Constellation Software Inc.

No quarterly revenue, EPS, gross margin, or consolidated year-over-year figures were stated in this call. Management’s financial commentary focused on specific business-level items: Altera had a strong Q2 '25 and its organic growth is expected to revert to a slow-shrinking trend over the next year or two; Dark Matter’s Q2 '26 organic growth was negatively affected by a tough comp against 10% organic growth in Q2 '25; Lumine’s organic growth was 1% in the quarter; and a South American business had a customer loss that created about a 30-basis-point drag on CSI’s numbers. Jamal Baksh also said the 2026 acquisition cohort moved from negative 16% margins in Q1 to positive 16% in Q2, while the 2025 cohort improved from about 16%-17% to 20%. On DerbySoft, management acknowledged the purchase price implied a high multiple but said the business is growing nicely and they still expect the IRR to be in line with similarly sized acquisitions. No formal next-quarter or full-year financial guidance was given.

Mark Miller’s tone was confident but deliberately measured. He framed AI as a decentralized tool for customer-driven product work and development efficiency, not as a centrally managed growth initiative, and said Constellation will not provide an AI revenue target or timeline. On verticalization, he emphasized that the company is not integrating businesses, but is grouping related assets more closely so it can become the long-term permanent owner in niches and better deploy AI and operational expertise. He also stressed that larger acquisitions and carve-outs require more team-based judgment than Constellation’s earlier small-deal model.

Jamal Baksh focused on explaining comp effects, acquisition cohort economics, and tax/expense timing rather than headline consolidated metrics. He said Altera’s Q2 '25 was unusually strong and that its trend should be a slow shrinker for the next year or two, while Dark Matter and other deals created temporary organic-growth noise from accounting and one-off customer losses. He noted the 2026 cohort’s margin profile improved from negative 16% in Q1 to positive 16% in Q2, with the 2025 cohort rising to 20%, and said prior cohorts are generally in the high 20s to 30s. On AI costs, he said the company has started creating GL accounts to track token and related expenses, but the spend is not materially impacting the P&L today; on taxes, he said current tax expense remains in the mid-20s as a percentage of adjusted net income before tax, while cash taxes can fluctuate with payment timing.

Analysts focused on whether AI is already driving organic growth, but management said the main benefit so far is faster development and better productivity, not a clear revenue uplift yet. Questions on organic growth below historical ranges were answered with explanations around Altera, Dark Matter, Lumine, and a South American customer loss, with management saying those anomalies should revert and that nothing currently suggests another large customer exit. Analysts also pressed on larger-deal pricing and competition; Bernard Anzarouth said competition remains very robust, especially at the high end, but that Constellation still expects acceptable IRRs and that higher leverage can support larger purchases. On carve-outs, management said these deals are more complex because financials and systems are intertwined and customer/employee transitions require care, but they view the category as an area where they can deploy significant capital.