Editor's Note: This article has been corrected to reflect that the amortization is from intangible assets rather than from goodwill.  

Morningstar (NASDAQ:MORN) dawned dimly on Wall Street Thursday morning, with an earnings report that sent shares tumbling 3%. But was the news really all that bad, or more a case of analysts getting back at the company for not giving their funds quite as many "stars" as they'd have liked? More succinctly: What's the story, morning glory?

In a nutshell, the story seems not unlike that told by financial services rival TheStreet.com (NASDAQ:TSCM) earlier in the week. It's a story of a fast-growing company that grew even more swiftly than Wall Street's Wise Men had expected, but sacrificed a bit of its projected profitability in the process. Relative to expectations, Morningstar delivered 5% greater revenues than predicted in Q1, but fell 8% short on earnings. More objectively, net profits rose 18%, and profits per diluted share 14% (the difference owing to 2% stock dilution.) Which would be pretty good, except that Q1 revenues were up 36% year over year.

So how did Morningstar manage to turn 36% sales growth into profits that grew at merely half that rate? In a word: margins. Thanks largely to amortization of intangible assets from its several recent acquisitions, but also to higher marketing costs, the firm shaved 220 basis points from its operating margin, and 270 basis points from its net this quarter. Operating margins ended up at 25.2%, and on the bottom line, the firm was still netting 16.5 cents per dollar of revenues. As we learned in last week's Foolish Forecast, that's been about par for the course for the company over the last few quarters.

The firm's institutional business salvaged the quarter. Here, Morningstar provides consulting services on investments and asset allocation, and licenses database information, research, and other content to its customers. Already Morningstar's biggest moneymaker, this segment grew 55% year over year, of which 26% was organic growth. Better still, the firm managed a feat unaccomplished elsewhere in its business -- it grew margins 310 basis points to 31.5%. That helped stem the bleeding in the individual and advisor segments, where Morningstar saw operating profit margin erode 700 b.p and 160 b.p., respectively.

According to management, rising costs and amortization of intangible assets are only part of the problem, however. Some of the businesses it has acquired recently quite simply operate on lower margins. Granted, "the company believes these margins will improve over time as Morningstar integrates these new businesses into its operations." But if the firm is to fully capitalize on its superb revenue growth, it will need to do more than just bring its new businesses' margins into line with the old -- it needs to get a handle on costs generally, and its marketing costs in particular.

What did we expect to see at Morningstar last quarter, and what did we get? Find out in:

Fool contributor Rich Smith owns shares of TheStreet.com. The Fool's disclosure policy is always wide awake.