Mr. Jamal Baksh reports

CONSTELLATION SOFTWARE INC. ANNOUNCES RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2023 AND DECLARES QUARTERLY DIVIDEND

Constellation Software Inc. has released its financial results for the fourth quarter and year ended Dec. 31, 2023, and declared a $1-per-share dividend payable on April 15, 2024, to all common shareholders of record at close of business on March 28, 2024. 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 news release are in U.S. dollars unless otherwise stated.

This news release should be read in conjunction with the company's annual consolidated financial statements, prepared in accordance with IFRS (international financial reporting standards) accounting standards, and the annual management's discussion and analysis for the year ended Dec. 31, 2023, which can be found on SEDAR+ and on the company's website. Additional information about the company is also available on SEDAR+.

Q4 2023 headlines:

• Revenue grew 26 per cent (6-per-cent organic growth, 4 per cent after adjusting for changes in foreign exchange rates) to $2,323-million, compared with $1,847-million in Q4 2022.
• Net income attributable to common shareholders decreased 7 per cent to $141-million ($6.64 on a diluted-per-share basis) from $152-million ($7.19 on a diluted-per-share basis) in Q4 2022.
• A number of acquisitions were completed for aggregate cash consideration of $376-million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of $86-million, resulting in total consideration of $463-million.
• Cash flows from operations (CFO) were $511-million, an increase of 28 per cent or $110-million compared with $400-million for the comparable period in 2022.
• Free cash flow available to shareholders (FCFA2S) increased $35-million to $325-million, compared with $290-million for the same period in 2022, representing an increase of 12 per cent.
• Subsequent to Dec. 31, 2023, the company completed or has open commitments to acquire a number of businesses for aggregate cash consideration of $513. Deferred payments associated with these acquisitions have an estimated value of $141, resulting in total consideration of $654.

2023 headlines:

• Revenue grew 27 per cent (5-per-cent organic growth, 5 per cent after adjusting for changes in foreign exchange rates) to $8,407-million, compared with $6,622-million in 2022.
• Net income attributable to common shareholders increased 10 per cent to $565-million ($26.67 on a diluted-per-share basis) from $512-million ($24.18 on a diluted-per-share basis) in 2022.
• A number of acquisitions were completed for total consideration of $2,609-million, including holdbacks and contingent consideration.
• Cash flows from operations were $1,779-million, an increase of $481-million compared with $1,297-million for the comparable period in 2022.
• Free cash flow available to shareholders increased $307-million to $1,160-million, compared with $853-million for the same period in 2022, representing an increase of 36 per cent.

Total revenue for the quarter ended Dec. 31, 2023, was $2,323-million, an increase of 26 per cent or $475-million compared with $1,847-million for the comparable period in 2022. For the year ended Dec. 31, 2023, total revenues were $8,407-million, an increase of 27 per cent or $1,785-million compared with $6,622-million for the comparable period in 2022. The increase for both the three- and 12-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 6 per cent and 5 per cent, respectively, 4 per cent and 5 per cent, respectively, 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.

Net income attributable to common shareholders of Constellation Software for the quarter ended Dec. 31, 2023, was $141-million, compared with $152-million for the same period in 2022. On a per-share basis, this translated into a net income per diluted share of $6.64 in the quarter ended Dec. 31, 2023, compared with a net income per diluted share of $7.19 for the same period in 2022. For the 12 months ended Dec. 31, 2023, net income attributable to common shareholders of Constellation Software was $565-million or $26.67 per diluted share, compared with $512-million or $24.18 per diluted share for the same period in 2022. There was no change in the number of shares outstanding.

For the quarter ended Dec. 31, 2023, CFO increased $110-million to $511-million, compared with $400-million for the same period in 2022, representing an increase of 28 per cent. For the 12 months ended Dec. 31, 2023, CFO increased $481-million to $1,779-million, compared with $1,297-million for the same period in 2022, representing an increase of 37 per cent.

For the quarter ended Dec. 31, 2023, FCFA2S increased $35-million to $325-million, compared with $290-million for the same period in 2022, representing an increase of 12 per cent. For the 12 months ended Dec. 31, 2023, FCFA2S increased $307-million to $1,160-million, compared with $853-million for the same period in 2022, representing an increase of 36 per cent.

Non-IFRS measures

FCFA2S refers to net cash flows from operating activities less interest paid on lease obligations, interest paid on other facilities, credit facility transaction costs, repayments of lease obligations, the IRGA/TSS membership liability revaluation charge, and property and equipment purchased, and includes interest and dividends received, and the proceeds from sale of interest rate caps. The portion of this amount applicable to non-controlling interests is then deducted. Constellation Software believes that FCFA2S is useful supplemental information as it provides an indication of the uncommitted cash flow that is available to shareholders if the company does not make any acquisitions or investments, and does not repay any debts. While Constellation Software could use the FCFA2S to pay dividends or repurchase shares, the company's objective is to invest all of its FCFA2S in acquisitions that meet its hurdle rate.

FCFA2S is not a recognized measure under IFRS and, accordingly, readers are cautioned that FCFA2S should not be construed as an alternative to net cash flows from operating activities.

An attached table reconciles FCFA2S to net cash flows from operating activities.

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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