Constellation Software Q3 2026 Earnings: Revenue Up 19%, Organic Growth 2%
Constellation Software’s Q3 2026 earnings, out after the Toronto close on Friday November 6, carry four numbers that do not obviously belong to the same quarter. Revenue rose 19% to US$3,512 million. Organic growth was 2%. Net income to common shareholders of CSI rose 1%, to US$212 million from US$210 million. Free cash flow available to shareholders (“FCFA2S”), the company’s own non-IFRS measure, fell 16% to US$443 million. The quarter is the distance between the first figure and the other three. Constellation reports in US dollars, so every figure here is US unless it carries C$.
Two of the nineteen points were organic
Revenue grew 19%, of which organic growth was 2%, and 2% again after adjusting for foreign exchange, as both the Q3 2026 press release and page 4 of the MD&A state. Organic growth is the company’s own measure, comparing an acquired business’s actual revenue after the deal with the revenue Constellation estimates it achieved in the matching period before it. It is, the MD&A says, “not a standardized financial measure and might not be comparable to measures disclosed by other issuers.”
| US$ millions | Q3 2026 | Q3 2025 | change | % | organic growth |
|---|---|---|---|---|---|
| Licenses | 97 | 107 | (10) | -9% | -18% |
| Professional services | 569 | 538 | +30 | +6% | -5% |
| Hardware and other | 131 | 89 | +42 | +47% | +6% |
| Maintenance and other recurring | 2,715 | 2,213 | +501 | +23% | +4% |
| Total revenue | 3,512 | 2,948 | +564 | +19% | +2% |
Revenue by type, three months to September 30, 2026. Source: CSI MD&A Q3 2026, page 4.
Professional services revenue grew 6% while shrinking 5% organically, so all of that increase and more was bought. Maintenance and other recurring revenue grew 23%, with an organic rate of 4%, and now makes up 77.3% of quarterly revenue against 75.1% a year earlier, by our arithmetic on the company’s two rows. On the company’s definition those two points came from businesses already owned, previously acquired ones included, not a legacy base alone.
The company publishes two versions of the quarterly organic series. On the reported basis (page 4) organic growth ran 6% in Q1, 3% in Q2 and 2% in Q3; on the FX-adjusted basis (page 5) the same three quarters read 1%, 1% and 2%. Page 24 gives the currency effect: “The impact to organic revenue growth for the three and nine months ended September 30, 2026 was approximately positive 0.3% and 2% respectively.” Setting the two series beside each other is ours, from those two tables: the slide down the reported series is substantially a currency tailwind fading, and on the basis that strips currency out the third quarter is the best of the three rather than the worst. The company flags one limit on the series: the pre-acquisition estimates “may be updated in the quarter following the quarter they were acquired resulting in slight variances to previously reported figures” (page 4).
The other seventeen points came from fifteen months of buying
Note 1 to that table defines the inorganic seventeen points: “Estimated pre-acquisition revenues for the three months ended September 30, 2025 from companies acquired after June 30, 2025. (Obtained from unaudited vendor financial information.)” The base the 2% is measured against is the sellers’ own unaudited figures. The adjustment is US$501 million, the total across all four revenue types rather than the maintenance row that carries the same figure, and it covers everything bought across the roughly fifteen months to September 30, 2026. The arithmetic the 2% comes out of checks: Q3 2025 revenue of US$2,948 million plus the US$501 million adjustment is US$3,449 million, against actual revenue of US$3,512 million.
Acquisitions closed inside the quarter took US$484 million of cash consideration including acquired cash, plus US$125 million of estimated deferred payments, US$609 million in all. Over nine months two aggregates count the same spending to different edges. The interim financial statements put US$1,913 million on the cash flow statement’s acquisition of businesses line, against US$755 million a year earlier (page 7). The MD&A’s figure on page 19 is US$2,175 million “including payments for holdbacks relating to prior acquisitions”, offset by US$189 million of acquired cash, against US$955 million. The difference is US$262 million of post-acquisition settlement payments, holdbacks on earlier deals, which the statement carries on its own row (US$200 million in 2025) and the MD&A folds in.
Note 4 names two. Synchronoss Technologies, 100% of the shares for US$309 million of cash in February 2026, sells into communications and media and contributed US$107 million of revenue and a US$2 million net loss over the nine months. DerbySoft, effectively 91.8% of the shares for US$391 million of total consideration in June 2026, sits in the travel vertical and contributed US$47 million and a US$6 million net loss. Everything else bought in the nine months came to US$1,605 million of total consideration.
Since the quarter ended, Constellation has committed to more, and two documents filed on November 6, 2026 state it differently. Note 19 of the interim financial statements and page 26 of the MD&A put it at US$526 million on closing plus US$148 million of estimated deferred payments, a total the company prints as US$673 million against the US$674 million those two parts give, across sixteen named verticals. Page 1 of the press release puts the three figures at US$466 million, US$123 million and US$589 million. The same two documents differ again inside the IRGA disclosure taken up below: both put the nine-month charge on the Sygnity and Asseco holdings at negative US$36 million, while the prior-year figure is US$169 million in the MD&A (page 13) and US$172 million in the release (page 2).
Reported revenue growth against the organic growth rate the company publishes for the same year, before adjusting for foreign exchange, FY2021 to FY2025. Source: each year’s own CSI annual MD&A, pages 4, 5, 4, 4 and 4.
The five-year series says this is the model rather than an off quarter: revenue growth of 29%, 30%, 27%, 20% and 15% from FY2021 through FY2025, against organic growth of 7%, negative 1%, 5%, 2% and 4%.
Carrying the purchases has a visible price on the income statement. Amortization of intangible assets, the cost of acquired software and customer relationships spread over years, was US$376 million against US$307 million, up 23%. It is growing faster than revenue on both windows, 23% against 19% in the quarter and 21% against 19% over the nine months, which is what separates reported earnings from cash. The MD&A’s expenses line, which excludes that amortization, held at 73% of revenue in both quarters, and at 75% for the nine months against 74% a year earlier, on expenses up 20% to US$7,488 million from US$6,230 million (page 6). Staff expenses rose 17% on both windows, US$248 million in the quarter and US$762 million over the nine months. Revenue less those two lines, the closest the page 3 table comes to operating income, was US$564 million against US$500 million, up 12.8% by our arithmetic.
The 59% change in pre-tax income belongs mostly to the prior year
Income before income taxes printed US$380 million against US$239 million, a change of US$141 million the company calls 59%. Net income attributable to common shareholders rose 1%. The MD&A prints the bridge itself.
| US$ millions | Q3 2026 | Q3 2025 | the company’s printed change |
|---|---|---|---|
| Income before income taxes | 380 | 239 | +141 |
| Income tax expense | 137 | 77 | +59 |
| Net income to non-controlling interests | 31 | (48) | +79 |
| Net income to common shareholders | 212 | 210 | +3 |
The company’s own printed variance column, carrying its signs: the +59 and +79 are increases in tax expense and in income attributable to non-controlling interests, both of which reduce what reaches common shareholders. Source: CSI MD&A Q3 2026, page 3.
Subtracting the columns gives 2 at the bottom and 60 in the tax row, the rounding the filing notes on its tables. Diluted earnings per share were US$10.01 against US$9.89.
The starting point is the problem. Q3 2025 carried a US$260 million loss on the revaluation of an equity-method investment to cost, and on the page 8 table its row, the revaluation of an investment accounted for using the equity method to cost, shows nil in 2026 against US$260 million in 2025, a change of negative 100%. Excluding that one item, Q3 2025 pre-tax income was US$499 million against this year’s US$380 million, a 24% decline, which is our arithmetic on the company’s two figures. Finance and other income fell from US$83 million to US$4 million, a US$79 million headwind on that same page, and page 10 shows the 2025 figure itself held a US$71 million fair value increase on derivatives tied to Asseco. Most of the US$141 million is those items clearing rather than this quarter improving.
Tax took the smaller piece, at a consolidated effective rate the company puts at 36% for the quarter against 32% a year earlier. Over nine months the same rate reads 27% against 38%, so that comparison runs the other way. Page 12 attaches its caveat to the current expense rather than to that rate: current tax expense “has historically approximated our cash tax rate however the quarterly expense can sometimes fall outside of the annual range due to out of period adjustments.”
The larger of the two deductions is the US$79 million swing in net income attributable to non-controlling interests, from a US$48 million loss last year to US$31 million of income this year. The prior-year loss reads as the revaluation’s other side, page 11 recording the 9.99% Asseco holding moved to the equity method at cost in Q3 2025 with previous fair value adjustments reversed.
The two units doing the growing are the two Constellation owns least of
On page 16 Constellation splits itself three ways. Of US$3,512 million of revenue, US$2,713 million is Constellation excluding Topicus and Lumine, Topicus is US$509 million and Lumine US$290 million. FX-adjusted organic revenue growth reads 1% for Constellation excluding the two, 5% at Topicus, 3% at Lumine and 2% consolidated; over nine months, 1%, 5%, 1% and 1%. Those two subsidiaries are why the consolidated figure prints 2% rather than the 1% the rest of Constellation grew.
Note 18 of the interim financial statements gives the ownership. Constellation’s equity interest in Topicus, a company based in the Netherlands, is 60.65%, “39.35% being non-controlling interest”, and Lumine is 61.40% with a 38.60% non-controlling interest (page 32). Those two non-controlling percentages, with Adapt-IT’s 26.07%, head the non-controlling interest tables on page 33, where the Topicus column is labelled Topicus Coop. A different percentage sits on page 14 of the MD&A, under its Topicus.com Inc. spin-out heading: Constellation’s equity interest in that separately listed company, on a fully diluted basis at September 30, 2026, is “approximately 31.3%”.
Note 18 also locates the US$79 million. The non-controlling interest attributable to Topicus Coop went from negative US$56 million in the third quarter of 2025 to positive US$21 million this year, US$77 million of the US$79 million, while Lumine’s was US$10 million in both quarters (pages 34 and 35). Behind that, Topicus Coop’s own result before income taxes went from a US$129 million loss to US$68 million of income, on revenue of US$453 million and then US$512 million, a different reporting entity from the page 16 Topicus supplemental above.
One line moved US$101 million and moved no cash
Operating cash flow rose US$33 million, or 5%, to US$717 million from US$685 million, while the company’s free cash flow available to shareholders fell 16%. The reconciliation on page 3 of the release puts the whole gap in one line.
Cash conversion stepped down. US$717 million of cash from operations on US$3,512 million of revenue is 20.4%, against US$685 million on US$2,948 million, or 23.2%, a year earlier, our arithmetic on two rows of the page 14 table. Cash from operations rose 5% where revenue rose 19% because the change in non-cash operating assets and liabilities consumed US$157 million in the quarter against US$47 million, and US$175 million over nine months against US$2 million (note 17, page 32). That US$110 million quarterly swing is about the size of the IRGA move below.
Year over year change in each line of the company’s own free cash flow available to shareholders reconciliation, three months to September 30, 2026. Each bar is the difference between the two columns that table prints, so the nine changes sum to negative 85 against the reported negative 86, and cash from operations reads 32 against the US$33 million the company states, both the rounding the filing notes on every table. Source: CSI Press Release Q3 2026, page 3.
The IRGA liability revaluation charge, which the company deducts in arriving at the measure, was US$117 million against US$16 million last year. That line moved by US$101 million, and no other adjustment line below cash from operations moved by more than US$7 million. Hold the charge at its prior-year level and the pre-minority subtotal would have risen about 3.5% rather than falling 14%, which is our arithmetic on the company’s reconciliation. Over nine months the measure runs the other way, up 21% to US$1,522 million, with the charge line US$131 million lighter than a year earlier, cash from operations US$148 million higher and interest and dividends received up US$64 million. The company’s own per-share figures are US$20.92 for the quarter and US$71.80 for the nine months (page 3). Page 14 sets the quarter beside its own history: third-quarter FCFA2S was US$362 million in 2024, US$529 million in 2025 and US$443 million in 2026.
The MD&A says the valuation of the IRGA liability, previously the TSS membership liability, “increased by approximately 10% or $117 million from Q2 2026”, primarily on growth in TSS trailing twelve month maintenance revenue on a pro-forma basis, mostly from acquisitions. Maintenance revenue and net tangible assets as defined under the agreement are two of its main drivers; the third is the period-end share price of two Warsaw-listed companies Topicus holds, Sygnity S.A. and Asseco Poland S.A.
On the composition table (page 10) the liability rose €102 million in the quarter, of which €63 million came from the Asseco mark and €4 million from Sygnity, taking the US dollar carrying amount to US$1,295 million. The release puts the portion of the charge relating to the Sygnity and Asseco holdings at US$77 million of the US$117 million total, against negative US$25 million a year earlier. The cash flow statement adds the whole US$117 million back as a non-cash adjustment to net income because no cash moved, and the company’s own FCFA2S measure then deducts it anyway.
The charge and the liability’s net movement are different numbers. Page 10 sets the nine-month charge of US$104 million, a figure its own pages 3 and 13 and the income statement put at US$105 million, against a US$43 million foreign exchange gain, for a US$61 million net increase in a liability denominated in euros, against a euro that depreciated 3% versus the US dollar over the period. The FCFA2S definition on page 1 deducts the revaluation charge, and the currency gain is not among its add-backs. Following one item across the income statement, the cash flow statement and a non-IFRS measure is its own reading skill; our guide to how to read financial statements is where to pick it up.
The contractual obligations table (page 23) carries that US$1,295 million with US$741 million of it within one year, matching the balance sheet’s current and non-current split. That US$741 million sits inside US$3,733 million of commitments falling due within a year on the same table. The note beneath sets out the assumption: “The IRGA liability commitment assumes that the Joday Group has exercised their put option to sell 100% of their interests back to Constellation. This option however has not been exercised as at November 6, 2026.” Joday held 29.38% of Topicus Coop at September 30, 2026, and note 8 lets it sell Constellation any number of those units. Among the items inside that current portion are the obligations associated with the Sygnity and Asseco investments, which the same note says are “expected to be settled through providing Joday their prorated share of the investments.”
The same Asseco stake carries a US$657 million unrealized gain
The holding behind that charge appears again on page 18, under the company’s Permanent Engaged Minority Shareholder strategy of “selective, long-term, and engaged minority investments rather than full acquisitions.” Asseco is the larger of the two positions there, first purchased in 2025: 19.2 million shares, 23% ownership, a cost basis of US$436 million against a market value of US$1,093 million. It is accounted for under the equity method, and page 18 notes its carrying value in the statements is not its market value.
So a rising Asseco share price generated a charge against this quarter’s reported income through the IRGA, while the same holding, which pages 11 and 22 place at Topicus, carries a US$657 million unrealized gain the income statement does not record as a gain. What it does record is the equity-method share of Asseco’s own earnings, US$6 million in the quarter and US$30 million over nine months against nil in both prior-year periods (page 11). One investment drives the charge, carries the gain, and is what the company expects to hand Joday, prorated, to settle the obligations tied to it.
US healthcare and Altera are the two groups Constellation breaks out as shrinking
Maintenance and other recurring revenue organic growth adjusted for foreign exchange, by business group. The first ten points are fiscal years and the last three single quarters of 2026. Source: CSI MD&A Q3 2026, page 5.
On that basis, maintenance and other recurring revenue only, the US healthcare group excluding Altera ran negative 10% in the quarter against negative 1% in each of the first two quarters of 2026, Altera negative 8%, consolidated positive 4% and CSI excluding both positive 5%.
The MD&A says that measure “is viewed by management as a key metric that indicates the overall stability of the customer base.” On the consolidated line it has been easing: adjusted for foreign exchange, 6% in 2022, 6% in 2023, 6% in 2024, 5% in 2025 and 3% for the 2026 year to date (page 5).
The MD&A attributes the longer-running healthcare decline to hospitals consolidating onto larger vendors’ end-to-end solutions and to consolidation within hospital and physician practices, and says: “We anticipate this trend to continue for the foreseeable future.” The decline this quarter is “largely due to the acquisition of two businesses made in the period that are experiencing very high customer attrition rates”, attrition that “was known and modeled as part of the respective investment theses and the investments are expected to achieve acceptable returns on the invested capital”. Excluding those two businesses, the company says, the group’s organic decline would have been negative 3%. On Altera: “A significant portion of the decline is directly attributed to the departure of several sizable clients, which we expect will run its course by the end of 2027, as these are multi-year transitions.”
Page 17 puts Altera’s quarterly revenue at US$144 million of the group’s US$3,512 million, 4.1% by our arithmetic. Across all of its revenue rather than the recurring lines alone its FX-adjusted organic growth was negative 17%, against positive 3% for CSI excluding Altera and positive 2% consolidated. The decline is profitable: the same page puts Altera’s income before income taxes at US$16 million and its FCFA2S at US$17 million.
More went out than came in, and the dividend did not move
Cash ended the quarter at US$2,693 million, down US$396 million from year end, while debt fell US$132 million to US$3,999 million, leaving cash less debt at negative US$1,306 million against negative US$1,043 million at December 31, 2025. The MD&A gives the reason in a sentence: “The net capital deployed on acquisitions plus dividends exceeded cash flows from operations during the nine months ended September 30, 2026.”
The share count has not moved: 21,191,530 common shares outstanding as at November 6, 2026, the same count printed in five consecutive annual MD&As from FY2021 to FY2025, with weighted average basic and diluted shares of 21.2 million throughout. So Constellation’s revenue growth and its revenue-per-share growth are the same figure, which is the measure behind our ranking of Canadian growth stocks on growth per share.
The dividend was declared at US$1.00 a share on November 6, 2026, payable January 12, 2027 to holders of record on December 18, 2026, and designated an eligible dividend for Income Tax Act (Canada) purposes. That is US$4.00 a year, unchanged through the five annual MD&As from FY2021 to FY2025, and this quarter’s filing prints US$1.00 for the quarter and US$3.00 for the nine months. The company states the policy itself: “While we could use the FCFA2S to pay dividends or repurchase shares, our objective is to invest all of our FCFA2S in acquisitions which meet our hurdle rate.” In Canadian dollars, StockAnalysis reports a trailing dividend of C$5.60 against the C$3,526.52 close on November 6, 2026, a yield of 0.16% (market data as of November 6, 2026, credit to StockAnalysis).
Set that close against the company’s own cash measure. Trailing twelve month FCFA2S per share is US$91.77, the four quarterly readings on page 14 added up: US$19.97, US$34.60, US$16.28 and US$20.92, additive because the share count has not moved. At the Bank of Canada’s daily rate for November 6, 2026, 1.4113 Canadian dollars per US dollar, that C$3,526.52 close is US$2,498.77, or 27.2 times the per-share figure, struck on a close that predates the release. It is a Canadian-dollar close converted at the central bank’s rate rather than a US-dollar quote, and the sum, the conversion and the multiple are ours, on the company’s four printed figures and the Bank of Canada’s daily exchange rates.
The nine months, and a company deploying more than it generates
The nine-month view is not the quarter’s. Revenue of US$10,027 million is up 19%, and net income to common shareholders of US$853 million is up 112% from a prior-year period that contained the US$260 million revaluation loss and that the company has since recast, raising first-quarter 2025 net income by US$34 million (note 1 to the page 14 table), so the base is the higher one. That is US$40.26 a diluted share against US$18.96. Organic growth over the nine months was 4% as reported and 1% after adjusting for foreign exchange.
Acquisitions over those nine months took US$2,175 million including payments for holdbacks on earlier deals, offset by US$189 million of acquired cash, against US$2,092 million of cash from operations (page 19). Cash fell by US$396 million over those nine months, and debt by US$132 million. The room to keep buying is in note 8 of the statements: the CSI Facility’s US$1,085 million limit was undrawn at September 30, 2026 and at December 31, 2025, with US$13 million of letters of credit issued, which the note says limits borrowing capacity dollar for dollar (page 22). Beside it sits the US$2,693 million of cash, US$1,025 million of that, 38% by our arithmetic, held at Topicus, Lumine and other subsidiaries with non-recourse debt facilities where page 18 discloses limitations on their ability to distribute funds to Constellation. Against it sit the US$673 million already committed since the quarter closed, the higher of the two figures the filings give, and US$590 million of acquisition holdbacks on the page 23 table, US$314 million of it within the year.
Page 19 states management’s own conclusion: “We believe we have sufficient cash and available credit capacity to continue to operate for the foreseeable future. Generally our VMS businesses operate with negative working capital as a result of the collection of maintenance payments and other revenues in advance of the performance of the related services. As such, management anticipates that it can continue to grow the business organically without any additional funding. If we continue to acquire VMS businesses we may need additional external funding depending upon the size and timing of the potential acquisitions.” At 2% organic growth in the quarter, what has to earn that back is the acquisitions, the two high-attrition healthcare businesses included. The call is at 8:00 a.m. ET on Monday November 9, 2026, per the company’s advisory of October 16, with president Mark Miller, chief financial officer Jamal Baksh and chief investment officer Bernard Anzarouth taking questions.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. Company figures are Constellation Software Inc.’s own for the three and nine months ended September 30, 2026, from its third quarter 2026 press release of November 6, 2026, its Q3 2026 Management’s Discussion and Analysis and its Q3 2026 unaudited condensed consolidated interim financial statements, with the document and page cited at each use. The five-year revenue and organic growth series is taken from each fiscal year’s own annual MD&A rather than from a single restated source. Constellation reports in US dollars, so every figure is US unless it carries C$. Figures described as our arithmetic are our own calculations on the company’s published numbers: the recurring revenue share of the quarter, total expenses as a share of revenue, revenue less expenses and amortization, the prior-year pre-tax figure excluding the revaluation loss, the subsidiary share of group cash, Altera’s share of revenue and the free cash flow subtotal held at its prior-year charge. The share price, the trailing dividend and the yield are market data as of the November 6, 2026 close, credited to StockAnalysis. The report date and the conference call time are quoted from the company’s own advisory of October 16, 2026.
