Constellation Software Inc "Accelerating M&A adds to our Positive View" (Buy)

Research evidence excerpt

Constellation Software Inc "Accelerating M&A adds to our Positive View" (Buy)

hile "exploring EPS (UBS, diluted) (USD)

additional opportunities to expand its portfolio of VMS businesses in Mexico". 12/26E

UBS Cons.

CORA [Jonas group] acquiring US Midmarket business of Finastra—

Q1 17.66 38.22

consistent with focus on deepening group vertical expertise in mission critical Q2E 15.48 26.92

software used by hundreds of banks and credit union across the US. The Q3E 14.88 28.35

solutions represent strong products, loyal customers, and "people who really Q4E 16.52 31.07

know their industry" according to CORA group CEO. 12/26E 64.53 120.87

12/27E 72.55 143.00

Lumine acquiring Video Network business—16th carve-out enhances

12/28E 91.29 179.21

Lumine's presence in Media supply chain domain. Lumine COO suggested this

operates independently, consistent with a decentralization strategy. Kevin McVeigh

Analyst

UBS recently hosted a group meeting with Constellation CFO Jamal Baksh kevin.mcveigh@ubs.com

We hosted a virtual group meeting with Constellation Software CFO Jamal Baksh— +1-212-882 0081

joined Constellation in 2003—as then Controller of Jonas Operating Group. We Bruna Werneck

leveraged Mr Baksh's 20+ years of experience, with key takeaways including focus on Associate Analyst

top line growth among its ~1600 businesses + 95% being mission critical solutions. bruna.werneck@ubs.com

+1-212-882 5955

Valuation: Olivia Bradlee

C$3,850 is ~16.5x FY-Dec-28E Free Cash Flow—3yr range of 8.8x-25.5x + 3Y average Associate Analyst

olivia.bradlee@ubs.comof 19x—2-year multiple based on FY-Dec-28E FCF rolled forward by CoE.

+1-212-713 1227

Highlights (US$m) 12/23 12/24 12/25 12/26E 12/27E 12/28E 12/29E 12/30E

Revenues 8,405 10,066 11,623 13,820 16,020 18,620 21,220 24,020