Mr. Jamal Baksh reports

CONSTELLATION SOFTWARE INC. ANNOUNCES RESULTS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2023, DECLARES QUARTERLY DIVIDEND AND ANNOUNCES APPOINTMENTS TO ITS BOARD OF DIRECTORS

Constellation Software Inc. has released its financial results for the third quarter ended Sept. 30, 2023, and has declared a $1-per-share dividend payable on Jan. 11, 2024, to all common shareholders of record at the close of business on Dec. 20, 2023. This dividend has been designated as an eligible dividend for the purposes of the Income Tax Act (Canada). Please note that all dollar amounts referred to in this press release are in U.S. dollars unless otherwise stated.

The following press release should be read in conjunction with the company's unaudited condensed consolidated interim financial statements for the three and nine months ended Sept. 30, 2023, and the accompanying notes, and its management's discussion and analysis for the three and nine months ended Sept. 30, 2023, and its annual consolidated financial statements, prepared in accordance with international financial reporting standards, and its annual management's discussion and analysis for the year ended Dec. 31, 2022, which can be found on SEDAR+ and on the company's website. Additional information about the company is also available on SEDAR+.

Q3 2023 and subsequent headlines

Revenue grew 23 per cent (8-per-cent organic growth, 6 per cent after adjusting for changes in foreign exchange rates) to $2,126-million compared with $1,725-million in Q3 2022.

A $37-million expense related to the increase in fair value of redeemable preferred securities was incurred in the quarter, which is non-cash related. Fair value of the preferred securities is primarily dependent on the price movement of Lumine Group Inc.'s subordinate voting shares.

Net income attributable to common shareholders increased 30 per cent to $177-million ($8.36 on a diluted per-share basis) from $136-million ($6.42 on a diluted per-share basis) in Q3 2022.

On Sept. 14, 2023, the company completed the acquisition of the Optimal Blue business from Intercontinental Exchange Inc. The company paid cash of $201-million, and assumed an estimated cash holdback payable of $1-million and a long-term promissory note payable of $500-million.

A number of additional acquisitions were completed for aggregate cash consideration of $187-million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of $37-million resulting in total consideration of $223-million.

Cash flows from operations were $513-million, an increase of 60 per cent, or $192-million, compared with $321-million for the comparable period in 2022.

Free cash flow available to shareholders increased 60 per cent or $138-million to $367-million compared with $229-million for the same period in 2022.

On Oct. 6, 2023, a total of $157-million ($213-million (Canadian)) principal amount of debentures were issued at a price of $133 (Canadian) per $100 (Canadian) principal amount of debentures purchased, representing proceeds to the company of $209-million ($283-million (Canadian)), which were used by the company to pay down indebtedness under its existing credit facility.

Total revenue for the quarter ended Sept. 30, 2023, was $2,126-million, an increase of 23 per cent, or $401-million, compared with $1,725-million for the comparable period in 2022. For the first nine months of 2023, total revenues were $6,084-million, an increase of 27 per cent, or $1,309-million, compared with $4,774-million for the comparable period in 2022. The increase for both the three- and nine-month periods compared with the same periods in the prior year is primarily attributable to growth from acquisitions as the company experienced organic growth of 8 per cent and 5 per cent, respectively, and 6 per cent and 5 per cent, respectively, for both periods after adjusting for the impact of changes in the valuation of the U.S. dollar against most major currencies in which the company transacts business. Organic growth is not a standardized financial measure and might not be comparable with measures disclosed by other issuers.

The net income attributable to common shareholders of Constellation Software for the quarter ended Sept. 30, 2023, was $177-million compared with net income of $136-million for the same period in 2022. On a per-share basis, this translated into net income per diluted share of $8.36 in the quarter ended Sept. 30, 2023, compared with net income per diluted share of $6.42 for the same period in 2022. For the nine months ended Sept. 30, 2023, net income attributable to common shareholders of Constellation Software was $375-million or $17.68 per diluted share compared with $360-million or $16.99 per diluted share for the same period in 2022.

For the quarter ended Sept. 30, 2023, CFO increased $192-million to $513-million compared with $321-million for the same period in 2022, representing an increase of 60 per cent. For the first nine months of 2023, CFO increased $371-million to $1,268-million compared with $897-million during the same period in 2022, representing an increase of 41 per cent.

For the quarter ended Sept. 30, 2023, FCFA2S increased $138-million to $367-million compared with $229-million for the same period in 2022, representing an increase of 60 per cent. For the nine months ended Sept. 30, 2023, FCFA2S increased $272-million to $835-million compared with $563-million for the same period in 2022, representing an increase of 48 per cent.

The board of directors of Constellation Software announced today the appointment of Lawrence A. Cunningham and Dexter Salna to the company's board of directors.

Mr. Cunningham is the managing partner of the Quality Shareholders Group (a boutique investor relations consultancy) since 2017 and special counsel Mayer Brown LLP since January, 2023. Mr. Cunningham served as the Henry St. George Tucker III research professor of law at George Washington University from 2007 to 2022 (elected emeritus in 2022). He has served on several public, private and non-profit boards. He currently is a director of Markel Group (New York Stock Exchange) and of Kelly Partners Group (Australia Securities Exchange). Mr. Cunningham also is a trustee of the Museum of American Finance, a member of the dean's council of Lerner College of Business at the University of Delaware, a member of the editorial board of Financial History and a member of the advisory board for the Ben Graham Centre for Value Investing at Ivey Business School. Mr. Cunningham has written extensively on corporate affairs, including the bestselling book The Essays of Warren Buffett. In 2018, he received the B. Kenneth West lifetime achievement award from the National Association of Corporate Directors (NACD; in 2023, he delivered Delaware law school's 37th annual F.G. Pileggi distinguished lecture in corporate law.

Mr. Salna joined Constellation Software in 1995 and is currently the chairman of the Perseus operating group within Constellation Software and oversees its Romulus and digital marketing portfolios of software businesses. Prior to his current position, Mr. Salna held various senior executive positions within the Volaris operating group of Constellation Software.

About Constellation Software Inc.

Constellation Software's common shares are listed on the Toronto Stock Exchange under the symbol CSU. Constellation Software acquires, manages and builds vertical market software businesses.

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