Constellation Software ($CSU): Q2 2026 Earnings
$CSU Q2 2026 earnings show an accelerating pace of acquisitions, with the company capitalizing on depressed SaaS valuations (the SaaSpocalypse)
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Q2 2026 Thesis Update
Constellation Software reported Q2 2026 earnings on August 11, 2026.
Revenues grew 17% YoY, but organic growth stayed at 1% when adjusted for the change in the valuation of the U.S. dollar against other currencies CSU operates in. Maintenance and other recurring revenues measures the performance of the underlying software businesses, this segment grew 4% in the last quarter but only 2% when adjusted for the impact of foreign exchange movements. An acceleration of recurring revenue would have been great to see, as it calms down fears of AI disruption. 2% is inside the average of the growth seen since 2024.
Reported EPS of $12.93 vs $2.66, up 386% YoY since Q2 2025, along with Net Income $274M vs $56M, was an earnings expansion driven by factors that extrinsic to the core business:
Positive Foreign Exchange Tailwind: $14M gain vs. $118M loss last year, a +$132M swing
IRGA/TSS revaluation: $64M charge vs. $126M charge
Effective tax rate: 27% vs. 53% in Q2 2025
Together, these account for roughly $190M of non-operating tailwind, not due to any operational results improvement.
These are the clear metrics that express this quarter’s performance:
Cash from Operating Activities: +10%
Free Cash Flow available to shareholders: +57%, benefiting from $80M of interest and dividends received vs $20M last year. The $69M Asseco dividend is included here, which is a non-recurring event. Underlying cash generation is closer to CFO’s, ~10%.
In April, we published our deep dive on Constellation Software. One of the medium-term growth opportunities we identified for the company is taking advantage of the “SaaSpocalypse” lower valuations to press the accelerator on acquisitions. At current multiples, these acquisitions can generate strong returns simple due to a private and public market re-rating. The numbers on H1 2026 confirm that CSU is taking this opportunity. During the first half of the year, acquisition spend was $1.59B, 2.6x the spend of H1 2025 ($604M). That takes announced H1 + subsequent deployment to ~2.4B, a materially faster pace than CSU’s historical run-rate.
Two individually disclosed deals:
Synchronoss ($309M, Feb 2026) — communications/media software, contributed $64M revenue and a $4M net loss H1
DerbySoft ($392M total, June 2026) — travel vertical, $11M revenue, $1M loss
Both were dilutive to operating margins, which is normal for CSU’s acquisitions, the ROIC comes from post-close operational improvements.
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