Constellation Software Q3 2026 Earnings Results & Report

Constellation Software EPS Results

• Actual EPS: C$14.25
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A
• EPS Beat Rate: 5 of last 8 quarters

Constellation Software Revenue Results

• Actual Revenue: C$5.00 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Constellation Software (TSE:CSU) is an international provider of market-leading software and services to a number of industries. Our mission is to acquire, manage and build market-leading software businesses that develop specialized, mission-critical software solutions to address the specific needs of our particular industries. Our company was founded in 1995 to assemble a portfolio of vertical market software companies that have the potential to be leaders in their particular market. Since then, we have grown rapidly through a combination of acquisitions and organic growth, and established a strong constellation of companies with a large, diverse customer base. We have six operating groups which currently service customers in over 100 different markets worldwide. With our headquarters in Toronto, Canada, and offices in North America, Europe, Australia, South America and Africa, we have over 50,000 employees generating consolidated revenues exceeding US$6 billion.

Constellation Software Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Revenue rose 19% to $3.5 billion, while organic growth was 2%. Maintenance and other recurring revenue grew 4%—about 5% excluding U.S. healthcare—within the company’s historical range.
• Negative Sentiment: U.S. healthcare businesses declined about 10% in the quarter, amid sector consolidation and shrinkage at some recently acquired businesses. Management said performance varies across the portfolio and that the affected investments remain in line with its return expectations.
• Neutral Sentiment: Free cash flow available to shareholders fell 16% to $443 million, largely due to a $117 million non-cash revaluation of the Topicus minority-partner obligation; management said it would have risen about 3% with that charge held flat. Cash from operations increased 5% to $717 million.
• Positive Sentiment: Acquisition activity was strong, and management said it has built capacity to pursue larger, more complex deals, though competition remains robust and valuations have not fallen substantially. Recent acquisition cohorts’ margins improved, including one that rose from negative 16% to 27%.
• Neutral Sentiment: AI work is decentralized across the company’s businesses, with experiments underway in products, customer support, and software development; some are already paying for themselves, but management said it is still early and spending is not material. Executives reported no broad customer behavior trend or material AI-driven disintermediation to date.

Presentation

[Operator]

Good day, and welcome to the Constellation Software 2026 third quarter results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Mark Miller, President and COO. Please go ahead, sir.

[Mark Miller, President and COO at Constellation Software]

Well, good morning, everyone. Looking forward to chatting through our Q3 results with you and taking some questions. I will keep some opening remarks short, and then we will move into questions. Just as you could see from our release, revenue for the quarter was $3.5 billion, which was up 19%. Organic growth was 2%, and I wanted to spend a little bit of time just speaking to how we think about organic growth and what is underneath that 2%, because in itself, it doesn't tell you the whole story. The measure we actually care a lot about is watching maintenance and other recurring revenue. That's important because that's where the customer base shows up and how our customers are continuing to use our systems over time.

[Mark Miller, President and COO at Constellation Software]

It's something in my decades at Constellation, I spent a lot of time thinking about and watching, and our maintenance and recurring revenue organic growth was 4% in the quarter. The gap between the 2%, which was the overall organic growth and our recurring revenue organic growth, was pretty much because licenses were down 17%, which is, licenses are pretty immaterial to us these days. Professional services were down 5%, and both of those numbers are fairly lumpy. So the actual 4% recurring revenue growth in the quarter was a reasonable outcome for us. Underneath the number, it's important you understand a little bit about some of the businesses we have in there.

[Mark Miller, President and COO at Constellation Software]

If you look to the MD&A, you can sort of see that if you took out our U.S. healthcare businesses, and in particular Altera, maintenance and recurring revenue growth would have been about 5%, which is pretty much a similar outcome to what we have had since 2016, which is a series that we published for you in the MD&A. It generally varied between 5% and 7%, so it's pretty normal quarter for us, and pretty much every year, but I think one in 2020 where it was 1%. So we thought it would be useful to put that table in for you so you could actually see and understand that. Healthcare is an area where we have seen more shrinkage than we normally would, and there has been a lot of consolidation in that space.

[Mark Miller, President and COO at Constellation Software]

In fact, our whole U.S. healthcare businesses were down by about 10% in the quarter against the 1% last quarter. In actuality, most of that step-down was to new businesses we acquired that we knew when we acquired them were going to shrink. Actually, the way we measure shrinkage in our business, organic growth, is we take into account the businesses prior to our ownership of them. We really weren't even responsible for the shrinkage of those particular businesses. We're working really hard with all of our healthcare team to make sure that our businesses do provide great service to their customers and hopefully will organically grow at some point.

[Mark Miller, President and COO at Constellation Software]

It's pretty important to understand that we did model that into the investment thesis, and all of our healthcare investments that I've mentioned today are expected to perform to our IRR expectations that we underwrote, including the two where we've seen that shrinkage in the quarter. Excluding the two businesses that we recently acquired, the healthcare group would have been down about 3% overall, so not as bad. Now I thought it'd be useful to talk a little bit about cash. Cash from operations was $717 million, which was really up 5%. Now, we use a calculation called free cash flow available to shareholders, and that was at $443 million, which was down 16%. I think it's important that I explain to you how that actually works.

[Mark Miller, President and COO at Constellation Software]

For those of you who do not follow the mechanics, we have an obligation to the minority partners in Topicus, and we have to revalue it every quarter. Its value moves with two things: Topicus's recurring revenue and the Polish shares Topicus holds in a company called Sygnity and Asseco. When either goes up, the obligation goes up, and we deduct that revaluation, arriving at free cash flow available to shareholders. The quarter charge was $117 million. A year ago, it was $16 million. Hold that one line flat, and free cash flow was up about 3%. Of this quarter's $117 million, roughly $77 million is simply the Sygnity and Asseco share prices rising. The rest is Topicus's recurring revenue growing. The charge went up because Topicus grew and because something we own became more valuable.

[Mark Miller, President and COO at Constellation Software]

It is non-cash in the period, and I'm not going to tell you it is meaningless because there's a real obligation sitting behind it, but it is not a deterioration in the business. I didn't want anyone reading down, who read the 16% down and concluding that's what it was. One last thing, as I would expect that we might get asked about AI today. On AI, there is an enormous amount of work going on across our businesses, and nearly all the learning is happening inside of them rather than at head office. We have more than 1,600 businesses across the world and dozens and dozens of vertical markets, and many of them are running experiments right now in their products, in how they support their customers, and how they write software. Some of those experiments are already paying for themselves, and plenty of them are not.

[Mark Miller, President and COO at Constellation Software]

The part I would actually like to point out to you is the best practice sharing, and I've mentioned this before. That has been the engine of this company for three decades. Managers teaching each other what worked, and more usually, what didn't. I have never seen it run as hard as it is running on this. A company with one product or a handful of products runs some experiments at one time. We have many, many, many running at once, and the results travel. That's a real advantage I would want you to understand, and it's not one that you can buy. I'm very, very proud of the team and how hard they're working on AI. I would describe us as experimenting hard, running quickly, and still early. The spend is not currently material to our results, and I'm not going to give you a forecast.

[Mark Miller, President and COO at Constellation Software]

What I can tell you is that nobody here is waiting to be told what to do about it. With that, we'll take your questions.

[Operator]

Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Our first question for today will come from Doug Taylor with National Bank. Please go ahead.

[Doug Taylor, Analyst at National Bank]

Yes, thank you, and good morning. Question for Mark. I think you articulated the Altera situation well last quarter, and I appreciate the added disclosure about the broader U.S. healthcare unit, even excluding Altera. I know you said Altera was expected to be a managed sort of runoff for the next couple of years. Does that same timeline and discussion apply to the broader challenges with the U.S. healthcare unit?

[Jamal Baksh, CFO at Constellation Software]

I mean, the U.S. healthcare unit is made up of probably like 50 different small businesses, and each of them have their own pros and cons, et cetera. Like, yeah, I broke out the group combined, which is sizable, but yeah, I wouldn't be able to generalize the same way, like the dynamics that were happening at Altera across the entire U.S. healthcare group. I think what we said in there, though, is we continue to invest and support our customers, and it's just a very difficult market because of the consolidation that happens because of Epic, et cetera.

[Mark Miller, President and COO at Constellation Software]

Yeah, I personally wouldn't extrapolate that at all. Like, I really would look to our business leaders to continue to think about how they could grow those businesses. Generally, when we're acquiring shrinking businesses, they shrink for a period of time because you want to stop doing some things and hope that at the point you stop doing the things that aren't working out as well for you, that you can then use that as a basis to grow it. So, we're very careful to make sure we're getting good returns on those investments, and I perpetually have preached we want to grow those businesses when the time is right, but not irrationally generating low returns on the incremental capital we're investing in those businesses. So, we'll make that a rational decision, if that makes any sense.

[Doug Taylor, Analyst at National Bank]

Thank you for that. I'll ask one more. I mean, clearly a very strong year for capital deployment, which looks set to continue here in the near-term. I mean, given the sentiment towards software has had such a roller coaster ride this year, climbing out of it, I guess I'm curious if some of the behavior of some of the owners of software assets that you speak to regularly has continued to evolve. I know you don't think of these things in terms of quarters, but it's been quite a year, so any comment there would be helpful.

[Jamal Baksh, CFO at Constellation Software]

Yeah, Bernie, I'll let you take that.

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

We've been very busy, as you could see, for the first three quarters of the year, and that activity is still ongoing. I don't know that there's a massive trend for everyone throwing in the towel in the software business. I think they're just selling as they feel like selling. In the public markets, you see the big fear that happened at the beginning of the year. Prices have bounced back since then, so I just feel that there's more activity for us in general. I think our people in the M&A world and the BD world are stepping up, and they're doing an excellent job against competition. We still have a very healthy amount of competition.

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

I understand from just what I read in the press that large platforms are selling less, harder to unload these days, but private equity and those platforms that exist today are still adding tuck-ins and still competing with us. Still healthy amount of competition in the software world.

[Mark Miller, President and COO at Constellation Software]

There's many businesses that don't transact either, right? During 2008, it was a tough time out there for people. People were very nervous about what the future held, right? As through COVID, good businesses don't want to sell unless there's another reason, because they feel they know their customers, just as our businesses do. They listen to them, and they continue to see their business doing okay. So, I don't think any of that's changed. It really hasn't changed.

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

M&A generally is lumpy for us, and it always will be. We've got a great year so far, and hopefully it'll continue.

[Mark Miller, President and COO at Constellation Software]

Yeah.

[Doug Taylor, Analyst at National Bank]

Thank you.

[Operator]

Your next question will come from Thanos Moschopoulos with BMO Capital Markets. Please go ahead.

[Thanos Moschopoulos, Analyst at BMO Capital Markets]

Hi, good morning. Daan was appointed Chief AI Officer, and that's interesting as it's a central head office role, and as you alluded to, you have a decentralized organization. Can you provide more color on how he will be approaching that role? Will his focus primarily be about propagating those best practices?

[Mark Miller, President and COO at Constellation Software]

It will be mostly about best practice sharing, for sure. Daan is a really smart guy, and he is respected by all of our leaders across Constellation. Any way he can help transmit best practices from an AI perspective is well worth his time doing that. I am super happy he has taken on that role. It's a classic head office role where you are really not in control of anything, but you share information as much as you can to help people do what they do better. I am really happy he took that on.

[Thanos Moschopoulos, Analyst at BMO Capital Markets]

Great. Can you update us on your verticalization strategy and where things stand as far as the implementation of that?

[Mark Miller, President and COO at Constellation Software]

Yeah, we're mostly through it. There's a few loose ends we're kind of working through, but we're mostly through it. It's been a big effort for the team here on top of also spending a lot of energy on AI this year as well. I'm very happy with that. They've done a great job, our operating leaders getting that.

[Thanos Moschopoulos, Analyst at BMO Capital Markets]

For context, would a majority of your revenue fall into buckets that are now verticalized, or just get a sense of the order of magnitude of this initiative?

[Mark Miller, President and COO at Constellation Software]

It'd be substantial. It'd be more than, let's just say more than half would, right? Just to give you a rough idea. Yeah. Of course, when you're doing verticalization, there's a bit of beauty is in the eye of the beholder situation as to how crisp that is. There's still some flexibility around that, but there's just a better focus. Just kind of putting businesses sort of in the same orbit is my expression to use being Constellation, so that they still can do what they need to do. Yeah, so that's sort of the situation there.

[Thanos Moschopoulos, Analyst at BMO Capital Markets]

I'll pass along. Thank you.

[Operator]

The next question will come from Jérôme Dubreuil with Desjardins. Please go ahead.

[Jérôme Dubreuil, Analyst at Desjardins]

Hey, good morning, everyone. Thanks for taking the question. Maybe first question, goes in line the MD&A, talking about an increase in expenses on professional services fees paid to advisors in relation to certain larger or more complex transactions. Are these deals done now, and is this something new that is being explored by the team, or just larger deals kind of in the line of the things that were done in the past?

[Jamal Baksh, CFO at Constellation Software]

Yeah, I mean, the expenses I'm talking about, like for tax analysis or legal analysis, different countries, et cetera, it's not that we're paying advisors to bring us deals, et cetera. It's just more third-party advice as we're doing diligence.

[Jérôme Dubreuil, Analyst at Desjardins]

Okay, thank you. The second one is on free cash, I guess lumpiness. Mark, you talked about the IRGA revaluation that is well noted. The other one that we noticed is on working cap. Just something that is typically lumpy, is there something new there, or we should be expecting some sort of reversals in the coming quarters?

[Jamal Baksh, CFO at Constellation Software]

Yeah, I mean, that number, like you said, it is a lot to do with timing. I mean, we do a ton of analysis around AR, WIP, aging, et cetera, and there's no concerns there. I always point out one thing with that line item. If we buy a business with a ton of positive working capital, we might pay more for that business, and you'd have the price, an increased price go through cash flow from investing, and then we could collect that cash the next day, and you'd get cash flow from ops. You could buy that same business, had negative working capital, let's just say we bought it two days after the collections, you'd pay less for it, but then you wouldn't get that pop in working capital, right?

[Jamal Baksh, CFO at Constellation Software]

It's not purely like an organic number. It is influenced by the timing of what the type of businesses we're buying and when we buy them in their cycle of cash flow.

[Mark Miller, President and COO at Constellation Software]

Yeah, we're careful including the ROIC calculations too for that business, right? So, you're right on, Jamal. Yeah.

[Jérôme Dubreuil, Analyst at Desjardins]

Yep. That's helpful. Thank you.

[Operator]

The next question will come from Stephanie Price with CIBC. Please go ahead.

[Stephanie Price, Analyst at CIBC]

Good morning. Thanks. Just wanted to circle back on a few topics we've covered already. Just on U.S. healthcare, hoping you walk through your thoughts a little bit more on the opportunities in that vertical and how you think about the investment opportunity in U.S. healthcare despite organic declines here.

[Mark Miller, President and COO at Constellation Software]

Well, the way our leaders look at investments is on an opportunistic basis. They're designing products that they believe might attract more growth inside of their business unit. I think Jamal put it correctly, it's a number of businesses in healthcare, and you have to look at each one of them individually as to what the opportunity is, and if it makes sense to invest our shareholders' capital in building something new for those particular businesses. It's a difficult question to ask generally. It's nice to kind of group U.S. healthcare together and say, but it really is a bunch of businesses. Altera is a large disproportionate business, so it kind of sways the whole group a little bit more, so.

[Stephanie Price, Analyst at CIBC]

Yeah. Okay. Just on M&A, obviously nice to see the deployment year to date. Just curious, amid efficiency gains, how should we think about the timeline to bring these businesses onto the CSU model? Has there been any change there, or how are you thinking about improving margins once you acquire these businesses?

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

I would maintain the same timeline. Of course, once we bring these businesses in, we are infusing them with all of our AI best practices as well. And really time will tell if that will accelerate in terms of changing the timeline towards higher margins in the shorter term. We are not ready to say that yet.

[Mark Miller, President and COO at Constellation Software]

I mean, I think I pointed out Q1 that we had, what was it, negative 16% margins with that cohort of the Q1 acquisitions. That cohort is now at 27%. The same thing, like the Q2 cohort went from 12% to 21%. They are improving. It's just that we are making so many acquisitions that it's still a drag on our overall. No, they are being improved. It's not a different pattern.

[Stephanie Price, Analyst at CIBC]

Okay. Thanks for the color.

[Operator]

The next question will come from Kevin McVeigh with UBS. Please go ahead.

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

Morning, Kevin.

[Kevin McVeigh, Analyst at UBS]

Hey, good morning. Hey, congratulations on the results. Just to follow up on that, it's great to see the accelerated pace of M&A. Is that just valuation, opportunistic? Just any thoughts, because it's great to see the incremental capital deployed, but what's giving you that confidence, I guess? Or is it just opportunistic transactions?

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

Still opportunistic transactions. We've got a lot of M&A people out there globally.

[Mark Miller, President and COO at Constellation Software]

Yeah.

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

We hope to be the first ones there when a business is for sale, and hopefully beat the competition. There still is very robust competition out there, and we will see what the next few quarters look like. But right now, I am very pleased with the way things are going.

[Mark Miller, President and COO at Constellation Software]

Yeah, I always add to that is I really think we have built better muscle to do larger transactions as well. We wouldn't have had that capacity in like a decade ago, Kevin. It's kind of nice. We have a good team who are able to make these fairly large, complicated transactions happen. At least we can be in the game and on the field, and we might win one of those that we maybe wouldn't have had the capacity to do previously.

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

All the knowledge we have built up over the history of our M&A, we use all of that knowledge to help us make new acquisitions, and it seems to be working out really well for us.

[Mark Miller, President and COO at Constellation Software]

True. Yeah, the best practice sharing in acquisitions is crazy.

[Kevin McVeigh, Analyst at UBS]

That's great. Then just real quick, are you seeing any client behavioral patterns? I mean, the AI debate has been out there for a while. It seems like the business is steady as it has ever been, but are you seeing anything underneath in terms of clients looking to leverage maybe certain best practices from you folks, or certain capabilities more than others as they not only respond to obviously AI efficiencies, but as they work through that in their own business models?

[Mark Miller, President and COO at Constellation Software]

Kevin, I wish I could say there is some big trend to see, but it's the individual clients who are trying to maybe do a little bit more with AI that you hear about. But across the board, we are not seeing that, right? I think our stronger businesses can get stronger. Our weaker businesses that have high churn rates, and that's a small percentage of our recurring revenues, I think they have always had such a lower long-term, like a lower LTV, like to keep the customers around. So, I wonder about some of those businesses. But overall, I wish I could say there are any like general trends we are seeing. So, nothing really.

[Kevin McVeigh, Analyst at UBS]

That alone is helpful. Thank you.

[Operator]

The next question will come from David Kwan with TD Cowen. Please go ahead.

[David Kwan, Analyst at TD Cowen]

Good morning.

[Mark Miller, President and COO at Constellation Software]

Morning.

[David Kwan, Analyst at TD Cowen]

Mark, Jamal, Bernie. For acquisition targets that are more outside of the traditional VMS businesses that you have targeted, especially maybe areas where you don't have much current exposure, can you maybe talk about how your approach is in terms of building out the investment cases for these types of opportunities? Do you take a different and maybe more conservative approach to the forecasts, or maybe you are using a higher hurdle rate to account for that greater risk with these types of businesses? Your playbook probably doesn't line up great versus more traditional targets.

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

Well, as you know, we do build four scenario models, and any time we go outside of our little patch of VMS, we build more dispersion in the models. Your wipeout is going to be a lot worse, your winner is going to be a bit better, and we use that with the probability weighted model to figure out what price to pay. We believe that the models or the scenarios capture the upside and the downside, and where we are less comfortable, we make the lower cases just a bit worse. Hope that helps.

[Mark Miller, President and COO at Constellation Software]

Yeah. I think, like, one of the things we are looking at more horizontal businesses, you got to really think about the size of the addressable market. The addressable market is outrageously large. You got to really think about that, right? Are you going to be able to cover it properly, what have you. We go through all that in kind of our modeling exercise and debate that stuff as far as what it could be, right?

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

But it's not like we're buying businesses that compete with

[Mark Miller, President and COO at Constellation Software]

Microsoft

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

Microsoft and Oracle. Well, Oracle maybe.

[Mark Miller, President and COO at Constellation Software]

Yeah.

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

But we try to find nichey businesses, even in horizontals, even in geographies. Anything that has a moat and a few moats is what we're looking for. So, in that sense, we believe that those businesses are relatively well protected. So we're not going into the wilderness buying anything that moves, so.

[Mark Miller, President and COO at Constellation Software]

But the behavior looking at that stuff hasn't really changed over the past few quarters, right, Bernie?

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

No. No, absolutely.

[Mark Miller, President and COO at Constellation Software]

Things that we always do.

[David Kwan, Analyst at TD Cowen]

No, it's helpful. I assumed it was a tuck-in, but a smaller, maybe managed services businesses that I think you guys acquired in Brazil. So, like you said, a little bit more outside of your traditional hunting grounds. I was kind of curious how you would approach a business like that.

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

Same approach, higher dispersion. That's really the way it works.

[Mark Miller, President and COO at Constellation Software]

Yeah. It's calculated, yeah, and best to just think it through.

[David Kwan, Analyst at TD Cowen]

Okay. Just one other question on M&A. Are you seeing the valuations start to come down for the private companies, or are they kind of staying fairly resilient? Is there any impact from, I know the 10-year yields come down recently, but still quite above where it was at the start of the year. Are you seeing any impact from higher rates?

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

Not really. I mean, there is some movement, but really generally, there is so much competition that's out there, whether it's a transaction that is leveraged or not. Maybe that will be spelling out a slightly lower price, but not really that much, because people still do have capital out there, and they have to put it out. Prices really haven't been dropping that much.

[Mark Miller, President and COO at Constellation Software]

Some people don't want to sell their businesses.

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

Some people don't want to sell.

[Mark Miller, President and COO at Constellation Software]

At this valuation right now. Yeah.

[David Kwan, Analyst at TD Cowen]

That's great. Thank you.

[Operator]

The next question will come from Paul Treiber with RBC Capital Markets. Please go ahead.

[Paul Treiber, Analyst at RBC Capital Markets]

Oh, thanks for taking the question. Good morning. Just a question on the IRGA, particularly in regards to the fair value of Asseco and Sygnity. I think that agreement expires in 2031. At that point, there's the liability. The fair value, is that set purely by the market price? If you disagree with the market value at that time, do you have an exit, or is that entirely your liability?

[Jamal Baksh, CFO at Constellation Software]

Yeah, the agreement there, and spending hours finalizing a revised agreement on this, is that Joday will get their proportion of the Sygnity and Asseco shares. So, it's actually not a cash obligation. They will just get them, and they're valued for accounting purposes at the market rates, right? So, it is what it is, and it's not that we will pay them that dollar amount. They will just get the shares.

[Paul Treiber, Analyst at RBC Capital Markets]

Okay. Thank you. That's helpful. Just secondly, just on Robin's retirement and then the appointment of Ramon. You've gone through retirements of general managers of operating groups in the past. Can you walk through typically what you've seen with the change in management? Is it typically like a smooth handoff? Is there some adjustment or changes that typically occurs?

[Mark Miller, President and COO at Constellation Software]

Yeah, I mean, it's usually pretty smooth because most people have been around for a while, and we run CSI in such a decentralized way, you end up inheriting more portfolios to oversee. So, I think that's generally how it works, because we're sort of a large tree of capital allocators around the world, if you want. And you hope you have a lot of successors sitting there that will bump up into that role, and they do a very similar job to what they've historically done, just have an over a larger, we would say, capital base to oversee, and to make sure they're sharing best practice, what have you. In Ramon's case, pick up a little bit of more shareholder and investor relations that he wouldn't really have been involved in at all in his role at Topicus.

[Mark Miller, President and COO at Constellation Software]

It works really well at CSI because of the way we are structured. There is no single points of failure.

[Paul Treiber, Analyst at RBC Capital Markets]

Okay. That's great to hear. All passed fine. Thank you.

[Operator]

Again, if you have a question, please press star, then one. Our next question will come from Teddy Farley with Jefferies. Please go ahead.

[Teddy Farley, Analyst at Jefferies]

Hi, this is Teddy on for Samad Samana. Thank you for taking our questions, and congrats on another strong quarter.

[Mark Miller, President and COO at Constellation Software]

Oh, yeah. That's great.

[Teddy Farley, Analyst at Jefferies]

Just a few quick ones from me. With some of our industry channel checks, particularly among vertical software companies on the smaller end, we have started to hear more cases of AI disintermediation. Within your portfolio companies, are you seeing any evidence of this yet?

[Mark Miller, President and COO at Constellation Software]

Really not to any large degree. I mean, there is some things happening, but it's not non-material. I think I said before, I think, yeah, really. Yeah, continue. Hit next question.

[Teddy Farley, Analyst at Jefferies]

This is smaller, but on license revenue, I know you noted it's lumpy quarter to quarter, but was there anything in the 3Q 2025 comp period that's worth calling out?

[Jamal Baksh, CFO at Constellation Software]

Yeah. Because it's so material, I did not do a deep dive on that, so I couldn't even tell you.

[Mark Miller, President and COO at Constellation Software]

Trying to get most people moved over to subscription, if you can, in some form or another, or recurring.

[Teddy Farley, Analyst at Jefferies]

Awesome. Last one from me. Is there anything you would highlight on specific sectors you are seeing either more or less transaction volume on? It could be over the full year, just because I know there is some amount of noise quarter to quarter.

[Mark Miller, President and COO at Constellation Software]

It's all over the place, right, Bernie?

[Bernard Anzarouth, Chief Investment Officer at Constellation Software]

It's very generalized. I mean, we go into all areas, all verticals, and it's opportunistic. So, no trend in any one sector that I could see.

[Teddy Farley, Analyst at Jefferies]

Awesome. Thank you, and I'll pass it on.

[Operator]

This will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Mark Miller for any closing remarks. Please go ahead.

[Mark Miller, President and COO at Constellation Software]

Hey. Well, thank you everyone for attending. Of course, I have to thank our whole team at Constellation for working so hard and continuing to push ahead. So, thank you very much. Over and out from Toronto.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Mark Miller, President and COO
• Jamal Baksh, CFO
• Bernard Anzarouth, Chief Investment Officer

Analysts

• Doug Taylor, Analyst at National Bank
• Thanos Moschopoulos, Analyst at BMO Capital Markets
• Jérôme Dubreuil, Analyst at Desjardins
• Stephanie Price, Analyst at CIBC
• Kevin McVeigh, Analyst at UBS
• David Kwan, Analyst at TD Cowen
• Paul Treiber, Analyst at RBC Capital Markets
• Teddy Farley, Analyst at Jefferies