Morningstar Inc. said on Wednesday that profit in the second quarter fell 12 percent on rising costs for compensation and other expenses.
Net income for the Chicago investment research company company fell to $18.0 million, or 36 cents per share, for the quarter, from $20.5 million, or 41 cents a share, for the same period a year earlier.
Revenue rose to $136.1 million, from $119.5 million for the year-earlier quarter, the company said. Revenue from acquisitions of $12.7 million helped drive the increase, along with more sales of software and data products. But total operating expenses also rose, including higher costs for salaries, sales and marketing.
Chief Executive Joe Mansueto said the revenue increase was encouraging because it came despite the loss of revenue under the terms of the Global Analyst Research Settlement, which ended last summer. In an interview he said it was the first time in nearly two years the company had recorded an increase in “organic” revenue, excluding acquisitions and currency effects.
One reason for the cost increases is that the company has moved to restore benefits and bonuses it had cut during the economic downturn, he said. Head count also is, to 2,965 employees, from 2,510 a year earlier. Many of the new jobs are in development centers the company has opened in China and India, the company said.
Morningstar is best-known for keeping tabs on mutual funds, but one recent deal it struck was a $52 million purchase of Realpoint LLC in March to compete with major rating agencies. Mansueto said further deals “are not part of our strategy” but said he may be looking to fill holes in the company’s product lineup.
“Fixed income data is an area we would love to bolster,” he said.
Shares of Morningstar have fallen 5 percent for the year to date. The results were released after the close of trading.
