1.2 |
Supplemental information of non-cash investing and financing activities: | ||
Unrealized (loss) gain on available-for-sale investments | $ (0.9) | $ 1.8 |
Basis of Presentation of Interi
Basis of Presentation of Interim Financial Information | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation of Interim Financial Information | Basis of Presentation of Interim Financial Information The accompanying unaudited condensed consolidated financial statements of Morningstar, Inc. and subsidiaries (Morningstar, we, our, the company) have been prepared to conform to the rules and regulations of the Securities and Exchange Commission (SEC). The preparation of financial statements in conformity with accounting principles generally accepted in the United States (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue, and expenses. Actual results could differ from those estimates. In the opinion of management, the statements reflect all adjustments, which are of a normal recurring nature, necessary to present fairly our financial position, results of operations, equity, and cash flows. These financial statements and notes are unaudited and should be read in conjunction with our Audited Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017 , filed with the SEC on March 1, 2018 (our Annual Report). The acronyms that appear in the Notes to our Unaudited Condensed Consolidated Financial Statements refer to the following: ASC: Accounting Standards Codification ASU: Accounting Standards Update FASB: Financial Accounting Standards Board |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Significant changes to our accounting policies as a result of adopting ASU 2014-09, Revenue from Contracts with Customers , are discussed below. We discuss our other significant accounting policies in Note 2 of our Audited Consolidated Financial Statements included in our Annual Report. Recently adopted accounting pronouncements On May 28, 2014, the FASB issued ASU No. 2014-09 (Topic 606), Revenue from Contracts with Customers , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The original effective date for ASU 2014-09 would have required us to adopt it beginning on January 1, 2017. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers — Deferral of the Effective Date , which deferred the effective date of ASU 2014-09 for one year and permitted early adoption as early as the original effective date of ASU 2014-09. We elected the deferral, and the new standard was effective for us on January 1, 2018. We also adopted ASU No. 2016-08, ASU No. 2016-10, ASU No. 2016-11, ASU No. 2016-12, and ASU No. 2016-20 on January 1, 2018. We adopted Topic 606 using the modified retrospective transition method applied to those contracts which were not completed as of January 1, 2018. Upon adoption, we recognized the cumulative effect of adopting this guidance as an adjustment to our opening balance of retained earnings. Prior periods were not retrospectively adjusted. Impact on financial statements The impact to revenue as a result of applying Topic 606 was an increase of $1.7 million for the three months ended March 31, 2018 and relates to a change in presentation of revenue and costs associated with third-party content and data. Such revenue and costs were presented on a net basis prior to the adoption of Topic 606 and are now presented on a gross basis. This change resulted in an increase of revenue and a corresponding increase in cost of revenue of $1.7 million , with no impact on operating income. We also changed our accounting for expenses related to our sales commission plans as a result of adopting Topic 606. Due to our method of adoption, we recorded a deferred commission asset, and related deferred tax liability, as of January 1, 2018, for sales commissions that were expensed in prior periods. This change resulted in an opening net adjustment to retained earnings of $17.0 million , with an offsetting increase to our deferred commissions and deferred income tax liabilities relating to prior periods. The following table summarizes the cumulative effect of the changes to our unaudited condensed consolidated balance sheet as of January 1, 2018 from the adoption of Topic 606: (in millions) Balance at December 31, 2017 Adjustments due to Topic 606 Balance at January 1, 2018 Assets: Deferred commissions, current and non-current $ — $ 22.7 $ 22.7 Liabilities: Deferred income tax liability $ — $ 5.7 $ 5.7 Equity: Retained earnings $ — $ 17.0 $ 17.0 The following table illustrates the impact that adopting Topic 606 has had on our reported results in the unaudited condensed consolidated balance sheet as of March 31, 2018 and the unaudited condensed consolidated statements of income for the three months ended March 31, 2018: For the three months ended March 31, 2018 (in millions) As Reported Impact of adopting Topic 606 Balances without adoption of Topic 606 Balance Sheet: Accounts receivable, less allowance $ 158.2 $ — $ 158.2 Deferred commissions, current and non-current 26.1 26.1 — Deferred revenue, current and non-current 219.6 — 219.6 Income Statement: Revenue $ 243.5 $ 1.7 $ 241.8 Cost of revenue 102.4 1.7 100.7 Sales and marketing 38.5 0.4 38.9 Operating income 47.5 (0.4 ) 47.1 Revenue Recognition : We recognize revenue by applying the following five-step model to each of our customer arrangements: 1. Identify the customer contract 2. Identify the performance obligations in the contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations 5. Recognize revenue when (or as) performance obligations are satisfied Revenues are recognized when (or as) performance obligations are satisfied by transferring a promised product or service to the customer. Products or services are transferred when (or as) the customer obtains control of the product or service. The transaction price for a customer arrangement is the amount we expect to be entitled to in exchange for transferring the promised product or service. The transaction price may include fixed amounts, variable amounts, or both. Amounts invoiced in excess of the revenue recognized for the services transferred during the period will result in an increase to deferred revenue. The timing of cash payments is typically thirty to sixty days after the performance obligation has been satisfied and these payments reduce our outstanding accounts receivable. Revenue from contracts with customers is derived from license-based arrangements, asset-based arrangements, and transaction-based arrangements. License-based revenue is generated through subscription contracts with our customers of Morningstar Data, Morningstar Direct, Morningstar Advisor Workstation, Morningstar Enterprise Components, PitchBook Data, and other similar products. Our performance obligations under these contracts are satisfied over time, as the customer has access to the product or service during the term of the subscription license and the level of service is consistent during the contract period. Therefore, we recognize revenue for these performance obligations on a straight-line basis. License-based arrangements typically have a term of 12 to 36 months . Asset-based revenue is generated through consulting service contracts with our customers of Morningstar Investment Management, Workplace Solutions, and Morningstar Indexes. Our performance obligations under these contracts are satisfied over time as the customer receives continuous access to a service for the contract term. We recognize revenue over the contract term based on the value of assets under management and a tiered fee agreed to with the customer (typically in a range of 30-55 basis points of the customer’s average daily portfolio balance). Asset-based arrangements typically have a term of 12 to 36 months . The fees from such arrangements represent variable consideration, and the customer does not make separate purchasing decisions that result in additional performance obligations. Significant changes in the underlying fund assets, or significant disruptions in the market, are evaluated to determine if revisions on estimates of earned asset-based fees for the current quarter are needed. An estimate of variable consideration is included in the initial transaction price only to the extent it is probable that a significant reversal in the amount of revenue recognized will not occur. Estimates of asset-based fees are based on the most recently completed quarter, and, as a result, it is unlikely a significant reversal of revenue would occur. Transaction-based revenue is generated through contracts with our customers for Internet advertising, Morningstar Conferences, and Morningstar Credit Ratings. Our performance obligations for Internet advertising and Morningstar Conferences are satisfied as the service is delivered, and therefore we recognize revenue when the performance obligation is satisfied (as the customer’s advertisements are displayed, and at the completion of the Morningstar conference). Our performance obligations for Morningstar Credit Ratings include the issuance of the rating, and may include surveillance services for a period of time as agreed to with the customer. We allocate the transaction price to the deliverable based on their relative selling price, which is generally based on the price we charge when the same deliverable is sold separately. Our performance obligation for the issuance of the rating is satisfied when the rating is issued, which is when we recognize the related revenue. Our performance obligations for surveillance services is satisfied over time, as the customer has access to the service during the surveillance period and the level of service is consistent during the contract period. Therefore, we recognize revenue for this performance obligation on a straight-line basis. Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its estimated standalone selling price. We generally determine standalone selling prices based on prices charged to customers when the same performance obligation is sold separately. Our contracts with customers may include third-party involvement in providing goods or services to the customer. The inclusion of third-party content does not result in separate performance obligations because is it not separately identifiable from the license obligation. In these arrangements, the customer has contracted to receive a single, bundled solution-third-party and Morningstar content delivered via Morningstar’s subscription services. Revenue and related costs of revenue from third-party content is presented on a gross basis within the condensed consolidated interim financial statements. Sales Commissions : We capitalize sales incentive compensation costs (sales commissions) which are considered directly attributable to obtaining a customer contract. Such costs are capitalized using a portfolio approach that aggregates these costs by legal entity within their geographical regions. Capitalized sales commissions are amortized using the straight-line method over a period that is consistent with the transfer of the products or services to the customer to which the sales commission relates. The period of transfer for each portfolio is the shorter of the weighted-average customer life, or the economic life of the underlying technology that delivers the products or services. As of March 31, 2018, the period of transfer was determined to be two to three years. Discretionary amounts which are added to sales commission payments are expensed as incurred, as they are not considered to be directly attributable to obtaining a customer contract. On January 5, 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities . The new guidance primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The accounting for other financial instruments, such as loans, investments in debt securities, and financial liabilities is largely unchanged. The new standard was effective for us on January 1, 2018. The adoption of ASU No. 2016-01 on January 1, 2018 had no impact on our consolidated financial statements and related disclosures. On August 26, 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments , which reduces diversity in practice of how certain transactions are classified in the statement of cash flows. The new guidance clarifies the classification of cash activities related to debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate and bank-owned life insurance policies, distributions received from equity-method investments, and beneficial interests in securitization transactions. The guidance also describes a predominance principle in which cash flows with aspects of more than one class that cannot be separated should be classified based on the activity that is likely to be the predominant source or use of cash flow. The new standard was effective for us on January 1, 2018. The adoption of ASU No. 2016-15 on January 1, 2018 had no impact on our consolidated financial statements and related disclosures. On January 5, 2017, the FASB issued ASU No. 2017-01, Business Combinations: Clarifying the Definition of a Business, which revises the definition of a business. When substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business. To be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to create outputs. The new guidance provides a framework to evaluate when an input and substantive process are present (including for early-stage companies that have not generated outputs). To be a business without outputs, there will now need to be an organized workforce. The new guidance also narrows the definition of the term outputs to be consistent with how it is described in Topic 606 , Revenue from Contracts with Customers . The new standard was effective for us on January 1, 2018. The adoption of ASU No. 2017-01 on January 1, 2018 had no impact on our consolidated financial statements and related disclosures. On May 10, 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation: Scope of Modification Accounting , which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The new standard was effective for us on January 1, 2018. The adoption of ASU No. 2017-09 on January 1, 2018 had no impact on our consolidated financial statements and related disclosures. Recently issued accounting pronouncements not yet adopted On February 25, 2016, the FASB issued ASU No. 2016-02, Leases , which will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. The new standard is effective for us on January 1, 2019. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. We are evaluating the effect that ASU No. 2016-02 will have on our consolidated financial statements and related disclosures. On January 26, 2017, the FASB issued ASU No. 2017-04, Intangibles — Goodwill and Other , which simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. The new standard is effective for us on January 1, 2020. The new standard is required to be applied prospectively. Early adoption is permitted for any impairment tests performed after January 1, 2017. We are evaluating the effect that ASU No. 2017-04 will have on our consolidated financial statements and related disclosures. On February 14, 2018, the FASB issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , to address a specific consequence of the Tax Cuts and Jobs Act (“Tax Reform Act”) by allowing a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Reform Act’s reduction of the U.S. federal corporate income tax rate. The new standard is effective for us on January 1, 2019 and is to be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Reform is recognized. Early adoption is permitted. We are evaluating the effect that ASU No. 2018-02 will have on our consolidated financial statements and related disclosures. On March 13, 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, which allowed SEC registrants to record provisional amounts in earnings for the year ended December 31, 2017 due to the complexities involved in accounting for the enactment of the Tax Reform Act. We recognized the estimated income tax effects of the Tax Reform Act in our Audited Consolidated Financial Statements included in our Annual Report in accordance with SEC Staff Accounting Bulletin No. 118 (“SAB 118”). Refer to Note 10 for further information regarding the provisional amounts that we recorded as of December 31, 2017. |
Credit Arrangements (Notes)
Credit Arrangements (Notes) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Credit Arrangements | Credit Arrangements We are party to a our credit agreement that provides us with a three -year credit facility expiring in November 2019 with a borrowing capacity of up to $300.0 million . The credit agreement also provides for issuance of up to $25.0 million of letters of credit under the revolving credit facility. The interest rate applicable to any loan under the credit agreement is, at our option, either: (i) the applicable London interbank offered rate (LIBOR) plus an applicable margin for such loans, which ranges between 1.00% and 1.75% , based on our consolidated leverage ratio or (ii) the lender's base rate plus the applicable margin for such loans, which ranges between 2.00% and 2.75% , based on our consolidated leverage ratio. The credit agreement also contains financial covenants under which we: (i) may not exceed a maximum consolidated leverage ratio of 3.00 to 1.00 and (ii) are required to maintain a minimum consolidated interest coverage ratio of not less than 3.00 to 1.00. We were in compliance with the financial covenants as of March 31, 2018 . We had an outstanding principal balance of $150.0 million at a one-month LIBOR interest rate plus 100 basis points as of March 31, 2018 , leaving borrowing availability of $150.0 million . |
Acquisitions, Goodwill and Othe
Acquisitions, Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Acquisitions, Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill The following table shows the changes in our goodwill balances from December 31, 2017 to March 31, 2018 : (in millions) Balance as of December 31, 2017 $ 564.9 Foreign currency translation 2.5 Balance as of March 31, 2018 $ 567.4 We did not record any impairment losses in the first three months of 2018 and 2017 . We perform our annual impairment reviews in the fourth quarter, and when triggering events are identified. Intangible Assets The following table summarizes our intangible assets: As of March 31, 2018 As of December 31, 2017 (in millions) Gross Accumulated Amortization Net Weighted Average Useful Life (years) Gross Accumulated Amortization Net Weighted Average Useful Life (years) Intellectual property $ 31.4 $ (29.1 ) $ 2.3 9 $ 31.5 $ (28.9 ) $ 2.6 9 Customer-related assets 157.4 (110.4 ) 47.0 12 156.6 (108.1 ) 48.5 12 Supplier relationships 0.2 (0.1 ) 0.1 20 0.2 (0.1 ) 0.1 20 Technology-based assets 128.2 (87.9 ) 40.3 7 127.9 (84.2 ) 43.7 7 Non-competition agreements 2.5 (2.0 ) 0.5 5 2.5 (2.0 ) 0.5 5 Total intangible assets $ 319.7 $ (229.5 ) $ 90.2 10 $ 318.7 $ (223.3 ) $ 95.4 10 The following table summarizes our amortization expense related to intangible assets: Three months ended March 31 (in millions) 2018 2017 Amortization expense $ 5.3 $ 6.5 We amortize intangible assets using the straight-line method over their expected economic useful lives. We expect intangible amortization expense for the remainder of 2018 and subsequent years as follows: (in millions) Remainder of 2018 (from April 1 through December 31) $ 15.5 2019 19.3 2020 16.3 2021 13.0 2022 5.2 Thereafter 20.9 Our estimates of future amortization expense for intangible assets may be affected by acquisitions, divestitures, changes in the estimated average useful life, and foreign currency translation. |
Income Per Share
Income Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Income Per Share | Income Per Share The following table shows how we reconcile our net income and the number of shares used in computing basic and diluted net income per share: Three months ended March 31 (in millions, except per share amounts) 2018 2017 Basic net income per share: Consolidated net income $ 41.9 $ 18.0 Weighted average common shares outstanding 42.5 42.9 Basic net income per share $ 0.99 $ 0.42 Diluted net income per share: Consolidated net income $ 41.9 $ 18.0 Weighted average common shares outstanding 42.5 42.9 Net effect of dilutive stock options, restricted stock units, performance share awards, and market stock units 0.4 0.3 Weighted average common shares outstanding for computing diluted income per share 42.9 43.2 Diluted net income per share $ 0.98 $ 0.42 The number of weighted average restricted stock units, performance share awards, and market stock units were excluded from our calculation of diluted earnings per share, as their inclusion would have been anti-dilutive and immaterial during the periods presented. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Disaggregation of Revenue The following table presents our revenue disaggregated by revenue type. Sales and usage-based taxes are excluded from revenue. Three months ended March 31 (in millions) 2018 2017 License-based $ 178.6 $ 156.7 Asset-based 50.7 42.0 Transaction-based 14.2 10.8 Consolidated revenue $ 243.5 $ 209.5 License-based performance obligations are satisfied over time as the customer has access to the product or service during the term of the subscription license and the level of service is consistent during the contract period. License-based agreements typically have a term of 12 to 36 months . License-based revenue includes Morningstar Data, Morningstar Direct, Morningstar Advisor Workstation, Morningstar Enterprise Components, Morningstar Research, PitchBook Data, and other similar products. Asset-based performance obligations are satisfied over time as the customer receives continuous access to a service for the term. Asset-based arrangements typically have a term of 12 to 36 months . The asset based fees represent variable consideration and the customer does not make separate purchasing decisions that result in additional performance obligations. Significant changes in the underlying fund assets, or significant disruptions in the market, are evaluated to determine if revisions on estimates of earned asset-based fees for the current quarter. An estimate of variable consideration is included in the initial transaction price only to the extent it is probable that a significant reversal in the amount of the revenue recognized will not occur. Estimates of asset based fees are based on the most recently completed quarter and as a result, it is unlikely a significant reversal of revenue would occur. Asset-based revenue includes Morningstar Investment Management, Workplace Solutions, and Morningstar Indexes. Transaction-based performance obligations are satisfied as the product or service has been complete or delivered. Transaction-based revenue includes Morningstar Credit Ratings, Internet Advertising Sales, and Conferences. Morningstar Credit Ratings may include surveillance services which are recognized over time, as the customer has access to the service during the surveillance period. During the first quarter of 2018, we had a total of $2.3 million in surveillance revenue. Contract liabilities Our contract liabilities represent deferred revenue. We record contract liabilities when cash payments are received or due in advance of our performance, including amounts which are refundable. The contract liabilities balance for the three months ended March 31, 2018 had a net increase of $34.1 million , primarily driven by cash payments received or due in advance of satisfying our performance obligations. We recognized $80.9 million of revenue in the three-month period ended March 31, 2018, that was included in the contract liabilities balance as of December 31, 2017. We expect to recognize revenue related to our contract liabilities for the remainder of 2018 and subsequent years as follows: As of March 31 (in millions) 2018 Remainder of 2018 (from April 1 through December 31) $ 322.7 2019 125.4 2020 43.8 2021 10.7 2022 7.7 Thereafter 26.5 $ 536.8 The aggregate amount of $536.8 million is $317.2 million higher than the ending balance of our contract liabilities of $219.6 million . These amounts relate primarily to our licensed-based performance obligations and the difference represents the value of performance obligations yet to be satisfied or billed for signed contracts as of March 31, 2018. The table above does not include variable consideration for unsatisfied performance obligations related to certain of our asset-based and transaction-based contracts as of March 31, 2018. We are applying the optional exemption as the variable consideration relates to these unsatisfied performance obligations being fulfilled as a series. The performance obligations related to these contracts are expected to be satisfied over the next 12 to 36 months as services are provided to the client. For asset-based contracts, the consideration received for services performed is based on future asset values, which will be known at the time the services are performed. The variable consideration for this revenue can be affected by changes in the underlying value of fund assets due to client redemptions, additional investments, or significant disruptions in the market. For transaction-based contracts such as Internet advertising, the consideration received for services performed is based on number of impressions, which will be known once impressions are created. The variable consideration for this revenue can be affected by the timing and quantity of impressions in any given period. The table above does not include revenue for unsatisfied performance obligations related to certain of our license-based and transaction-based contracts as of March 31, 2018. We are applying the optional exemption as the performance obligations for such contracts have an expected duration of one year or less. For certain license-based contracts, the remaining performance obligation is expected to be less than one year based on the corresponding subscription terms. For transaction-based contracts such as new credit rating issuances and the Morningstar conference, the related performance obligations are expected to be satisfied within the next twelve months. Contract Assets Our contract assets represent accounts receivable, less allowance and deferred commissions. We did not record any impairment losses on receivables or deferred commissions in the first three months of 2018. The following table summarizes our contract assets balance: As of March 31 As of December 31 (in millions) 2018 2017 Accounts receivable, less allowance $ 158.2 $ 148.2 Deferred commissions 16.7 — Deferred commissions, non-current 9.4 — Total contract assets $ 184.3 $ 148.2 The following table shows the change in our deferred commissions balance from January 1, 2018 to March 31, 2018 : (in millions) Balance as of January 1, 2018 $ 22.7 Commissions earned and capitalized 7.0 Amortization of capitalized amounts (3.6 ) Balance as of March 31, 2018 $ 26.1 |
Segment and Geographical Area I
Segment and Geographical Area Information | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment and Geographical Area Information | Segment and Geographical Area Information Segment Information We report our results in a single reportable segment, which reflects how our chief operating decision maker allocates resources and evaluates our financial results. Because we have one reportable segment, all required financial segment information can be found directly in the Unaudited Condensed Consolidated Financial Statements. The accounting policies for our single reportable segment are the same as those described in “Note 2. Summary of Significant Accounting Policies” included in the Audited Consolidated Financial Statements and Notes thereto included in our Annual Report. We evaluate the performance of our reporting segment based on revenue and operating income. Geographical Area Information The tables below summarize our revenue and long-lived assets by geographical area: External revenue by geographical area Three months ended March 31 (in millions) 2018 2017 United States $ 179.5 $ 156.9 United Kingdom 18.3 14.9 Continental Europe 19.9 16.3 Australia 10.5 8.1 Canada 7.7 7.3 Asia 6.1 4.9 Other 1.5 1.1 Total International 64.0 52.6 Consolidated revenue $ 243.5 $ 209.5 Long-lived assets by geographical area As of March 31 As of December 31 (in millions) 2018 2017 United States $ 128.8 $ 131.9 United Kingdom 5.8 6.0 Continental Europe 1.6 1.7 Australia 5.3 2.3 Canada 0.2 0.2 Asia 5.6 5.2 Other 0.1 0.1 Total International 18.6 15.5 Consolidated property, equipment, and capitalized software, net $ 147.4 $ 147.4 |
Investments and Fair Value Meas
Investments and Fair Value Measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Investments and Fair Value Measurements | Investments and Fair Value Measurements We classify our investments into three categories: available-for-sale, held-to-maturity, and trading securities. Our investment portfolio consists of stocks, bonds, options, mutual funds, money market funds, or exchange-traded products that replicate the model portfolios and strategies created by Morningstar. These investment accounts may also include exchange-traded products where Morningstar is an index provider. We classify our investment portfolio as shown below: As of March 31 As of December 31 (in millions) 2018 2017 Available-for-sale $ 21.3 $ 21.5 Held-to-maturity 21.5 21.9 Trading securities 1.6 1.7 Total $ 44.4 $ 45.1 The following table shows the cost, unrealized gains (losses), and fair value of investments classified as available-for-sale and held-to-maturity: As of March 31, 2018 As of December 31, 2017 (in millions) Cost Unrealized Gain Unrealized Loss Fair Value Cost Unrealized Gain Unrealized Loss Fair Value Available-for-sale: Equity securities and exchange-traded funds $ 17.8 $ 2.0 $ (1.0 ) $ 18.8 $ 17.1 $ 2.4 $ (0.6 ) $ 18.9 Mutual funds 2.4 0.1 — 2.5 2.4 0.2 — 2.6 Total $ 20.2 $ 2.1 $ (1.0 ) $ 21.3 $ 19.5 $ 2.6 $ (0.6 ) $ 21.5 Held-to-maturity: Certificates of deposit $ 19.5 $ — $ — $ 19.5 $ 19.9 $ — $ — $ 19.9 Convertible note 2.0 — — 2.0 2.0 — — 2.0 Total $ 21.5 $ — $ — $ 21.5 $ 21.9 $ — $ — $ 21.9 As of March 31, 2018 and December 31, 2017 , investments with unrealized losses for greater than a 12-month period were not material to the Unaudited Condensed Consolidated Balance Sheets and were not deemed to have other than temporary declines in value. The table below shows the cost and fair value of investments classified as available-for-sale and held-to-maturity based on their contractual maturities as of March 31, 2018 and December 31, 2017 . As of March 31, 2018 As of December 31, 2017 (in millions) Cost Fair Value Cost Fair Value Available-for-sale: Equity securities, exchange-traded funds, and mutual funds $ 20.2 $ 21.3 $ 19.5 $ 21.5 Total $ 20.2 $ 21.3 $ 19.5 $ 21.5 Held-to-maturity: Due in one year or less $ 19.3 $ 19.3 $ 19.7 $ 19.7 Due in one to three years 2.2 2.2 2.2 2.2 Total $ 21.5 $ 21.5 $ 21.9 $ 21.9 The following table shows the realized gains and losses arising from sales of our investments classified as available-for-sale recorded in our Unaudited Condensed Consolidated Statements of Income: Three months ended March 31 (in millions) 2018 2017 Realized gains $ 0.6 $ 0.5 Realized losses (0.1 ) — Realized gains, net $ 0.5 $ 0.5 We determine realized gains and losses using the specific identification method. The following table shows the net unrealized losses on trading securities as recorded in our Unaudited Condensed Consolidated Statements of Income: Three months ended March 31 (in millions) 2018 2017 Unrealized losses, net $ (0.1 ) $ — The table below shows the fair value of our assets subject to fair value measurements that are measured at fair value on a recurring basis using a fair value hierarchy: Level 1: Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 3: Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Fair Value Fair Value Measurements as of March 31, 2018 as of Using Fair Value Hierarchy (in millions) March 31, 2018 Level 1 Level 2 Level 3 Available-for-sale investments: Equity securities and exchange-traded funds $ 18.8 $ 18.8 $ — $ — Mutual funds 2.5 2.5 — — Trading securities 1.6 1.6 — — Cash equivalents 0.5 0.5 — — Total $ 23.4 $ 23.4 $ — $ — Fair Value Fair Value Measurements as of December 31, 2017 as of Using Fair Value Hierarchy (in millions) December 31, 2017 Level 1 Level 2 Level 3 Available-for-sale investments: Equity securities and exchange-traded funds $ 18.9 $ 18.9 $ — $ — Mutual funds 2.6 2.6 — — Trading securities 1.7 1.7 — — Cash equivalents 0.5 0.5 — — Total $ 23.7 $ 23.7 $ — $ — Based on our analysis of the nature and risks of our investments in equity securities and mutual funds, we determined that presenting each of these investment categories in the aggregate is appropriate. We measure the fair value of money market funds, mutual funds, equity securities, and exchange-traded funds based on quoted prices in active markets for identical assets or liabilities. We did not hold any securities categorized as Level 2 or Level 3 as of March 31, 2018 and December 31, 2017 . |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Stock-Based Compensation Plans All of our employees and our non-employee directors are eligible for awards under the Morningstar 2011 Stock Incentive Plan, which provides for a variety of stock-based awards, including stock options, restricted stock units, performance share awards, market stock units, and restricted stock. The following table summarizes the stock-based compensation expense included in each of our operating expense categories: Three months ended March 31 (in millions) 2018 2017 Cost of revenue $ 2.7 $ 2.1 Sales and marketing 0.8 0.7 General and administrative 3.1 2.5 Total stock-based compensation expense $ 6.6 $ 5.3 As of March 31, 2018 , the total unrecognized stock-based compensation cost related to outstanding restricted stock units, performance share awards, and market stock units expected to vest was $42.8 million , which we expect to recognize over a weighted average period of 29 months. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Effective Tax Rate The following table shows our effective tax rate for the three months ended March 31, 2018 and March 31, 2017 : Three months ended March 31 (in millions) 2018 2017 Income before income taxes and equity in net loss of unconsolidated entities $ 56.8 $ 27.1 Equity in net loss of unconsolidated entities (1.5 ) (0.8 ) Total $ 55.3 $ 26.3 Income tax expense $ 13.4 $ 8.3 Effective tax rate 24.2 % 31.6 % Our effective tax rate in the first quarter of 2018 was 24.2% , a decrease of 7.4 percentage points compared with the same period a year ago. The decrease was primarily attributable to the reduction of the U.S. federal statutory income tax rate from 35% to 21% as a result of the Tax Reform Act enacted in December 2017. Other impacts of the Tax Reform Act on our effective tax rate in the first quarter of 2018 are discussed below. On December 22, 2017, the President of the United States signed into law the Tax Reform Act. The legislation significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, changing to a territorial tax system and imposing a transitional tax on deemed repatriated earnings of foreign subsidiaries. The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective from January 1, 2018. In our consolidated financial statements for the year ended December 31, 2017, we recognized a $10.6 million discrete net tax benefit. SAB 118 allowed for the recording of provisional amounts which were primarily comprised of the following: • A $14.7 million deferred tax benefit from revaluing our net U.S. deferred tax liabilities at December 31, 2017, to reflect the new U.S. corporate tax rate. • A tax expense of $7.5 million for the transitional tax liability on deemed repatriated earnings of foreign subsidiaries payable over 8 years . This tax expense was offset by a tax benefit of a $6.4 million reduction of a deferred tax liability previously recorded for our foreign equity method investments. • A tax expense of $3.0 million related to changes in our indefinite reinvestment assertion. We recorded deferred taxes in the amount of $3.0 million for foreign withholding taxes that would be due upon remittance of dividends from certain of our foreign affiliates. During the three-month period ended March 31, 2018, we made no changes to the provisional amounts recognized in 2017. We will continue to analyze the effects of the Tax Reform Act and will record additional impacts of the enactment as we complete our accounting within the measurement period, which extends up to one year from the enactment date. The ultimate impact from the enactment of the Tax Reform Act may differ from the provisional amounts that we recorded in 2017, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions that we have made, additional legislative or administrative actions taken to clarify the intent of the statutory language that may differ from our current interpretation, any changes in accounting standards for income taxes or related interpretations in response to the Tax Reform Act or any updates or changes to estimates used to calculate the impacts. Effective from January 1, 2018, we are subject to the provisions of the Tax Reform Act which: • establish a flat federal statutory income tax rate of 21% on U.S. earnings; • impose a new minimum tax on certain non-U.S. earnings, irrespective of the territorial system of taxation, and generally allows for the repatriation of future earnings of foreign subsidiaries without incurring additional U.S. taxes by transitioning to a territorial system of taxation (Global Intangible Low-Taxed Income or “GILTI Tax”); • eliminate tax incentives for domestic production activities in the United States (the “Section 199 Deduction”) and create an incentive for U.S. companies to sell, lease or license goods and services abroad by allowing for a new deduction for Foreign-Derived Intangible Income (the “FDII Deduction”); • subject certain payments made by a U.S. company to related foreign companies to certain minimum taxes (Base Erosion Anti-Abuse Tax or “BEAT”); • disallow net business interest deductions in excess of 30% of adjusted U.S. taxable income without regard to interest expense, interest income, taxes, net operating losses, depreciation and amortization for years beginning before January 1, 2022, (generally, EBITDA) and taxable income without regard to interest and taxes (EBIT) thereafter with indefinite carryforwards of excess interest expense (the “163(j) Interest Limitation”); • reduces deductions with respect to certain employee fringe benefits and reduces deductions for compensation paid to specified executive officers. With respect to the above provisions, our effective tax rate in the first quarter of 2018, compared to our effective tax rate in the first quarter of 2017, was lower primarily as result of the federal statutory income tax rate change from 35% to 21% and the tax benefits of the FDII deduction. The reduction in our 2018 rate was offset by the impact of the loss of tax of benefits eliminated by the repeal of the Section 199 deduction, incremental tax expense attributable to GILTI Tax estimates and, to a lesser extent, incremental tax expense for lower deductions for employee fringe benefits and executive compensation. Our effective tax rate for the first quarter of 2018 was not impacted by BEAT or the 163(j) Interest Limitation. We also continue to evaluate the impact of the GILTI Tax provisions which are complex and subject to continuing interpretation and administrative actions of the U.S. tax authorities. We are required to make an accounting policy election of either (1) treating taxes due on future U.S. inclusions in taxable income related to the GILTI Tax as a current period expense when incurred (the “period cost method”) or (2) factoring such amounts into the measurement of our deferred taxes (the “deferred method”). Our accounting policy election with respect to the new GILTI Tax rules will depend, in part, on analyzing our global income to determine whether we can reasonably estimate the tax impact. While we have included an estimate of GILTI Tax in our estimated effective tax rate for the first quarter of 2018, we have not completed our analysis and are not yet able to determine which method to elect. Adjustments related to the amount of GILTI Tax recorded in our consolidated financial statements may be required based on the outcome of this election. Unrecognized Tax Benefits The table below provides information concerning our gross unrecognized tax benefits as of March 31, 2018 , and December 31, 2017 , as well as the effect these gross unrecognized tax benefits would have on our income tax expense, if they were recognized. As of March 31 As of December 31 (in millions) 2018 2017 Gross unrecognized tax benefits $ 16.6 $ 18.7 Gross unrecognized tax benefits that would affect income tax expense $ 12.9 $ 15.0 Decrease in income tax expense upon recognition of gross unrecognized tax benefits $ 12.4 $ 14.4 In the first quarter of 2018, we settled U.S. federal and state tax audits including our federal audit for the tax periods covering 2008 to 2012. These settlements decreased our unrecognized tax benefits by $2.4 million . The impact of these settlements on our income tax expense was nominal since our liabilities reserved for these audits were approximate to the final settlement amounts. Our Unaudited Condensed Consolidated Balance Sheets include the following liabilities for unrecognized tax benefits. These amounts include interest and penalties, less any associated tax benefits. As of March 31 As of December 31 Liabilities for Unrecognized Tax Benefits (in millions) 2018 2017 Current liability $ 6.3 $ 8.7 Non-current liability 7.0 7.0 Total liability for unrecognized tax benefits $ 13.3 $ 15.7 Because we conduct business globally, we file income tax returns in U.S. federal, state, local, and foreign jurisdictions. We are currently under audit by federal and various state and local tax authorities in the United States, as well as tax authorities in certain non-U.S. jurisdictions. It is possible that the examination phase of some of these audits will conclude in 2018 . It is not possible to estimate the effect of current audits on previously recorded unrecognized tax benefits. Approximately 74% of our cash, cash equivalents, and investments balance as of March 31, 2018 was held by our operations outside of the United States. We believe that our cash balances and investments in the United States, along with cash generated from our U.S. operations, will be sufficient to meet our U.S. operating and cash needs for the foreseeable future, without requiring us to repatriate earnings from these foreign subsidiaries. In December of 2017, we recorded a provisional deferred tax liability of $3.0 million for foreign withholding taxes that would be due upon remittance of dividends from certain of our foreign affiliates. We continue to assess our indefinite reinvestment assertion as a result of the Tax Reform Act. Accordingly, we consider that most of our remaining foreign outside basis differences to be indefinitely reinvested and we have not recorded deferred taxes on those outside basis differences. As part of our continuing evaluation, we will need to gather additional information to compute outside basis differences for our foreign affiliates in order to assess whether any new deferred taxes should be recorded. We will also need to account for any prospective interpretive guidance issued on the Tax Reform Act as part of our evaluation. Certain of our non-U.S. operations have incurred net operating losses (NOLs), which may become deductible to the extent these operations become profitable. For each of our operations, we evaluate whether it is more likely than not that the tax benefits related to NOLs will be realized. As part of this evaluation, we consider evidence such as tax planning strategies, historical operating results, forecasted taxable income, and recent financial performance. In the year that certain non-U.S. operations record a loss, we do not recognize a corresponding tax benefit, thus increasing our effective tax rate. Upon determining that it is more likely than not that the NOLs will be realized, we reduce the tax valuation allowances related to these NOLs, which results in a reduction to our income tax expense and our effective tax rate in that period. |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Michael D. Green In August 2017, Michael D. Green, individually and purportedly on behalf of all others similarly situated, filed a complaint in the United States District Court for the Northern District of Illinois. The complaint named as defendants Morningstar, Inc., Prudential Investment Management Services LLC, and Prudential Retirement Insurance and Annuity Co., and contained one count alleging violation of the Racketeer Influenced and Corrupt Organizations Act (RICO). Plaintiff, a participant in a pension plan, alleged that the defendants engaged in concerted racketeering actions to steer plan participants into high-cost investments that pay unwarranted fees to the defendants. The complaint sought unspecified compensatory damages for plaintiff and the members of the putative class, treble damages, injunctive relief, costs, and attorneys’ fees. Morningstar filed a motion to dismiss the complaint for failure to state a claim, which the court granted without prejudice on March 16, 2018. On April 13, 2018, plaintiff filed an amended complaint, substituting Morningstar Investment Management LLC for Morningstar, Inc. as a defendant, and which again contains one count alleging violation of RICO and seeks unspecified compensatory damages for plaintiff and the members of the putative class, treble damages, injunctive relief, costs, and attorneys' fees. Morningstar's answer to the amended complaint or motion to dismiss currently is due on May 11, 2018. Although Morningstar is vigorously contesting the claim asserted, we cannot predict the outcome of the proceeding. Other Matters We are involved from time to time in legal proceedings and litigation that arise in the normal course of our business. While it is difficult to predict the outcome of any particular proceeding, we do not believe the result of any of these matters will have a material adverse effect on our business, operating results, or financial position. |
Share Repurchase Program
Share Repurchase Program | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Share Repurchase Program | Share Repurchase Program In December 2017, the board of directors approved a new share repurchase program that authorizes the company to repurchase up to $500.0 million in shares of the company's outstanding common stock, effective January 1, 2018. The authorization expires on December 31, 2020. We may repurchase shares from time to time at prevailing market prices on the open market or in private transactions in amounts that we deem appropriate. As of March 31, 2018 , we had repurchased a total of 92,529 shares for $8.9 million under this authorization, leaving approximately $491.1 million available for future repurchases. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements Policy | Recently adopted accounting pronouncements On May 28, 2014, the FASB issued ASU No. 2014-09 (Topic 606), Revenue from Contracts with Customers , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The original effective date for ASU 2014-09 would have required us to adopt it beginning on January 1, 2017. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers — Deferral of the Effective Date , which deferred the effective date of ASU 2014-09 for one year and permitted early adoption as early as the original effective date of ASU 2014-09. We elected the deferral, and the new standard was effective for us on January 1, 2018. We also adopted ASU No. 2016-08, ASU No. 2016-10, ASU No. 2016-11, ASU No. 2016-12, and ASU No. 2016-20 on January 1, 2018. We adopted Topic 606 using the modified retrospective transition method applied to those contracts which were not completed as of January 1, 2018. Upon adoption, we recognized the cumulative effect of adopting this guidance as an adjustment to our opening balance of retained earnings. Prior periods were not retrospectively adjusted. Impact on financial statements The impact to revenue as a result of applying Topic 606 was an increase of $1.7 million for the three months ended March 31, 2018 and relates to a change in presentation of revenue and costs associated with third-party content and data. Such revenue and costs were presented on a net basis prior to the adoption of Topic 606 and are now presented on a gross basis. This change resulted in an increase of revenue and a corresponding increase in cost of revenue of $1.7 million , with no impact on operating income. We also changed our accounting for expenses related to our sales commission plans as a result of adopting Topic 606. Due to our method of adoption, we recorded a deferred commission asset, and related deferred tax liability, as of January 1, 2018, for sales commissions that were expensed in prior periods. This change resulted in an opening net adjustment to retained earnings of $17.0 million , with an offsetting increase to our deferred commissions and deferred income tax liabilities relating to prior periods. The following table summarizes the cumulative effect of the changes to our unaudited condensed consolidated balance sheet as of January 1, 2018 from the adoption of Topic 606: (in millions) Balance at December 31, 2017 Adjustments due to Topic 606 Balance at January 1, 2018 Assets: Deferred commissions, current and non-current $ — $ 22.7 $ 22.7 Liabilities: Deferred income tax liability $ — $ 5.7 $ 5.7 Equity: Retained earnings $ — $ 17.0 $ 17.0 The following table illustrates the impact that adopting Topic 606 has had on our reported results in the unaudited condensed consolidated balance sheet as of March 31, 2018 and the unaudited condensed consolidated statements of income for the three months ended March 31, 2018: For the three months ended March 31, 2018 (in millions) As Reported Impact of adopting Topic 606 Balances without adoption of Topic 606 Balance Sheet: Accounts receivable, less allowance $ 158.2 $ — $ 158.2 Deferred commissions, current and non-current 26.1 26.1 — Deferred revenue, current and non-current 219.6 — 219.6 Income Statement: Revenue $ 243.5 $ 1.7 $ 241.8 Cost of revenue 102.4 1.7 100.7 Sales and marketing 38.5 0.4 38.9 Operating income 47.5 (0.4 ) 47.1 Revenue Recognition : We recognize revenue by applying the following five-step model to each of our customer arrangements: 1. Identify the customer contract 2. Identify the performance obligations in the contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations 5. Recognize revenue when (or as) performance obligations are satisfied Revenues are recognized when (or as) performance obligations are satisfied by transferring a promised product or service to the customer. Products or services are transferred when (or as) the customer obtains control of the product or service. The transaction price for a customer arrangement is the amount we expect to be entitled to in exchange for transferring the promised product or service. The transaction price may include fixed amounts, variable amounts, or both. Amounts invoiced in excess of the revenue recognized for the services transferred during the period will result in an increase to deferred revenue. The timing of cash payments is typically thirty to sixty days after the performance obligation has been satisfied and these payments reduce our outstanding accounts receivable. Revenue from contracts with customers is derived from license-based arrangements, asset-based arrangements, and transaction-based arrangements. License-based revenue is generated through subscription contracts with our customers of Morningstar Data, Morningstar Direct, Morningstar Advisor Workstation, Morningstar Enterprise Components, PitchBook Data, and other similar products. Our performance obligations under these contracts are satisfied over time, as the customer has access to the product or service during the term of the subscription license and the level of service is consistent during the contract period. Therefore, we recognize revenue for these performance obligations on a straight-line basis. License-based arrangements typically have a term of 12 to 36 months . Asset-based revenue is generated through consulting service contracts with our customers of Morningstar Investment Management, Workplace Solutions, and Morningstar Indexes. Our performance obligations under these contracts are satisfied over time as the customer receives continuous access to a service for the contract term. We recognize revenue over the contract term based on the value of assets under management and a tiered fee agreed to with the customer (typically in a range of 30-55 basis points of the customer’s average daily portfolio balance). Asset-based arrangements typically have a term of 12 to 36 months . The fees from such arrangements represent variable consideration, and the customer does not make separate purchasing decisions that result in additional performance obligations. Significant changes in the underlying fund assets, or significant disruptions in the market, are evaluated to determine if revisions on estimates of earned asset-based fees for the current quarter are needed. An estimate of variable consideration is included in the initial transaction price only to the extent it is probable that a significant reversal in the amount of revenue recognized will not occur. Estimates of asset-based fees are based on the most recently completed quarter, and, as a result, it is unlikely a significant reversal of revenue would occur. Transaction-based revenue is generated through contracts with our customers for Internet advertising, Morningstar Conferences, and Morningstar Credit Ratings. Our performance obligations for Internet advertising and Morningstar Conferences are satisfied as the service is delivered, and therefore we recognize revenue when the performance obligation is satisfied (as the customer’s advertisements are displayed, and at the completion of the Morningstar conference). Our performance obligations for Morningstar Credit Ratings include the issuance of the rating, and may include surveillance services for a period of time as agreed to with the customer. We allocate the transaction price to the deliverable based on their relative selling price, which is generally based on the price we charge when the same deliverable is sold separately. Our performance obligation for the issuance of the rating is satisfied when the rating is issued, which is when we recognize the related revenue. Our performance obligations for surveillance services is satisfied over time, as the customer has access to the service during the surveillance period and the level of service is consistent during the contract period. Therefore, we recognize revenue for this performance obligation on a straight-line basis. Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its estimated standalone selling price. We generally determine standalone selling prices based on prices charged to customers when the same performance obligation is sold separately. Our contracts with customers may include third-party involvement in providing goods or services to the customer. The inclusion of third-party content does not result in separate performance obligations because is it not separately identifiable from the license obligation. In these arrangements, the customer has contracted to receive a single, bundled solution-third-party and Morningstar content delivered via Morningstar’s subscription services. Revenue and related costs of revenue from third-party content is presented on a gross basis within the condensed consolidated interim financial statements. Sales Commissions : We capitalize sales incentive compensation costs (sales commissions) which are considered directly attributable to obtaining a customer contract. Such costs are capitalized using a portfolio approach that aggregates these costs by legal entity within their geographical regions. Capitalized sales commissions are amortized using the straight-line method over a period that is consistent with the transfer of the products or services to the customer to which the sales commission relates. The period of transfer for each portfolio is the shorter of the weighted-average customer life, or the economic life of the underlying technology that delivers the products or services. As of March 31, 2018, the period of transfer was determined to be two to three years. Discretionary amounts which are added to sales commission payments are expensed as incurred, as they are not considered to be directly attributable to obtaining a customer contract. On January 5, 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities . The new guidance primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The accounting for other financial instruments, such as loans, investments in debt securities, and financial liabilities is largely unchanged. The new standard was effective for us on January 1, 2018. The adoption of ASU No. 2016-01 on January 1, 2018 had no impact on our consolidated financial statements and related disclosures. On August 26, 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments , which reduces diversity in practice of how certain transactions are classified in the statement of cash flows. The new guidance clarifies the classification of cash activities related to debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate and bank-owned life insurance policies, distributions received from equity-method investments, and beneficial interests in securitization transactions. The guidance also describes a predominance principle in which cash flows with aspects of more than one class that cannot be separated should be classified based on the activity that is likely to be the predominant source or use of cash flow. The new standard was effective for us on January 1, 2018. The adoption of ASU No. 2016-15 on January 1, 2018 had no impact on our consolidated financial statements and related disclosures. On January 5, 2017, the FASB issued ASU No. 2017-01, Business Combinations: Clarifying the Definition of a Business, which revises the definition of a business. When substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business. To be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to create outputs. The new guidance provides a framework to evaluate when an input and substantive process are present (including for early-stage companies that have not generated outputs). To be a business without outputs, there will now need to be an organized workforce. The new guidance also narrows the definition of the term outputs to be consistent with how it is described in Topic 606 , Revenue from Contracts with Customers . The new standard was effective for us on January 1, 2018. The adoption of ASU No. 2017-01 on January 1, 2018 had no impact on our consolidated financial statements and related disclosures. On May 10, 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation: Scope of Modification Accounting , which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The new standard was effective for us on January 1, 2018. The adoption of ASU No. 2017-09 on January 1, 2018 had no impact on our consolidated financial statements and related disclosures. Recently issued accounting pronouncements not yet adopted On February 25, 2016, the FASB issued ASU No. 2016-02, Leases , which will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. The new standard is effective for us on January 1, 2019. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. We are evaluating the effect that ASU No. 2016-02 will have on our consolidated financial statements and related disclosures. On January 26, 2017, the FASB issued ASU No. 2017-04, Intangibles — Goodwill and Other , which simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. The new standard is effective for us on January 1, 2020. The new standard is required to be applied prospectively. Early adoption is permitted for any impairment tests performed after January 1, 2017. We are evaluating the effect that ASU No. 2017-04 will have on our consolidated financial statements and related disclosures. On February 14, 2018, the FASB issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , to address a specific consequence of the Tax Cuts and Jobs Act (“Tax Reform Act”) by allowing a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Reform Act’s reduction of the U.S. federal corporate income tax rate. The new standard is effective for us on January 1, 2019 and is to be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Reform is recognized. Early adoption is permitted. We are evaluating the effect that ASU No. 2018-02 will have on our consolidated financial statements and related disclosures. On March 13, 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, which allowed SEC registrants to record provisional amounts in earnings for the year ended December 31, 2017 due to the complexities involved in accounting for the enactment of the Tax Reform Act. We recognized the estimated income tax effects of the Tax Reform Act in our Audited Consolidated Financial Statements included in our Annual Report in accordance with SEC Staff Accounting Bulletin No. 118 (“SAB 118”). Refer to Note 10 for further information regarding the provisional amounts that we recorded as of December 31, 2017. |
Segment Reporting Policy | We report our results in a single reportable segment, which reflects how our chief operating decision maker allocates resources and evaluates our financial results. Because we have one reportable segment, all required financial segment information can be found directly in the Unaudited Condensed Consolidated Financial Statements. The accounting policies for our single reportable segment are the same as those described in “Note 2. Summary of Significant Accounting Policies” included in the Audited Consolidated Financial Statements and Notes thereto included in our Annual Report. We evaluate the performance of our reporting segment based on revenue and operating income. |
Investments- Debt and Equity Securities Policy | We classify our investments into three categories: available-for-sale, held-to-maturity, and trading securities. Our investment portfolio consists of stocks, bonds, options, mutual funds, money market funds, or exchange-traded products that replicate the model portfolios and strategies created by Morningstar. These investment accounts may also include exchange-traded products where Morningstar is an index provider. We classify our investment portfolio as shown below: |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Impact of Adoption of Topic 606 | The following table summarizes the cumulative effect of the changes to our unaudited condensed consolidated balance sheet as of January 1, 2018 from the adoption of Topic 606: (in millions) Balance at December 31, 2017 Adjustments due to Topic 606 Balance at January 1, 2018 Assets: Deferred commissions, current and non-current $ — $ 22.7 $ 22.7 Liabilities: Deferred income tax liability $ — $ 5.7 $ 5.7 Equity: Retained earnings $ — $ 17.0 $ 17.0 The following table illustrates the impact that adopting Topic 606 has had on our reported results in the unaudited condensed consolidated balance sheet as of March 31, 2018 and the unaudited condensed consolidated statements of income for the three months ended March 31, 2018: For the three months ended March 31, 2018 (in millions) As Reported Impact of adopting Topic 606 Balances without adoption of Topic 606 Balance Sheet: Accounts receivable, less allowance $ 158.2 $ — $ 158.2 Deferred commissions, current and non-current 26.1 26.1 — Deferred revenue, current and non-current 219.6 — 219.6 Income Statement: Revenue $ 243.5 $ 1.7 $ 241.8 Cost of revenue 102.4 1.7 100.7 Sales and marketing 38.5 0.4 38.9 Operating income 47.5 (0.4 ) 47.1 |
Acquisitions, Goodwill and Ot23
Acquisitions, Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following table shows the changes in our goodwill balances from December 31, 2017 to March 31, 2018 : (in millions) Balance as of December 31, 2017 $ 564.9 Foreign currency translation 2.5 Balance as of March 31, 2018 $ 567.4 |
Schedule of Intangible Assets | The following table summarizes our intangible assets: As of March 31, 2018 As of December 31, 2017 (in millions) Gross Accumulated Amortization Net Weighted Average Useful Life (years) Gross Accumulated Amortization Net Weighted Average Useful Life (years) Intellectual property $ 31.4 $ (29.1 ) $ 2.3 9 $ 31.5 $ (28.9 ) $ 2.6 9 Customer-related assets 157.4 (110.4 ) 47.0 12 156.6 (108.1 ) 48.5 12 Supplier relationships 0.2 (0.1 ) 0.1 20 0.2 (0.1 ) 0.1 20 Technology-based assets 128.2 (87.9 ) 40.3 7 127.9 (84.2 ) 43.7 7 Non-competition agreements 2.5 (2.0 ) 0.5 5 2.5 (2.0 ) 0.5 5 Total intangible assets $ 319.7 $ (229.5 ) $ 90.2 10 $ 318.7 $ (223.3 ) $ 95.4 10 |
Schedule of Intangible Asset, Amortization Expense | The following table summarizes our amortization expense related to intangible assets: Three months ended March 31 (in millions) 2018 2017 Amortization expense $ 5.3 $ 6.5 |
Schedule of Expected Amortization Expense | We expect intangible amortization expense for the remainder of 2018 and subsequent years as follows: (in millions) Remainder of 2018 (from April 1 through December 31) $ 15.5 2019 19.3 2020 16.3 2021 13.0 2022 5.2 Thereafter 20.9 Our estimates of future amortization expense for intangible assets may be affected by acquisitions, divestitures, changes in the estimated average useful life, and foreign currency translation. |
Income Per Share (Tables)
Income Per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table shows how we reconcile our net income and the number of shares used in computing basic and diluted net income per share: Three months ended March 31 (in millions, except per share amounts) 2018 2017 Basic net income per share: Consolidated net income $ 41.9 $ 18.0 Weighted average common shares outstanding 42.5 42.9 Basic net income per share $ 0.99 $ 0.42 Diluted net income per share: Consolidated net income $ 41.9 $ 18.0 Weighted average common shares outstanding 42.5 42.9 Net effect of dilutive stock options, restricted stock units, performance share awards, and market stock units 0.4 0.3 Weighted average common shares outstanding for computing diluted income per share 42.9 43.2 Diluted net income per share $ 0.98 $ 0.42 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table presents our revenue disaggregated by revenue type. Sales and usage-based taxes are excluded from revenue. Three months ended March 31 (in millions) 2018 2017 License-based $ 178.6 $ 156.7 Asset-based 50.7 42.0 Transaction-based 14.2 10.8 Consolidated revenue $ 243.5 $ 209.5 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | We expect to recognize revenue related to our contract liabilities for the remainder of 2018 and subsequent years as follows: As of March 31 (in millions) 2018 Remainder of 2018 (from April 1 through December 31) $ 322.7 2019 125.4 2020 43.8 2021 10.7 2022 7.7 Thereafter 26.5 $ 536.8 |
Summary of Contract Assets and Change in Deferred Commissions | The following table summarizes our contract assets balance: As of March 31 As of December 31 (in millions) 2018 2017 Accounts receivable, less allowance $ 158.2 $ 148.2 Deferred commissions 16.7 — Deferred commissions, non-current 9.4 — Total contract assets $ 184.3 $ 148.2 The following table shows the change in our deferred commissions balance from January 1, 2018 to March 31, 2018 : (in millions) Balance as of January 1, 2018 $ 22.7 Commissions earned and capitalized 7.0 Amortization of capitalized amounts (3.6 ) Balance as of March 31, 2018 $ 26.1 |
Segment and Geographical Area26
Segment and Geographical Area Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from External Customer [Line Items] | |
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block] | The tables below summarize our revenue and long-lived assets by geographical area: External revenue by geographical area Three months ended March 31 (in millions) 2018 2017 United States $ 179.5 $ 156.9 United Kingdom 18.3 14.9 Continental Europe 19.9 16.3 Australia 10.5 8.1 Canada 7.7 7.3 Asia 6.1 4.9 Other 1.5 1.1 Total International 64.0 52.6 Consolidated revenue $ 243.5 $ 209.5 Long-lived assets by geographical area As of March 31 As of December 31 (in millions) 2018 2017 United States $ 128.8 $ 131.9 United Kingdom 5.8 6.0 Continental Europe 1.6 1.7 Australia 5.3 2.3 Canada 0.2 0.2 Asia 5.6 5.2 Other 0.1 0.1 Total International 18.6 15.5 Consolidated property, equipment, and capitalized software, net $ 147.4 $ 147.4 |
Investments and Fair Value Me27
Investments and Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Investments | We classify our investment portfolio as shown below: As of March 31 As of December 31 (in millions) 2018 2017 Available-for-sale $ 21.3 $ 21.5 Held-to-maturity 21.5 21.9 Trading securities 1.6 1.7 Total $ 44.4 $ 45.1 |
Unrealized Gain (Loss) on Investments | The following table shows the net unrealized losses on trading securities as recorded in our Unaudited Condensed Consolidated Statements of Income: Three months ended March 31 (in millions) 2018 2017 Unrealized losses, net $ (0.1 ) $ — The following table shows the cost, unrealized gains (losses), and fair value of investments classified as available-for-sale and held-to-maturity: As of March 31, 2018 As of December 31, 2017 (in millions) Cost Unrealized Gain Unrealized Loss Fair Value Cost Unrealized Gain Unrealized Loss Fair Value Available-for-sale: Equity securities and exchange-traded funds $ 17.8 $ 2.0 $ (1.0 ) $ 18.8 $ 17.1 $ 2.4 $ (0.6 ) $ 18.9 Mutual funds 2.4 0.1 — 2.5 2.4 0.2 — 2.6 Total $ 20.2 $ 2.1 $ (1.0 ) $ 21.3 $ 19.5 $ 2.6 $ (0.6 ) $ 21.5 Held-to-maturity: Certificates of deposit $ 19.5 $ — $ — $ 19.5 $ 19.9 $ — $ — $ 19.9 Convertible note 2.0 — — 2.0 2.0 — — 2.0 Total $ 21.5 $ — $ — $ 21.5 $ 21.9 $ — $ — $ 21.9 |
Investments Classified by Contractual Maturity Date | The table below shows the cost and fair value of investments classified as available-for-sale and held-to-maturity based on their contractual maturities as of March 31, 2018 and December 31, 2017 . As of March 31, 2018 As of December 31, 2017 (in millions) Cost Fair Value Cost Fair Value Available-for-sale: Equity securities, exchange-traded funds, and mutual funds $ 20.2 $ 21.3 $ 19.5 $ 21.5 Total $ 20.2 $ 21.3 $ 19.5 $ 21.5 Held-to-maturity: Due in one year or less $ 19.3 $ 19.3 $ 19.7 $ 19.7 Due in one to three years 2.2 2.2 2.2 2.2 Total $ 21.5 $ 21.5 $ 21.9 $ 21.9 |
Schedule of Realized Gain (Loss) on Available-For-Sale Securities | The following table shows the realized gains and losses arising from sales of our investments classified as available-for-sale recorded in our Unaudited Condensed Consolidated Statements of Income: Three months ended March 31 (in millions) 2018 2017 Realized gains $ 0.6 $ 0.5 Realized losses (0.1 ) — Realized gains, net $ 0.5 $ 0.5 |
Fair Value, Assets Measured on Recurring Basis | The table below shows the fair value of our assets subject to fair value measurements that are measured at fair value on a recurring basis using a fair value hierarchy: Level 1: Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 3: Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Fair Value Fair Value Measurements as of March 31, 2018 as of Using Fair Value Hierarchy (in millions) March 31, 2018 Level 1 Level 2 Level 3 Available-for-sale investments: Equity securities and exchange-traded funds $ 18.8 $ 18.8 $ — $ — Mutual funds 2.5 2.5 — — Trading securities 1.6 1.6 — — Cash equivalents 0.5 0.5 — — Total $ 23.4 $ 23.4 $ — $ — Fair Value Fair Value Measurements as of December 31, 2017 as of Using Fair Value Hierarchy (in millions) December 31, 2017 Level 1 Level 2 Level 3 Available-for-sale investments: Equity securities and exchange-traded funds $ 18.9 $ 18.9 $ — $ — Mutual funds 2.6 2.6 — — Trading securities 1.7 1.7 — — Cash equivalents 0.5 0.5 — — Total $ 23.7 $ 23.7 $ — $ — |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule Of Compensation Cost By Expense Category | The following table summarizes the stock-based compensation expense included in each of our operating expense categories: Three months ended March 31 (in millions) 2018 2017 Cost of revenue $ 2.7 $ 2.1 Sales and marketing 0.8 0.7 General and administrative 3.1 2.5 Total stock-based compensation expense $ 6.6 $ 5.3 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | The following table shows our effective tax rate for the three months ended March 31, 2018 and March 31, 2017 : Three months ended March 31 (in millions) 2018 2017 Income before income taxes and equity in net loss of unconsolidated entities $ 56.8 $ 27.1 Equity in net loss of unconsolidated entities (1.5 ) (0.8 ) Total $ 55.3 $ 26.3 Income tax expense $ 13.4 $ 8.3 Effective tax rate 24.2 % 31.6 % |
Schedule of Gross Unrecognized Tax Benefits | The table below provides information concerning our gross unrecognized tax benefits as of March 31, 2018 , and December 31, 2017 , as well as the effect these gross unrecognized tax benefits would have on our income tax expense, if they were recognized. As of March 31 As of December 31 (in millions) 2018 2017 Gross unrecognized tax benefits $ 16.6 $ 18.7 Gross unrecognized tax benefits that would affect income tax expense $ 12.9 $ 15.0 Decrease in income tax expense upon recognition of gross unrecognized tax benefits $ 12.4 $ 14.4 |
Schedule of Liabilities for Unrecognized Tax Benefits | Our Unaudited Condensed Consolidated Balance Sheets include the following liabilities for unrecognized tax benefits. These amounts include interest and penalties, less any associated tax benefits. As of March 31 As of December 31 Liabilities for Unrecognized Tax Benefits (in millions) 2018 2017 Current liability $ 6.3 $ 8.7 Non-current liability 7.0 7.0 Total liability for unrecognized tax benefits $ 13.3 $ 15.7 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Impact on Financial Statements, Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from contracts | $ 243.5 | $ 209.5 | |
Revenue | 243.5 | 209.5 | |
Cost of revenue | 102.4 | 97 | |
Cumulative effect adjustment of new accounting principle | $ 17 | ||
License-based | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from contracts | $ 178.6 | 156.7 | |
License-based | Minimum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue performance period | 12 months | ||
License-based | Maximum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue performance period | 36 months | ||
Asset-based | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from contracts | $ 50.7 | $ 42 | |
Asset-based | Minimum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue performance period | 12 months | ||
Asset-based | Maximum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue performance period | 36 months | ||
Retained Earnings | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative effect adjustment of new accounting principle | 17 | ||
ASU 2014-09 | Retained Earnings | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative effect adjustment of new accounting principle | $ 17 | ||
ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Revenue from contracts | $ 1.7 | ||
Revenue | 1.7 | ||
Cost of revenue | $ 1.7 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Cumulative Effect of Changes from Adoption of Topic 606) (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Assets: | |||
Deferred commissions, current and non-current | $ 26.1 | $ 22.7 | |
Liabilities: | |||
Deferred income tax liability | 5.7 | ||
Equity: | |||
Retained earnings | 1,007 | 17 | $ 958.7 |
Balances without adoption of Topic 606 | |||
Assets: | |||
Deferred commissions, current and non-current | 0 | 0 | |
Liabilities: | |||
Deferred income tax liability | 0 | ||
Equity: | |||
Retained earnings | $ 0 | ||
Adjustments due to Topic 606 | ASU 2014-09 | |||
Assets: | |||
Deferred commissions, current and non-current | $ 26.1 | 22.7 | |
Liabilities: | |||
Deferred income tax liability | 5.7 | ||
Equity: | |||
Retained earnings | $ 17 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Impact of Adoption of Topic 606) (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Balance Sheet: | ||||
Accounts receivable, less allowance | $ 158.2 | $ 148.2 | ||
Deferred commissions, current and non-current | 26.1 | $ 22.7 | ||
Deferred revenue, current and non-current | 219.6 | |||
Income Statement: | ||||
Revenue | 243.5 | $ 209.5 | ||
Cost of revenue | 102.4 | 97 | ||
Sales and marketing | 38.5 | 32.4 | ||
Operating income | 47.5 | $ 28.4 | ||
Impact of adopting Topic 606 | ASU 2014-09 | ||||
Balance Sheet: | ||||
Accounts receivable, less allowance | 0 | |||
Deferred commissions, current and non-current | 26.1 | $ 22.7 | ||
Deferred revenue, current and non-current | 0 | |||
Income Statement: | ||||
Revenue | 1.7 | |||
Cost of revenue | 1.7 | |||
Sales and marketing | 0.4 | |||
Operating income | (0.4) | |||
Balances without adoption of Topic 606 | ||||
Balance Sheet: | ||||
Accounts receivable, less allowance | 158.2 | |||
Deferred commissions, current and non-current | 0 | $ 0 | ||
Deferred revenue, current and non-current | 219.6 | |||
Income Statement: | ||||
Revenue | 241.8 | |||
Cost of revenue | 100.7 | |||
Sales and marketing | 38.9 | |||
Operating income | $ 47.1 |
Credit Arrangements (Details)
Credit Arrangements (Details) | 3 Months Ended | |
Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Line of Credit Facility [Line Items] | ||
Outstanding principal balance | $ 150,000,000 | $ 180,000,000 |
Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Credit facility term of agreement | 3 years | |
Credit facility borrowing capacity | $ 300,000,000 | |
Outstanding principal balance | 150,000,000 | |
Borrowing availability | 150,000,000 | |
Letter of Credit [Member] | ||
Line of Credit Facility [Line Items] | ||
Credit facility borrowing capacity | $ 25,000,000 | |
London Interbank Offered Rate (LIBOR) [Member] | Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate (percent) | 1.00% | |
Minimum | ||
Line of Credit Facility [Line Items] | ||
Minimum consolidated interest coverage ratio | 3 | |
Minimum | London Interbank Offered Rate (LIBOR) [Member] | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate (percent) | 1.00% | |
Minimum | Base Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate (percent) | 2.00% | |
Maximum | ||
Line of Credit Facility [Line Items] | ||
Maximum consolidated leverage ratio | 3 | |
Maximum | London Interbank Offered Rate (LIBOR) [Member] | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate (percent) | 1.75% | |
Maximum | Base Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate (percent) | 2.75% |
Acquisitions, Goodwill and Ot34
Acquisitions, Goodwill and Other Intangible Assets (Schedule of Goodwill) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill, Impairment Loss | $ 0 | $ 0 |
Goodwill [Roll Forward] | ||
Goodwill, Beginning Balance | 564.9 | |
Foreign currency translation | 2.5 | |
Goodwill, Ending Balance | $ 567.4 |
Acquisitions, Goodwill and Ot35
Acquisitions, Goodwill and Other Intangible Assets (Schedule of Intangible Assets) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 319.7 | $ 318.7 |
Accumulated Amortization | (229.5) | (223.3) |
Intangible assets, Net | $ 90.2 | $ 95.4 |
Weighted-Average Useful Life (years) | 10 years | 10 years |
Intellectual Property [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 31.4 | $ 31.5 |
Accumulated Amortization | (29.1) | (28.9) |
Intangible assets, Net | $ 2.3 | $ 2.6 |
Weighted-Average Useful Life (years) | 9 years | 9 years |
Customer Related Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 157.4 | $ 156.6 |
Accumulated Amortization | (110.4) | (108.1) |
Intangible assets, Net | $ 47 | $ 48.5 |
Weighted-Average Useful Life (years) | 12 years | 12 years |
Supplier Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 0.2 | $ 0.2 |
Accumulated Amortization | (0.1) | (0.1) |
Intangible assets, Net | $ 0.1 | $ 0.1 |
Weighted-Average Useful Life (years) | 20 years | 20 years |
Technology-Based Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 128.2 | $ 127.9 |
Accumulated Amortization | (87.9) | (84.2) |
Intangible assets, Net | $ 40.3 | $ 43.7 |
Weighted-Average Useful Life (years) | 7 years | 7 years |
Non-competition Agreement [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 2.5 | $ 2.5 |
Accumulated Amortization | (2) | (2) |
Intangible assets, Net | $ 0.5 | $ 0.5 |
Weighted-Average Useful Life (years) | 5 years | 5 years |
Acquisitions, Goodwill and Ot36
Acquisitions, Goodwill and Other Intangible Assets (Amortization Expense) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 5.3 | $ 6.5 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
Remainder of 2018 (from April 1 through December 31) | 15.5 | |
2,017 | 19.3 | |
2,018 | 16.3 | |
2,019 | 13 | |
2,020 | 5.2 | |
Thereafter | $ 20.9 |
Income Per Share (Details)
Income Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share, Basic [Abstract] | ||
Consolidated net income | $ 41.9 | $ 18 |
Weighted average common shares outstanding | 42.5 | 42.9 |
Basic net income per share attributable to Morningstar, Inc. | $ 0.99 | $ 0.42 |
Earnings Per Share, Diluted [Abstract] | ||
Consolidated net income | $ 41.9 | $ 18 |
Weighted average common shares outstanding | 42.5 | 42.9 |
Net effect of dilutive stock options and restricted stock units | 0.4 | 0.3 |
Weighted average common shares outstanding for computing diluted income per share | 42.9 | 43.2 |
Diluted net income per share attributable to Morningstar, Inc. | $ 0.98 | $ 0.42 |
Revenue (Disaggregation of Reve
Revenue (Disaggregation of Revenue) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Disaggregation of Revenue [Line Items] | ||
Consolidated revenue | $ 243.5 | $ 209.5 |
License-based | ||
Disaggregation of Revenue [Line Items] | ||
Consolidated revenue | 178.6 | 156.7 |
Asset-based | ||
Disaggregation of Revenue [Line Items] | ||
Consolidated revenue | 50.7 | 42 |
Transaction-based | ||
Disaggregation of Revenue [Line Items] | ||
Consolidated revenue | $ 14.2 | $ 10.8 |
Revenue (Disaggregation of Re39
Revenue (Disaggregation of Revenue, Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenues | $ 243.5 | $ 209.5 |
Licensed-based Revenue | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenues | $ 178.6 | 156.7 |
Licensed-based Revenue | Minimum | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue performance period | 12 months | |
Licensed-based Revenue | Maximum | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue performance period | 36 months | |
Asset-based Revenue | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenues | $ 50.7 | $ 42 |
Asset-based Revenue | Minimum | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue performance period | 12 months | |
Asset-based Revenue | Maximum | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue performance period | 36 months | |
Surveillance Revenue | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenues | $ 2.3 |
Revenue (Contract Liabilities,
Revenue (Contract Liabilities, Narrative) (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liability | $ 219.6 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | 322.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | 125.4 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | 43.8 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | 10.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | 7.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | 26.5 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Increase in contract liabilities from cash payments received | 34.1 |
Revenues recognized | 80.9 |
Revenue, remaining performance obligation | 536.8 |
Change in contract liabilities | 317.2 |
Contract liability | $ 219.6 |
Revenue (Contract Liabilities41
Revenue (Contract Liabilities, Expected Recognition) (Details) $ in Millions | Mar. 31, 2018USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 322.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | 125.4 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | 43.8 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | 10.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | 7.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | 26.5 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 536.8 |
Revenue (Summary of Contract As
Revenue (Summary of Contract Assets) (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Revenue from Contract with Customer [Abstract] | ||
Accounts receivable, less allowance | $ 158.2 | $ 148.2 |
Deferred commissions | 16.7 | 0 |
Deferred commissions, non-current | 9.4 | 0 |
Total contract assets | $ 184.3 | $ 148.2 |
Revenue (Change in Deferred Com
Revenue (Change in Deferred Commissions) (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Commissions earned and capitalized | $ 7 |
Amortization of capitalized amounts | (3.6) |
Balance as of March 31, 2018 | $ 26.1 |
Segment and Geographical Area44
Segment and Geographical Area Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Segment Reporting Information, Operating Income (Loss) [Abstract] | ||
External revenue | $ 243.5 | $ 209.5 |
U.S. [Member] | ||
Segment Reporting Information, Operating Income (Loss) [Abstract] | ||
External revenue | 179.5 | 156.9 |
Non-U.S. [Member] | ||
Segment Reporting Information, Operating Income (Loss) [Abstract] | ||
External revenue | $ 64 | $ 52.6 |
Segment and Geographical Area45
Segment and Geographical Area Information (External Revenue and Long-Lived Assets) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
External revenue | $ 243.5 | $ 209.5 | |
Long-lived assets | 147.4 | $ 147.4 | |
United States | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
External revenue | 179.5 | 156.9 | |
Long-lived assets | 128.8 | 131.9 | |
Total International | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
External revenue | 64 | 52.6 | |
Long-lived assets | 18.6 | 15.5 | |
United Kingdom | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
External revenue | 18.3 | 14.9 | |
Long-lived assets | 5.8 | 6 | |
Continental Europe | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
External revenue | 19.9 | 16.3 | |
Long-lived assets | 1.6 | 1.7 | |
Australia | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
External revenue | 10.5 | 8.1 | |
Long-lived assets | 5.3 | 2.3 | |
Canada | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
External revenue | 7.7 | 7.3 | |
Long-lived assets | 0.2 | 0.2 | |
Asia | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
External revenue | 6.1 | 4.9 | |
Long-lived assets | 5.6 | 5.2 | |
Other | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
External revenue | 1.5 | $ 1.1 | |
Long-lived assets | $ 0.1 | $ 0.1 |
Investments and Fair Value Me46
Investments and Fair Value Measurements (Classification of Securities) (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Fair Value Disclosures [Abstract] | ||
Available-for-sale | $ 21.3 | $ 21.5 |
Held-to-maturity | 21.5 | 21.9 |
Trading securities | 1.6 | 1.7 |
Total | $ 44.4 | $ 45.1 |
Investments and Fair Value Me47
Investments and Fair Value Measurements (Gains (Losses) on Investments) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Available-for-sale: | |||
Available-for-sale securities, Cost | $ 20.2 | $ 19.5 | |
Available-for-sale Securities, Unrealized Gain | 2.1 | 2.6 | |
Available-for-sale Securities, Unrealized Loss | (1) | (0.6) | |
Available-for-sale securities, Fair Value | 21.3 | 21.5 | |
Held-to-maturity: | |||
Held-to-maturity securities, Cost | 21.5 | 21.9 | |
Held-to-maturity Securities, Unrecognized Gain | 0 | 0 | |
Held-to-maturity Securities, Unrecognized Loss | 0 | 0 | |
Held-to-maturity | 21.5 | 21.9 | |
Available-for-sale Securities, Gross Realized Gain (Loss) [Abstract] | |||
Available-for-sale securities, realized gains | 0.6 | $ 0.5 | |
Available-for-sale securities, realized losses | (0.1) | 0 | |
Available-for-sale securities, realized gains (losses), net | 0.5 | $ 0.5 | |
Equity Securities and Exchange-traded Funds [Member] | |||
Available-for-sale: | |||
Available-for-sale securities, Cost | 17.8 | 17.1 | |
Available-for-sale Securities, Unrealized Gain | 2 | 2.4 | |
Available-for-sale Securities, Unrealized Loss | (1) | (0.6) | |
Available-for-sale securities, Fair Value | 18.8 | 18.9 | |
Mutual Funds [Member] | |||
Available-for-sale: | |||
Available-for-sale securities, Cost | 2.4 | 2.4 | |
Available-for-sale Securities, Unrealized Gain | 0.1 | 0.2 | |
Available-for-sale Securities, Unrealized Loss | 0 | 0 | |
Available-for-sale securities, Fair Value | 2.5 | 2.6 | |
Certificates of Deposit [Member] | |||
Held-to-maturity: | |||
Held-to-maturity securities, Cost | 19.5 | 19.9 | |
Held-to-maturity Securities, Unrecognized Gain | 0 | 0 | |
Held-to-maturity Securities, Unrecognized Loss | 0 | 0 | |
Held-to-maturity | 19.5 | 19.9 | |
Convertible Debt Securities [Member] | |||
Held-to-maturity: | |||
Held-to-maturity securities, Cost | 2 | 2 | |
Held-to-maturity Securities, Unrecognized Gain | 0 | 0 | |
Held-to-maturity Securities, Unrecognized Loss | 0 | 0 | |
Held-to-maturity | $ 2 | $ 2 |
Investments and Fair Value Me48
Investments and Fair Value Measurements (Unrealized Gains On Trading Securities) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | ||
Unrealized gains, net | $ (0.1) | $ 0 |
Investments and Fair Value Me49
Investments and Fair Value Measurements (Cost and Fair Value of Investments Classified by Maturity) (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Available-for-sale Securities, Debt Maturities [Abstract] | ||
Available-for-sale securities, Equity securities, exchange-traded funds, and mutual funds, Cost | $ 20.2 | $ 19.5 |
Available-for-sale securities, Equity securities, exchange-traded funds, and mutual funds, Fair Value | 21.3 | 21.5 |
Available-for-sale securities, Cost | 20.2 | 19.5 |
Available-for-sale securities, Fair Value | 21.3 | 21.5 |
Held-to-maturity Securities, Debt Maturities [Abstract] | ||
Held-to-maturity securities, Due in one year or less, Cost | 19.3 | 19.7 |
Held-to-maturity securities, Due within one year or less, Fair Value | 19.3 | 19.7 |
Held-to-maturity securities, Due in one to three years, Cost | 2.2 | 2.2 |
Held-to-maturity securities, Due in one to three years, Fair Value | 2.2 | 2.2 |
Held-to-maturity securities, Cost | 21.5 | 21.9 |
Held-to-maturity securities, Fair Value | $ 21.5 | $ 21.9 |
Investments and Fair Value Me50
Investments and Fair Value Measurements (Fair Value of Assets) (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading securities, fair value | $ 1.6 | $ 1.7 |
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading securities, fair value | 1.6 | 1.7 |
Cash equivalents, fair value | 0.5 | 0.5 |
Total investments, fair value | 23.4 | 23.7 |
Fair Value, Measurements, Recurring [Member] | Equity Securities and Exchange-traded Funds [Member] | Estimate of Fair Value Measurement [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, fair value | 18.8 | 18.9 |
Fair Value, Measurements, Recurring [Member] | Mutual Funds [Member] | Estimate of Fair Value Measurement [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, fair value | 2.5 | 2.6 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading securities, fair value | 1.6 | 1.7 |
Cash equivalents, fair value | 0.5 | 0.5 |
Total investments, fair value | 23.4 | 23.7 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Equity Securities and Exchange-traded Funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, fair value | 18.8 | 18.9 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Mutual Funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, fair value | 2.5 | 2.6 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading securities, fair value | 0 | 0 |
Cash equivalents, fair value | 0 | 0 |
Total investments, fair value | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Equity Securities and Exchange-traded Funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, fair value | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Mutual Funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, fair value | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Trading securities, fair value | 0 | 0 |
Cash equivalents, fair value | 0 | 0 |
Total investments, fair value | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Equity Securities and Exchange-traded Funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, fair value | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Mutual Funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities, fair value | $ 0 | $ 0 |
Stock-Based Compensation (Alloc
Stock-Based Compensation (Allocation of Stock-Based Compensation Costs by Plan) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense | $ 6.6 | $ 5.3 |
Cost of Revenue [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense | 2.7 | 2.1 |
Selling and Marketing Expense [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense | 0.8 | 0.7 |
General and Administrative Expense [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense | $ 3.1 | $ 2.5 |
Stock-Based Compensation (Narra
Stock-Based Compensation (Narrative) (Details) - Restricted Stock Units and Performance Share Awards [Member] $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized stock-based compensation expense | $ 42.8 |
Expected amortization period (months) | 29 months |
Income Taxes (Income Tax Reconc
Income Taxes (Income Tax Reconciliation and Unrecognized Tax Benefits) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||
Income before income taxes and equity in net loss of unconsolidated entities | $ 56.8 | $ 27.1 | |
Equity in net loss of unconsolidated entities | (1.5) | (0.8) | |
Total | 55.3 | 26.3 | |
Income tax expense | $ 13.4 | $ 8.3 | |
Effective income tax rate | 24.20% | 31.60% | |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued [Abstract] | |||
Current liabilities | $ 6.3 | $ 8.7 | |
Non-current liabilities | 7 | 7 | |
Total liability for unrecognized tax benefits | $ 13.3 | 15.7 | |
Concentration Risk [Line Items] | |||
Respective decrease in taxes (as a percent) | 7.40% | ||
Deferred tax liability on undistributed foreign earnings | $ 3 | ||
Geographic Concentration Risk | Cash, Cash Equivalents and Investments | Non-U.S. [Member] | |||
Concentration Risk [Line Items] | |||
Percentage of cash, cash equivalents and investments held by operations outside of US | 74.00% |
Income Taxes (Effective Tax Rat
Income Taxes (Effective Tax Rate, Narrative) (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Income Tax Disclosure [Abstract] | |
Discrete net tax benefit | $ 10.6 |
Deferred tax benefit from revaluation of net U.S. deferred tax liabilities | 14.7 |
Tax expense for transitional tax liability on deemed repatriated earnings of foreign subsidiaries | 7.5 |
Tax benefit for reduction of deferred tax liability previously recorded for foreign equity method investments | 6.4 |
Tax expense related to changes in indefinite reinvestment assertion | 3 |
Deferred tax on foreign withholding taxes | $ 3 |
Income Taxes (Income Tax Contin
Income Taxes (Income Tax Contingency) (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Gross unrecognized tax benefits | $ 16.6 | $ 18.7 |
Gross unrecognized tax benefits which would affect income tax expense | 12.9 | 15 |
Decrease in income tax expense upon recognition of gross unrecognized tax benefits | $ 12.4 | $ 14.4 |
Income Taxes (Unrecognized Tax
Income Taxes (Unrecognized Tax Benefits, Narrative) (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Income Tax Disclosure [Abstract] | |
Decrease in unrecognized tax benefits from settlement with taxing authorities | $ 2.4 |
Share Repurchase Program (Detai
Share Repurchase Program (Details) | Mar. 31, 2018USD ($)shares |
Equity [Abstract] | |
Share repurchase program, authorized amount | $ 500,000,000 |
Shares repurchased, program life to date, shares | shares | 92,529 |
Shares repurchased, program life to date, value | $ 8,900,000 |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 491,100,000 |