Constellation Software Q2 2026: What Now After The 5% Drawdown?
Results and thesis check
The Results and Outlook
Revenues grew 17% YoY to $3.4 billion. Organic growth was unimpressive with 3%, but this was mainly due to an accounting fluke with its subsidiary Altera, as well as some other anomalies that were expected by management. Excluding these, organic growth would have landed at 5%. As a reminder, Constellation Software’s business model relies on acquisitions to grow, and is supported by organic growth.
Free Cash Flow Available To Shareholders (“FCFA2S”, the cash flow before acquisitions or debt repayment), a key performance metric for Constellation Software, came in at $345 million, a 57% increase YoY. That is a healthy increase, but was aided by a couple of one-offs. Net cash flows from operating activities (CFO) grew 10% to $477 million, mainly supported by strong revenue growth.
Acquisitions worth $893 million were completed. That’s a good chunk, and one of the better prints in recent quarters. Adding to that, the company completed or has open commitments to acquire a number of businesses worth $818 million. Also, something you want to see as an investor in Constellation Software.
Management does not like to make any grand statements about the future, but the earnings call did show that they still see a healthy flow of deals, the same type of competition, and no real disruption from AI.
My Next Steps
Disclaimer: This is not financial advice. Do your own research.