Constellation Software Inc. — Management Reports 2025

May 12, 2025

1

CONSTELLATION SOFTWARE INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS ("MD&A")

The following discussion and analysis should be read in conjunction with the Unaudited Condensed Consolidated Interim Financial Statements for the three month period ended March 31, 2025, which we prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS). Certain information included herein is forward-looking and based upon assumptions and anticipated results that are subject to uncertainties. Should one or more of these uncertainties materialize or should the underlying assumptions prove incorrect, actual results may vary significantly from those expected. See "Forward-Looking Statements" and "Risks and Uncertainties".

Unless otherwise indicated, all dollar amounts are expressed in U.S. dollars. All references to “$” are to U.S. dollars and all references to “C$” are to Canadian dollars. Due to rounding, certain totals and subtotals may not foot and certain percentages may not reconcile.

Additional information about Constellation Software Inc. (the "Company", "Constellation" or "CSI"), including our most recently filed Annual Information Form ("AIF"), is available on SEDAR+ at www.sedarplus.ca.

Forward Looking Statements

Certain statements in this report may contain "forward looking" statements that involve risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company or industry to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Words such as "may", "will", "expect", "believe", "plan", "intend", "should", "anticipate" and other similar terminology are intended to identify forward looking statements. These statements reflect current assumptions and expectations regarding future events and operating performance as of the date of this MD&A May 12, 2025. Forward looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward looking statements, including, but not limited to, the factors discussed under "Risks and Uncertainties". Although the forward looking statements contained in this MD&A are based upon what management of the Company believes are reasonable assumptions, the Company cannot assure investors that actual results will be consistent with these forward looking statements. These forward looking statements are made as of the date of this MD&A and the Company assumes no obligation, except as required by law, to update any forward looking statements to reflect new events or circumstances. This report should be viewed in conjunction with the Company's other publicly available filings, copies of which can be obtained electronically on SEDAR+ at www.sedarplus.ca.

Non-IFRS Measures

This MD&A includes certain measures which have not been prepared in accordance with IFRS such as Free cash flow available to shareholders.

Free cash flow available to shareholders "FCFA2S" refers to net cash flows from operating activities less interest paid on lease obligations, interest paid on debt, debt transaction costs, payments 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. We believe that FCFA2S is useful supplemental information as it provides an indication of the uncommitted cash flow that is available to shareholders if we do not make any acquisitions, or investments, and do not repay any debts. 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.

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FCFA2S is not a recognized measure under IFRS and may not be comparable to similar financial measures disclosed by other issuers. Accordingly, readers are cautioned that FCFA2S should not be construed as an alternative to net cash flows from operating activities. See “Results of Operations — Free cash flow available to shareholders” for a reconciliation of FCFA2S to net cash flows from operating activities.

Overview

We acquire, manage and build vertical market software (“VMS”) businesses. Generally, these businesses provide mission critical software solutions that address the specific needs of our customers in particular markets. Our focus on acquiring businesses with growth potential, managing them well and then building them, has allowed us to generate significant cash flows and revenue growth during the past several years.

Our revenue consists primarily of software license fees, maintenance and other recurring fees, professional service fees and hardware sales. Software license revenue is comprised of non-recurring license fees charged for the use of software products licensed under multiple-year or perpetual arrangements. Maintenance and other recurring revenue primarily consists of fees charged for customer support on software products post-delivery and also includes recurring fees derived from combined software/support contracts, transaction revenues, managed services associated with CSI software that has been sold to the customer, and hosted software-as-a-service products. Professional service revenue consists of fees charged for implementation services, custom programming, product training, certain managed services, and consulting. Hardware and other revenue includes the resale of third party hardware as part of customized solutions, as well as sales of hardware assembled internally and the reimbursement of travel costs. Our customers typically purchase a combination of software, maintenance, professional services and hardware, although the type, mix and quantity of each vary by customer and by product.

Expenses consist primarily of staff costs, the cost of hardware, third party licenses, maintenance and professional services to fulfill our customer arrangements, travel and occupancy costs, depreciation, and other general operating expenses.

Preferred Share Investment in Lumine

On February 22 and 23, 2023 (as part of a series of transactions relating to the acquisition of WideOrbit Inc. (“WideOrbit”)), the Company’s subsidiary, Lumine Group Inc. (“Lumine”), completed a corporate reorganization. At the beginning of the period, the Company owned 63,582,712 preferred shares (“Lumine Preferred Shares”) in the capital of the Company’s subsidiary, Lumine. The Lumine Preferred Shares were non-voting and under certain conditions were redeemable at the option of CSI for a redemption price of $21.74 (the “Initial Face Value”) per share. The redemption price was to either be settled in cash or through the issuance of a variable number of subordinate voting shares of Lumine (“Lumine Subordinate Voting Shares”) based on the terms of the Lumine Preferred Shares, or any combination thereof. The Lumine Preferred Shares were also convertible into Lumine Subordinate Voting Shares at a conversion ratio of 1:2.4302106 at any time. The Lumine Preferred Shares entitled CSI to a fixed annual cumulative dividend of 5% per annum on the Initial Face Value.

On March 25, 2024, all of the Lumine Preferred Shares were automatically converted into Lumine Subordinate Voting Shares, and additional Lumine Subordinate Voting Shares were issued in satisfaction of the amounts owing in connection with the accrued dividends on the Lumine Preferred Shares. As at March 31, 2025, CSI holds 157,553,539 Lumine Subordinate Voting Shares.

Subsequent to the conversion, CSI continues to consolidate Lumine and now reflects an equity interest of 61.40% (December 31, 2023 – 0%) in Lumine and a non-controlling interest of 38.60% (December 31, 2023 – 100%).

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Results of Operations

(In millions of dollars, except percentages and per share amounts)

Unaudited

	Three months ended March 31,		Period-Over-Period Change
	2025	2024	$	%
Revenue	2,654	2,353	300	13%
Expenses	2,001	1,800	201	11%
Amortization of intangible assets	272	242	30	12%
Foreign exchange (gain) loss	32	(18)	50	NM
IRGA / TSS membership liability revaluation charge	94	81	14	17%
Finance and other expense (income)	(45)	(9)	(36)	412%
Bargain purchase gain	-	(2)	2	-100%
Impairment of intangible and other non-financial assets	3	10	(7)	-74%
Redeemable preferred securities expense (income)	-	58	(58)	-100%
Finance costs	71	67	4	6%
Income before income taxes	227	125	101	81%
Income tax expense (recovery)
Current income tax expense (recovery)	136	127	9	7%
Deferred income tax expense (recovery)	(49)	(75)	26	-35%
Income tax expense (recovery)	87	52	35	68%
Net income (loss) attributable to:
Common shareholders of CSI	115	105	10	10%
Non-controlling interests	24	(31)	56	NM
Net income (loss)	140	74	66	90%
Net cash flows from operating activities	827	737	90	12%
Free cash flow available to shareholders	510	446	64	14%
Weighted average number of shares outstanding
Basic and diluted	21.2	21.2
Net income (loss) per share
Basic and diluted	$ 5.44	$ 4.95	$ 0.49	10%
Net cash flows from operating activities per share
Basic and diluted	$ 39.00	$ 34.76	$ 4.25	12%
Free cash flow available to shareholders per share
Basic and diluted	$ 24.07	$ 21.04	$ 3.03	14%
Cash dividends declared per share
Basic and diluted	$ 1.00	$ 1.00	$ -	0%

NM - Not meaningful
Due to rounding, certain totals may not foot and certain percentages may not reconcile.

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Comparison of the first quarter ended March 31, 2025 and 2024

Revenue:

Total revenue for the quarter ended March 31, 2025 was $2,654 million, an increase of 13%, or $300 million, compared to $2,353 million for the comparable period in 2024. The increase is primarily attributable to growth from acquisitions as the Company experienced organic growth of 0.3% in the quarter, 2% after adjusting for the impact of changes in the valuation of the US dollar against most major currencies in which the Company transacts business. For acquired companies, organic growth is calculated as the difference between actual revenues achieved by each company in the financial period following acquisition compared to the estimated revenues they achieved in the corresponding financial period preceding the date of acquisition by Constellation. Organic growth is not a standardized financial measure and might not be comparable to measures disclosed by other issuers.

The following table displays the breakdown of our revenue according to revenue type:

	Three months ended March 31,		Period-Over- Period Change		Q124 Proforma Adj. (Note 1)	Organic Growth
	2025	2024	$	%	$	%
($ in millions, except percentages)
Licenses	96	88	8	9%	17	-9%
Professional services	487	470	18	4%	49	-6%
Hardware and other	74	59	15	26%	12	5%
Maintenance and other recurring	1,996	1,737	260	15%	215	2%
	2,654	2,353	300	13%	293	0%

$M - Millions of dollars

Due to rounding, certain totals may not foot and certain percentages may not reconcile.

Note 1: Estimated pre-acquisition revenues for the three months ended March 31, 2024 from companies acquired after December 31, 2023. (Obtained from unaudited vendor financial information.)

For comparative purposes the table below shows the quarterly organic growth as compared to the same period in the prior year by revenue type since Q1 2023. Note that the estimated revenues achieved by acquired companies in the corresponding financial period preceding the date of acquisition by Constellation may be updated in the quarter following the quarter they were acquired resulting in slight variances to previously reported figures.

	Quarter Ended
	Mar. 31 2023	Jun. 30 2023	Sep. 30 2023	Dec. 31 2023	Mar. 31 2024	Jun. 30 2024	Sep. 30 2024	Dec. 31 2024	Mar. 31 2025
Licenses	-9%	-1%	-7%	15%	-8%	-23%	-20%	-19%	-9%
Professional services	0%	1%	7%	4%	-1%	-2%	-6%	-4%	-6%
Hardware and other	-1%	3%	10%	-18%	-11%	-9%	-7%	4%	5%
Maintenance and other recurring	4%	6%	9%	7%	7%	5%	6%	5%	2%
Revenue	2%	4%	7%	6%	4%	2%	2%	2%	0%

The following table shows the same information adjusting for the impact of foreign exchange movements.

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	Quarter Ended
	Mar. 31 2023	Jun. 30 2023	Sep. 30 2023	Dec. 31 2023	Mar. 31 2024	Jun. 30 2024	Sep. 30 2024	Dec. 31 2024	Mar. 31 2025
Licenses	-7%	-1%	-9%	13%	-9%	-22%	-20%	-19%	-8%
Professional services	3%	1%	4%	2%	-2%	-2%	-7%	-3%	-5%
Hardware and other	2%	3%	6%	-20%	-12%	-8%	-8%	4%	7%
Maintenance and other recurring	6%	7%	7%	6%	6%	6%	6%	5%	4%
Revenue	5%	5%	5%	4%	3%	3%	1%	2%	2%

Expenses:

The following table displays the breakdown of our expenses:

	Three months ended March 31,		Period-Over-Period Change
Expenses	2025	2024	$	%
	($ in millions, except percentages)
Staff	1,412	1,293	119	9%
Hardware	40	35	5	15%
Third party license, maintenance and professional services	254	215	39	18%
Occupancy	17	14	2	16%
Travel, Telecommunications, Supplies & Software and equipment	131	112	19	17%
Professional fees	47	38	9	23%
Other, net	53	50	4	8%
Depreciation	46	44	3	7%
	2,001	1,800	201	11%

Due to rounding, certain totals may not foot and certain percentages may not reconcile.

Overall expenses for the quarter ended March 31, 2025 increased 11%, or $201 million to $2,001 million, compared to $1,800 million during the same period in 2024. As a percentage of total revenue, expenses equalled 75% for the quarter ended March 31, 2025 and 76% for the same period in 2024. The change in valuation of the US dollar against most major currencies in which the Company transacts business resulted in an approximate 2% decrease in expenses for the three months ended March 31, 2025 compared to the first quarter of 2024.

Staff expense – Staff expenses increased 9% or $119 million for the quarter ended March 31, 2025 over the same period in 2024. Staff expense can be broken down into five key operating departments: Professional Services, Maintenance, Research and Development, Sales and Marketing, and General and Administrative. Included within staff expenses for each of the above five departments are personnel and related costs associated with providing the necessary services. The table below compares the period over period variances.

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	Three months ended March 31,		Period-Over-Period Change
	2025	2024	$	%
	($ in millions, except percentages)
Professional services	292	287	5	2%
Maintenance	293	246	47	19%
Research and development	389	360	29	8%
Sales and marketing	167	156	11	7%
General and administrative	271	243	27	11%
	1,412	1,293	119	9%

Due to rounding, certain totals may not foot and certain percentages may not reconcile.

The increase in staff expenses for the quarter ended March 31, 2025 was primarily due to the growth in the number of employees compared to the same period in 2024 primarily due to acquisitions. Staff expenses in the first quarter of every year are typically higher as a percentage of revenue as compared to other quarters, largely attributable to increased payroll tax costs associated with our annual bonus payments that are made in the month of March.

Hardware expenses – Hardware expenses increased 15% or $5 million for the quarter ended March 31, 2025 over the same period in 2024, as compared to the 26% increase in hardware and other revenue for the same periods. Hardware margin for the three months ended March 31, 2025 was 46% as compared to 41% for the same period in 2024.

Third party license, maintenance and professional services expenses – Third party license, maintenance and professional services expenses increased 18% or $39 million for the quarter ended March 31, 2025 over the same period in 2024. The increase is primarily due to third party license, maintenance and professional services expenses of acquired businesses.

Occupancy expenses – Occupancy expenses increased 16% or $2 million for the quarter ended March 31, 2025 over the same period in 2024. This increase is primarily due to the occupancy expenses of acquired businesses.

Travel, Telecommunications, Supplies & Software and equipment expenses – Travel, Telecommunications, Supplies & Software and equipment expenses increased 17% or $19 million for the quarter ended March 31, 2025 over the same period in 2024. The increase in these expenses is primarily due to expenses incurred by acquired businesses.

Professional fees – Professional fees increased 23% or $9 million for the quarter ended March 31, 2025 over the same period in 2024. There are no individually material reasons contributing to this variance.

Other, net – Other expenses increased 8% or $4 million for the quarter ended March 31, 2025 over the same period in 2024. The following table provides a further breakdown of expenses within this category.

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	Three months ended March 31,		Period-Over-Period Change
	2025	2024	$	%
	($ in millions, except percentages)
Advertising and promotion	37	31	6	18%
Recruitment and training	10	10	(0)	-2%
Bad debt expense	1	1	(0)	-28%
R&D tax credits	(10)	(13)	3	-21%
Contingent consideration	7	11	(4)	-34%
Other expense, net	9	9	(0)	0%
	53	50	4	8%

Due to rounding, certain totals may not foot and certain percentages may not reconcile.

The contingent consideration expense amounts recorded for the three months ended March 31, 2025 related to an increase (decrease) in anticipated acquisition earnout payment accruals primarily as a result of increases (decreases) to revenue forecasts for the associated acquisitions. Revenue forecasts are updated on a quarterly basis and the related anticipated acquisition earnout payment accruals are updated accordingly.

There are no individually material reasons contributing to the remaining variances.

Depreciation – Depreciation of property and equipment and right of use assets increased 7% or $3 million for the quarter ended March 31, 2025 over the same period in 2024. The increases are primarily due to the depreciation expense associated with acquired businesses.

Other Income and Expenses:

The following table displays the breakdown of our other income and expenses:

	Three months ended March 31,		Period-Over-Period Change
	2025	2024	$	%
	($ in millions, except percentages)
Amortization of intangible assets	272	242	30	12%
Foreign exchange (gain) loss	32	(18)	50	NM
IRGA / TSS membership liability revaluation charge	94	81	14	17%
Finance and other expense (income)	(45)	(9)	(36)	412%
Bargain purchase gain	-	(2)	2	-100%
Impairment of intangible and other non-financial assets	3	10	(7)	-74%
Redeemable preferred securities expense (income)	-	58	(58)	-100%
Finance costs	71	67	4	6%
Income tax expense (recovery)	87	52	35	68%
	513	480	33	7%

NM - Not meaningful
Due to rounding, certain totals may not foot and certain percentages may not reconcile.

Amortization of intangible assets – Amortization of intangible assets increased 12% or $30 million for the quarter ended March 31, 2025 over the same period in 2024. The increase in amortization expense is primarily

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attributable to an increase in the carrying amount of our intangible asset balance over the twelve-month period ended March 31, 2025 as a result of acquisitions completed during this twelve-month period.

Foreign exchange – Most of our businesses are organized geographically so many of our expenses are incurred in the same currency as our revenues, which mitigates some of our exposure to currency fluctuations. For the quarter ended March 31, 2025, we realized a foreign exchange loss of $32 million compared to a gain of $18 million for the same period in 2024. The following table provides a breakdown of these amounts.

Unrealized foreign exchange (gain) loss related to:

• revaluation of intercompany loans between entities with differing functional currencies (1)
• revaluation of the Company's unsecured subordinated floating rate debentures as a result of the appreciation (depreciation) of the Canadian dollar against the US dollar.
• revaluation of the liability associated with the IRGA (Euro denominated liability)

Remaining foreign exchange (gain) loss

Three months ended March 31,		Period-Over-Period Change
2025	2024	$	%
($ in millions, except percentages)
(4)	3	(8)	NM
0	(9)	10	NM
29	(14)	43	NM
6	2	4	235%
32	(18)	50	NM

NM - Not meaningful

Due to rounding, certain totals may not foot and certain percentages may not reconcile.

(1) Offsetting amounts recorded in other comprehensive income. Net impact to Total comprehensive income for each period is nil.

The remaining foreign exchange gains and losses per the table above are primarily related to the unrealized foreign exchange translation gains and losses of certain non-US dollar denominated working capital balances to US dollars as a result of the depreciation or appreciation of the US dollar.

IRGA / TSS membership liability revaluation charge – On December 23, 2014, in accordance with the terms of the purchase and sale agreement for the initial acquisition of TSS (as defined below) by CSI, and on the basis of the term sheets attached thereto, Constellation and the Joday Group, among others, entered into a Members Agreement (the “Members Agreement”) pursuant to which the Joday Group acquired 33.29% of the voting interests in Constellation Software Netherlands Holding Coöperatief U.A. (which was renamed to Topicus.com Coöperatief U.A.), a subsidiary of Constellation and the indirect owner of 100% of TSS at the time of the acquisition. Total proceeds from this transaction was €39 million ($49 million).

On January 5, 2021, the Members Agreement was terminated in conjunction with the acquisition of Topicus.com B.V., the reorganization of Topicus Coop and the execution of the IRGA. The IRGA was established to create certain contractual obligations of the parties in respect of the governance of Topicus and Topicus Coop. As of March 31, 2025 the Joday Group’s interest in Topicus Coop comprised 38,148,221 Topicus Coop Ordinary Units (“Topicus Coop Units”) resulting in an interest of 29.38% in Topicus Coop. The IRGA provides for transfer restrictions in respect of the Topicus Coop Units. See “Liability of CSI under the terms of the IRGA” below for further details.

The valuation of the IRGA liability (previously the TSS membership liability) increased by approximately 14% or $94 million from Q4 2024. The increase is primarily the result of the growth in TSS’ trailing twelve month

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maintenance revenue on a pro-forma basis (primarily due to acquisitions) and an increase in net tangible assets (as defined under the IRGA) resulting from of an investment in equity securities. Maintenance revenue and net tangible assets are the two main drivers in the calculation of the liability. The liability recorded on the balance sheet increased by $18\%$ or $\$124$ million over the three month period ended March 31, 2025 from $\$693$ million to $\$816$ million as a result of the revaluation charge of $\$94$ million and a $\$29$ million foreign exchange loss. The IRGA / TSS membership liability is denominated in Euros and the Euro appreciated $4\%$ versus the US dollar during the three months ended March 31, 2025.

Finance and other expense (income) – Finance and other income for the three months ended March 31, 2025 was $45 million compared to $9 million for the same period in 2024. The following table provides a further breakdown of expenses (income) within this category.

	Three months ended March 31,
	2025	2024
Interest income on cash	$ (11)	$ (6)
(Increase) decrease in the fair value of equity securities	3	3
Share in net (income) loss of equity investee	0	0
(Increase) decrease in the fair value of derivative and other finance income	(5)	-
Finance and other income	(32)	(6)
Finance and other expense (income)	$ (45)	$ (9)

Finance and other income for the three months ended March 31, 2025 includes a $29 million settlement payment related to the fair value of the net tangible assets acquired as part of an acquisition that closed in 2024. On February 4, 2025, the Company entered into a binding agreement in respect of the acquisition of 12,318,863 treasury shares of Asseco Poland S.A. ("Asseco"). These shares represent $14.84\%$ of Asseco's share capital and will be purchased at a price of PLN 85 per share. The completion of the acquisition of the treasury shares remains subject to obtaining relevant regulatory and antitrust approvals in various government jurisdictions. The contract to acquire the additional shares of Asseco is a derivative under IFRS Accounting Standards and has been recorded at fair value as of March 31, 2025. During the three months ended March 31, 2025, a gain of $5 million was recorded. There are no individually material reasons contributing to the remaining variances.

Bargain purchase gain – No bargain purchase gain was recorded in the three months ended March 31, 2025 compared to $2 million for the same period in 2024, relating to acquisitions made in 2024. The gain resulted from the fact that the fair value of the separately identifiable assets and liabilities acquired exceeded the total consideration paid, principally due to the acquisition of certain assets that will benefit the Company that had limited value to the sellers.

Impairment of intangible and other non-financial assets – An impairment expense of $3 million was recorded in the three month period ended March 31, 2025 compared to $10 million for the same period in 2024. The expenses relate to businesses that have been unable to achieve the goals established in their respective investment theses.

Redeemable preferred securities expense – The redeemable preferred securities expense for the three month period ended March 31, 2025 was nil compared to $58 million for the same period in 2024. In conjunction with the acquisition of WideOrbit, Lumine issued 10,204,294 special shares of Lumine (the “Lumine Special Shares” or the “Preferred Securities”) to the sellers of WideOrbit for an initial subscription price of approximately $222 million. Holders of the Preferred Securities were entitled to convert some or all of their Preferred Securities into Lumine Subordinate Voting Shares on the basis of 3.4302106 Lumine Subordinate Voting Shares per Preferred Security, at any time.

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The Preferred Securities were recorded at fair value at the end of each reporting period. The change in fair value of the Preferred Securities was recorded as redeemable preferred securities expense (income) in the consolidated statements of income (loss). Based on the Preferred Securities conversion right, the value of the Preferred Securities was primarily dependent on the price movement of Lumine’s Subordinate Voting Shares. The holders of the Lumine Special Shares were also entitled to a fixed annual cumulative dividend of 5% per annum.

On March 25, 2024, all of the Lumine Special Shares were automatically converted into Lumine Subordinate Voting Shares, and additional Lumine Subordinate Voting Shares were issued in satisfaction of the amounts owing in connection with the accrued dividends on Lumine Special Shares. Specifically, a total of 35,076,193 Lumine Subordinate Voting Shares were issued.

Finance costs – Finance costs for the quarter ended March 31, 2025 increased $4 million to $71 million, compared to $67 million for the same period in 2024 primarily a result of an increase in the average debt outstanding in Q1 2025 as compared to Q1 2024.

Income taxes – We operate globally and we calculate our tax provision in each of the jurisdictions in which we conduct business. Our effective tax rate on a consolidated basis is, therefore, affected by the realization and anticipated relative profitability of our operations in those various jurisdictions, as well as different tax rates that apply and our ability to utilize tax losses and other credits. For the quarter ended March 31, 2025, income tax expense increased $35 million to $87 million compared to $52 million for the same period in 2024. 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. Current tax expense reflects gross taxes before the application of R&D tax credits which are classified as part of “other, net” expenses in the statement of income (loss). The Company’s consolidated effective tax rate in respect of continuing operations for the three months ended March 31, 2025 was 38% (41% for the three months ended March 31, 2024). The Q1 2024 effective tax rate is impacted by the redeemable preferred securities expense, which is not deductible for tax purposes.

Constellation is subject to tax audits in the countries in which the Company carries on business globally. These tax audits could result in additional tax expense in future periods relating to historical filings. Reviews by tax authorities generally focus on, but are not limited to, the validity of the Company’s inter-company transactions, including financing and transfer pricing policies which generally involve subjective areas of taxation and a significant degree of judgment. If any of these tax authorities are successful with their challenges, the Company’s income tax expense may be adversely affected and Constellation could also be subject to interest and penalty charges.

Net Income and Earnings per Share:

Net income attributable to common shareholders of CSI for the quarter ended March 31, 2025 was $115 million compared to $105 million for the same period in 2024. On a per share basis this translated into net income per basic and diluted share of $5.44 in the quarter ended March 31, 2025 compared to $4.95 for the same period in 2024. There was no change in the number of shares outstanding.

Net cash flows from operating activities (“CFO”):

For the quarter ended March 31, 2025, CFO increased $90 million to $827 million compared to $737 million for the same period in 2024 representing an increase of 12%.

Free cash flow available to shareholders (“FCFA2S”):

For the quarter ended March 31, 2025, FCFA2S increased $64 million to $510 million compared to $446 million for the same period in 2024 representing an increase of 14%.

The following table reconciles FCFA2S to net cash flows from operating activities:

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Net cash flows from operating activities

Adjusted for:
Interest paid on lease obligations
Interest paid on debt
Proceeds from sale of interest rate cap
Debt transaction costs
Payments of lease obligations
IRGA / TSS membership liability revaluation charge
Property and equipment purchased
Interest and dividends received

Less amount attributable to
Non-controlling interests

Free cash flow available to shareholders

Due to rounding, certain totals may not foot.

| Three months ended
March 31, | |
| --- | --- |
| 2025
($ in millions) | 2024 |
| 827 | 737 |
| (4) | (3) |
| (62) | (41) |
| - | - |
| (0) | (11) |
| (31) | (29) |
| (94) | (81) |
| (15) | (10) |
| 11 | 6 |
| 631 | 568 |
| (121) | (122) |
| 510 | 446 |

Quarterly Results

	Quarter Ended
	Mar. 31
2023	Jun. 30
2023	Sep. 30
2023	Dec. 31
2023	Mar. 31
2024	Jun. 30
2024	Sep. 30
2024	Dec. 31
2024	Mar. 31
2025
Revenue	1,919	2,039	2,126	2,323	2,353	2,468	2,541	2,703	2,654
Net income (loss) *	94	103	227	141	105	177	164	285	115
CFO	632	123	513	511	737	265	517	678	827
FCFA2S	453	14	367	325	446	182	362	482	510
Net income per share *
Basic & diluted	4.44	4.88	10.70	6.64	4.95	8.35	7.74	13.44	5.44
CFO per share
Basic & diluted	29.85	5.78	24.22	24.09	34.76	12.51	24.37	31.99	39.00
FCFA2S per share
Basic & diluted	21.37	0.68	17.33	15.33	21.04	8.61	17.06	22.76	24.07

• Attributable to common shareholders of CSI

We experience seasonality in our operating results in that CFO and FCFA2S in the first quarter of every year is typically the highest and CFO and FCFA2S in the second quarter of every year is typically the lowest. The key driver impacting this seasonality is the timing of annual maintenance contract renewals. Our quarterly results may also fluctuate as a result of the various acquisitions which may be completed by the Company in any given quarter. We may experience variations in our net income on a quarterly basis depending upon the timing of certain expenses or gains, which may include changes in provisions, acquired contract liabilities, foreign exchange gains and losses, bargain purchase gains, and gains or losses on the sale of financial and other assets.

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Spin-Outs

Topicus.com Inc.

Constellation (TSX:CSU) and Topicus (TSXV:TOI) announced on January 5, 2021 that Constellation, acting through its Total Specific Solutions ("TSS") operating group and its subsidiary TPCS Holding B.V., completed the purchase of 100% of the shares of Topicus.com B.V., a Netherlands-based diversified vertical market software provider, from IJssel B.V. and that in connection with the closing of the acquisition, TSS has been spun out of Constellation and now operates, together with Topicus.com B.V., as a separate public company, Topicus.com Inc. (collectively, the "Spin-Out Transactions").

In connection with the completion of the Spin-Out Transactions, on January 4, 2021, all of Constellation's common shareholders of record on December 28, 2020 received, by way of a dividend-in-kind, 1.859817814 subordinate voting shares of Topicus.com (the "Spin-Out Shares") for each common share of Constellation held.

Constellation's equity interest in TSS prior to the Spin-Out Transactions was 66.7%. Constellation's equity interest in Topicus after completion of the Spin-Out Transactions on a fully diluted basis was approximately 30.4%. Constellation's equity interest on a fully diluted basis as at March 31, 2025 is approximately 31.3%. In addition, Constellation as the holder of the Topicus Super Voting Share is entitled to that number of votes that equals 50.1% of the aggregate number of votes attached to all of the outstanding voting shares at such time. As a result of the Topicus Super Voting Share Constellation consolidated the financial results of Topicus with its financial results.

Lumine Group Inc.

On February 22 and 23, 2023 (as part of a series of transactions relating to the acquisition of WideOrbit Inc. ("WideOrbit"), the Company's subsidiary, Lumine Group Inc. ("Lumine"), completed a corporate reorganization. See "Preferred Share Investment in Lumine" on page 2.

The Company holds 1 super voting share of Lumine (the "Lumine Super Voting Share"). The Lumine Super Voting Share entitles CSI to that number of votes that equals 50.1% of the aggregate number of votes attached to all the outstanding Lumine Super Voting Shares, Lumine Subordinate Voting Shares and Lumine Special Shares. As a result, the Company controls Lumine and has consolidated Lumine's financial position and results of operations. As at March 31, 2025, the Company holds 157,553,539 Lumine Subordinate Voting Shares and now reflects an equity interest of 61.40% in Lumine and a non-controlling interest of 38.60%.

The tables below provide certain supplemental balance sheet, statement of income, and net operating cash flow information of Topicus and Lumine for the three months ended March 31, 2025. Neither Topicus or Lumine are considered a reportable operating segment of Constellation, however, management has chosen to provide certain supplemental financial information to provide greater clarity into the operating performance and cash flow from operations of Topicus and Lumine considering Constellation's equity ownership.

Selected Balance Sheet Information

As at March 31, 2025

(Unaudited)	Constellation Software Inc. (excluding Topicus & Lumine)	Topicus	Lumine	Consolidated
Cash	1,904	321	252	2,477
Bank debt, bonds and debentures	2,904	338	279	3,520

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Statement of Income
(Excluding intercompany activity)

(Unaudited)	For the three months ended March 31, 2025
	Constellation Software Inc. (excluding Topicus & Lumine)	Topicus	Lumine	Consolidated
Revenue	2,103	371	179	2,654
Expenses	1,599	283	118	2,001
Amortization of intangible assets	207	39	26	272
Foreign exchange (gain) loss	30	0	1	32
IRGA / Membership liability revaluation charge	94	-	-	94
Finance and other income	(38)	(6)	(1)	(45)
Impairment of intangible and other non-financial assets	3	-	-	3
Finance costs	59	6	5	71
Income (loss) before income taxes	149	49	29	227
Income tax expense (recovery)
Current income tax expense (recovery)	103	18	15	136
Deferred income tax expense (recovery)	(32)	(9)	(7)	(49)
Income tax expense (recovery)	71	9	8	87
Net income (loss)	78	40	21	140
Net cash flows from operating activities	502	284	40	827

Foreign Exchange Adjusted Organic Revenue Growth
(Excluding intercompany activity)

	For the three months ended March 31, 2025
	Constellation Software Inc. (excluding Topicus & Lumine)	Topicus	Lumine	Consolidated
Licenses	2%	-3%	-43%	-8%
Professional services	-5%	-3%	-8%	-5%
Hardware and other	1%	-10%	116%	7%
Maintenance and other recurring	4%	6%	-1%	4%
Revenue	2%	3%	-4%	2%

Acquisition of business segment from Allscripts Healthcare Solutions

On May 2, 2022, Constellation, through its wholly-owned subsidiary, N. Harris Computer Corporation, completed the purchase from Allscripts Healthcare Solutions (“Allscripts”) of Allscripts’ Hospitals and Large Physician Practices business segment. This business segment now operates under the name Altera.

The tables below provide certain supplemental balance sheet, statement of income, and net operating cash flow information of Altera for the three months ended March 31, 2025. Altera is not considered a reportable operating segment of Constellation, however, management has chosen to provide certain supplemental financial information to provide greater clarity into the operating performance and cash flow from operations of Altera considering the size of the business and its impact on the results of Constellation.

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Selected Balance Sheet Information

As at March 31, 2025

(Unaudited)	Constellation Software Inc. (excluding
	Altera)	Altera	Consolidated
Cash	2,358	119	2,477
Bank debt, bonds and debentures	3,268	252	3,520
Statement of Income
(Excluding intercompany activity)
(Unaudited)	For the three months ended March 31, 2025
---	---	---	---
	Constellation Software Inc. (excluding Altera)	Altera	Consolidated
Revenue	2,485	168	2,654
Expenses	1,853	148	2,001
Amortization of intangible assets	254	18	272
Foreign exchange (gain) loss	32	(0)	32
IRGA / Membership liability revaluation charge	94	-	94
Finance and other income	(44)	(0)	(45)
Bargain purchase gain	-	-	-
Impairment of intangible and other non-financial assets	3	-	3
Redeemable preferred securities expense (income)	-	-	-
Finance costs	67	4	71
Income (loss) before income taxes	227	(0)	227
Income tax expense (recovery)
Current income tax expense (recovery)	134	1	136
Deferred income tax expense (recovery)	(46)	(3)	(49)
Income tax expense (recovery)	88	(1)	87
Net income (loss)	139	1	140
Net cash flows from operating activities	804	22	827
Free cash flow available to shareholders	496	14	510
Foreign Exchange Adjusted Organic Revenue Growth
(Excluding intercompany activity)
	For the three months ended March 31, 2025
---	---	---	---
	Constellation Software Inc. (excluding Altera)	Altera	Consolidated
Licenses	-4%	-70%	-8%
Professional services	-3%	-15%	-5%
Hardware and other	7%	-19%	7%
Maintenance and other recurring	5%	-9%	4%
Revenue	3%	-13%	2%

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Liquidity

	March 31, 2025	December 31, 2024	Variance
Cash	2,477	1,980	497
Debt with recourse to Constellation Software Inc.	2,285	2,159	126
Debt without recourse to Constellation Software Inc.	2,052	2,008	44
Debt	4,337	4,166	170
Cash less Debt	(1,859)	(2,187)	327

Cash flows from operations exceeded the net capital deployed on acquisitions plus dividends during the three months ended March 31, 2025. Cash increased by $497 million to $2,477 million at March 31, 2025 compared to $1,980 million at December 31, 2024 and debt increased by $170 million to $4,337 million at March 31, 2025 compared to $4,166 million at December 31, 2024.

Total assets increased $1,038 million, from $12,857 million at December 31, 2024 to $13,896 million at March 31, 2025. The increase is primarily due to the $497 million increase in cash, the $72 million increase in accounts receivable, and the $340 million increase in equity securities. At March 31, 2025 Topicus, Lumine and other subsidiaries with non-recourse debt facilities hold approximately $842 million of cash. As explained in the "Capital Resources and Commitments" section below, there are limitations on the ability of these subsidiaries to distribute funds to Constellation.

Current liabilities increased $588 million, from $4,667 million at December 31, 2024 to $5,254 million at March 31, 2025. The increase is primarily due to an increase in debt with recourse to Constellation of $116 million, and an increase in deferred revenue of $545 million mainly due to acquisitions made since December 31, 2024 and the timing of maintenance and other billings versus performance and delivery under those customer arrangements, offset by a decrease in accounts payable and accrued liabilities of $141 million.

Net Changes in Cash Flows

($ in millions)

	Three months ended March 31, 2025	Three months ended March 31, 2024
Net cash provided by operating activities	827	737
Net cash from (used in) financing activities	(91)	351
Cash used in the acquisition of businesses	(110)	(299)
Cash obtained with acquired businesses	11	35
Net cash from (used in) other investing activities	(172)	(13)
Net cash from (used in) investing activities	(271)	(277)
Effect of foreign currency	33	(17)
Net increase (decrease) in cash and cash equivalents	497	794

The net cash flows from operating activities were $827 million for the three months ended March 31, 2025. The $827 million provided by operating activities resulted from net income of $140 million plus $563 million of adjustments to net income (primarily amortization of intangible assets, depreciation, IRGA/TSS Membership liability revaluation charge, finance and other income, finance costs, and income tax expense) and $231 million of cash from non-cash working capital, offset by $107 million in taxes paid.

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The net cash flows used in financing activities for the three months ended March 31, 2025 were $91 million, which is mainly a result of interest payments of $66 million, lease obligation payments of $31 million, and dividends paid to common shareholders of $21 million, offset by a net increase in debt facilities of $28 million.

The net cash flows used in investing activities for the three months ended March 31, 2025 were $271 million. The cash used in investing activities was primarily due to acquisitions for an aggregate of $110 million (including payments for holdbacks relating to prior acquisitions), and an investment in equity securities of $175 million, offset by $11 million of acquired cash.

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 (see "Subsequent Events" below).

Capital Resources and Commitments

Debt with recourse to CSI comprises the following ($ in millions):

	CSI Facility	Senior Notes	Liability of CSI under the IRGA	Debentures	Term Loan	Total
Principal outstanding at March 31, 2025 (and, except for debentures, equal to fair value)	$ -	$ 1,000	$ 816	$ 345	$ 84	2,245
Deduct: Unamortized transaction costs included in debt balance	-	(7)	-	-	(0)	(7)
Add: Unamortized debt premium	-	-	-	47	-	47
Carrying value at March 31, 2025	-	993	816	392	84	2,285
Current portion	-	-	419	-	-	419
Non-current portion	-	993	397	392	84	1,865

CSI Facility

On January 31, 2024, the Company completed an amendment and restatement of its existing credit facility agreement (the "CSI Facility"). The facility limit was increased from $840 million to $1,085 million, with a syndicate of existing and new institutions. The agreement has also moved from a secured to an unsecured facility structure, which continues to be available for general corporate purposes including acquisitions and working capital. The CSI Facility is guaranteed by certain subsidiaries of the Company. The CSI Facility bears a variable interest rate with no fixed repayments required over the term to maturity. Interest rates are calculated at standard U.S. and Canadian reference rates plus interest rate spreads based on a leverage table. The CSI Facility contains standard events of default which if not remedied within a cure period would trigger the repayment of any outstanding balance. As at March 31, 2025, nil had been drawn from this credit facility, and letters of credit totaling $13 million were issued, which limits the borrowing capacity on a dollar-for-dollar basis.

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Senior Notes

On February 16, 2024, the Company completed a private offering of $500 million aggregate principal amount of 5.158% senior notes due 2029 and $500 million aggregate principal amount of 5.461% senior notes due 2034 (collectively, the “Senior Notes”). The Senior Notes are senior unsecured obligations of the Company and rank equally in right of payment to all of the Company’s existing and future senior unsecured indebtedness, including the CSI Facility. The Senior Notes are guaranteed by certain subsidiaries of the Company on the same basis as such subsidiaries have guaranteed the CSI Facility. Transaction costs associated with the Senior Notes are being amortized through profit or loss using the effective interest rate method.

Liability of CSI under the terms of the IRGA / TSS Membership Agreement

On December 23, 2014, in accordance with the terms of the purchase and sale agreement for the initial acquisition of TSS by CSI, and on the basis of the term sheets attached thereto, Constellation and the Joday Group, among others, entered into a Members Agreement (the “Members Agreement”) pursuant to which the Joday Group acquired 33.29% of the voting interests in Constellation Software Netherlands Holding Coöperatief U.A. (which was renamed to Topicus.com Coöperatief U.A.), a subsidiary of Constellation and the indirect owner of 100% of TSS at the time of the acquisition. Total proceeds from this transaction was €39 million ($49 million).

On January 5, 2021, the Members Agreement was terminated in conjunction with the acquisition of Topicus.com B.V., the reorganization of Topicus Coop and the execution of the IRGA. The IRGA was established to create certain contractual obligations of the parties in respect of the governance of Topicus and Topicus Coop. As of December 31, 2024 the Joday Group’s interest in Topicus Coop comprised 38,148,221 Topicus Coop Ordinary Units resulting in an interest of 29.38% in Topicus Coop. The IRGA provides for transfer restrictions in respect of the Topicus Coop Units.

Any time after January 5, 2021, any member of the Joday Group has the right, at his or its option, to sell any number of its Topicus Coop Units to CSI at a cash price per Topicus Coop Unit determined in accordance with the IRGA. Upon the exercise of such option by a member of the Joday Group, CSI will be obligated to purchase 33.33% of such Topicus Coop Units within 30 days, and an additional 33.33% on each of the first and the second anniversary of such initial purchase with the exception of certain items which have been classified as a current liability. Notwithstanding the foregoing, CSI can offer Topicus the right to purchase such Topicus Coop Units in lieu of CSI.

In the event of a change of control of CSI, any member of the Joday Group has the right, at his or its option, to sell all of its Topicus Coop Units to CSI at a cash price per Topicus Coop Unit determined in accordance with the IRGA. Upon the exercise of such option by a member of the Joday Group, CSI will be obligated to purchase all such Topicus Coop Units. Notwithstanding the foregoing, CSI can offer Topicus the right to purchase such Topicus Coop Units in lieu of CSI.

If CSI reduces its economic interest in Topicus by a sale or transfer of its economic interest (and not due to any additional issuance of any shares or equity by Topicus) by more than one-third (calculated on a fully converted basis in accordance with the IRGA), any member of the Joday Group has the right, at his or its option, to sell to CSI one-third of its Topicus Coop Units at a cash price per Topicus Coop Unit determined in accordance with the IRGA. Upon the exercise of such put option by a member of the Joday Group, CSI will be obligated to purchase all such put Topicus Coop Units. Notwithstanding the foregoing, CSI can offer Topicus the right to purchase such Topicus Coop Units in lieu of CSI. Any member of the Joday Group has a similar right to sell one-half or all of its remaining Topicus Coop Units, respectively, at its option, if CSI further reduces its remaining fully-diluted economic interest in Topicus by a sale or transfer of its economic interest by one-half and again if CSI sells its entire remaining economic interest in Topicus.

All of the Topicus Coop Ordinary Units and Topicus Coop Preference Units held by the Joday Group and Ijssel B.V. (collectively, the “Topicus Coop Exchangeable Units”) are exchangeable, directly or indirectly, for

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Topicus Subordinate Voting Shares. All of the above rights of members of the Joday Group apply to any Topicus Subordinate Voting Shares issued on an exchange of Topicus Coop Exchangeable Units.

At any time after December 31, 2023, CSI has the right, at its option, to buy all of the Topicus Coop Units and shares of Topicus held by certain members of the Joday Group (excluding Joday) at a cash price per Topicus Coop Unit (or share of Topicus, as applicable) determined in accordance with the IRGA. After December 31, 2043, CSI has the same right to buy all of the Topicus Coop Units and shares of Topicus held by the remaining members of the Joday Group, including Joday.

In addition, if certain individuals affiliated with Joday are terminated from their employment with Topicus Coop or an affiliate thereof for urgent cause (as defined in the Dutch Civil Code), CSI has the right, at its option, to buy all of Topicus Coop Units held by such individuals at a cash price per Topicus Coop Unit determined in accordance with the IRGA.

The Company has continued to classify the above obligations of CSI under the terms of the IRGA as a liability. The main valuation driver in such calculation is the maintenance and other recurring revenue of Topicus. The valuation of CSI's obligations under the IRGA is also impacted by the change in the net tangible assets of Topicus (as defined under the IRGA). As the net tangible assets increase (which is typically the result of net profits in the applicable period), the valuation of CSI's obligations under the IRGA increases. Maintenance and recurring revenue of Topicus for the trailing twelve months on a pro-forma basis determined at the end of the current reporting period was used as the basis for valuing the interests at each redemption date. Any increase or decrease in the value of such liability is recorded as an expense or income in the consolidated statements of income (loss) for the period.

The liability recorded on the balance sheet at March 31, 2025 was $816 million.

Debentures

On October 1, 2014 and November 19, 2014, the Company issued unsecured subordinated debentures (the "Debentures") with a total principal value of C$96 million for total proceeds of C$91 million. On September 30, 2015, the Company issued an additional tranche of Debentures with a total principal value of C$186 million for total proceeds of C$214 million. On October 6, 2023, a total of C$213 million principal amount of Debentures were issued at a price of C$133.00 per C$100.00 principal amount of Debentures purchased representing proceeds to the Company of C$283 million which was used by the Company to pay down indebtedness under its existing credit facility. The Debentures were issued as an additional tranche of, and formed a single series with, the outstanding C$282 aggregate principal amount of Debentures.

The total principal value of debentures outstanding at March 31, 2025 was $345 million (C$495 million).

Guarantees

One of CSI's subsidiaries has entered into a $84 million (£65 million) term debt facility with a financial institution for which CSI has guaranteed the debt. The facility bears a fixed rate of interest. The term loan contains events of default that, if not remedied, allow the loan note holder to require repayment of the loan principal and interest. The loan is due in 2028.

Debt without recourse to CSI

Certain of CSI's subsidiaries have entered into term debt facilities and revolving credit facilities with various financial institutions. Except as noted above, CSI does not guarantee the debt of its subsidiaries, nor are there any cross-guarantees between subsidiaries. The credit facilities are collateralized by substantially all of the assets of the borrowing entity and its subsidiaries. The credit facilities typically bear interest at a rate calculated using an interest rate index plus a margin. The financing arrangements for each subsidiary typically contain certain restrictive covenants, which may include limitations or prohibitions on additional indebtedness, payment of cash

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dividends, redemption of capital, capital spending, making of acquisitions and sales of assets. In addition, certain financial covenants must be met by those subsidiaries that have outstanding debt.

In conjunction with the acquisition of Optimal Blue, the Company entered into a promissory note agreement (“Promissory Note”) with the seller, Intercontinental Exchange, Inc. for $500 million. The promissory note accrues interest at a rate of 7% per annum, is compounded annually and is payable in arrears. The first cash interest and principal payment under the Promissory Note is due on the day prior to the fifth anniversary and thereafter interest and principal payments will be due annually on the subsequent anniversaries of that date. The promissory note matures in 2063, subject to earlier optional prepayment.

Debt without recourse to CSI comprises the following ($ in millions):

	Topicus Revolving Credit Facility	Debt Facilities	Promissory Note	Total
Principal outstanding at March 31, 2025 (and equal to fair value)	$ 271	$ 1,294	$ 500	2,064
Deduct: Carrying value of transaction costs included in debt balance	(2)	(10)	-	(13)
Carrying value at March 31, 2025	268	1,284	500	2,052
Current portion	268	97	-	365
Non-current portion	-	1,187	500	1,687

Other commitments

Commitments include operating leases for office equipment and facilities, letters of credit and performance bonds issued on our behalf by financial institutions in connection with facility leases and contracts with public sector customers. Also, occasionally we structure some of our acquisitions with contingent consideration based on the future performance of the acquired business. The fair value of contingent consideration recorded in our statement of financial position was $188 million at March 31, 2025. On January 31, 2025, the Company purchased 8,300,029 shares in Asseco Poland S.A. (“Asseco”) representing approximately 9.99% of the issued shares in Asseco. The shares were acquired at a price of 85 PLN per share for total consideration of $174 million. Asseco offers comprehensive, proprietary IT solutions for all sectors of the economy. The Company has made an irrevocable election at the time of initial recognition to present subsequent changes in fair value in other comprehensive income (“FVOCI”). The Company designated the Asseco investment as equity securities at FVOCI because the investment in Asseco represents an investment that the Company intends to hold for the long term. During the three months ended March 31, 2025, the Company recorded a gain of $157 million based on the share price as at March 31, 2025 within other comprehensive income reduced by transaction costs of $2 million. As mentioned in the “Finance and other expense (income)” section above, the Company has entered into a binding agreement in respect of the acquisition of 12,318,863 treasury shares of Asseco, which is a derivative under IFRS Accounting Standards. The fair value of this derivative recorded in our statement of financial position was $6 million at March 31, 2025. Aside from the aforementioned, we do not have any other business arrangements, derivative financial instruments, or any equity interests in non-consolidated entities that would have a significant effect on our assets and liabilities as at March 31, 2025.

Contractual obligations at March 31, 2025 are summarized below.

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(in millions of dollars)

	Total	< 1 yr	1-5 yrs	> 5 yrs
Lease obligations	409	121	240	48
Holdbacks	361	216	145	-
Liability of CSI under the terms of the IRGA/TSS Members Agreement	816	419	397	-
Debentures	392	-	-	392
Term Loan	84	-	84	-
CSI revolving credit facility	-	-	-	-
Senior Notes	1,000	-	500	500
Topicus revolving credit facility without recourse to Constellation Software Inc.	271	271	-	-
Promissory note	500	-	7	493
Other debt facilities without recourse to Constellation Software Inc.	1,294	82	1,209	3
Total outstanding commitments	5,126	1,109	2,581	1,436

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 May 12, 2025. See note 8 to the Unaudited Condensed Consolidated Interim Financial Statements for the three month period ended March 31, 2025 for a discussion on the valuation methodology utilized.

Financial Instruments

The carrying values of cash, accounts receivable, accounts payable, accrued liabilities, dividends payable, the majority of acquisition holdbacks, and the CSI Facility, approximates fair value due to the short-term nature of these instruments. The carrying value of the debt without recourse to CSI approximate their fair values as the debt is subject to market interest rates. The carrying value of the IRGA liability and the term loan with recourse to CSI approximates fair value.

Financial assets and financial liabilities measured at fair value as at March 31, 2025 and December 31, 2024 in the Unaudited Condensed Consolidated Interim Financial Statements for the three month period ended March 31, 2025 are summarized below. The Company has no additional financial liabilities measured at fair value after initial recognition other than those recognized in connection with business combinations and the redeemable preferred securities.

	March 31, 2025				December 31, 2024
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Assets:
Equity securities	$ 329	$ -	$ -	$ 329	$ 27	$ -	$ -	$ 27
Derivatives	-	-	6	6	-	-	-	-
	329	-	6	335	27	-	-	27
Liabilities:
Contingent consideration	-	-	188	188	-	-	174	174
	-	-	188	188	-	-	174	174

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2 inputs are inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly (i.e. prices) or indirectly (i.e. derived from prices); and
• Level 3 inputs are inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs).

Foreign Currency Exposure

We operate internationally and have foreign currency risks related to our revenue, operating expenses, assets and liabilities denominated in currencies other than the U.S. dollar. Consequently, we believe movements in the foreign currencies in which we transact will impact future revenue and net income. The impact to organic revenue growth for the three months ended March 31, 2025 was approximately negative 2%. We cannot predict the effect of foreign exchange gains or losses in the future; however, if significant foreign exchange losses are

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experienced, they could have a material adverse effect on our business, revenues, results of operations, and financial condition. The Company enters into forward foreign exchange contracts from time to time with the objective of mitigating volatility in profit or loss in respect of financial liabilities. In entering into these forward exchange contracts, the Company is exposed to the credit risk of the counterparties to such contracts and the possibility that the counterparties will default on their payment obligations under these contracts. However, given that the counterparties are Schedule 1 banks or affiliates thereof, the Company believes these risks are not material. During the three months ended March 31, 2025, the Company did not purchase any contracts of this nature.

The following table provides an approximate breakdown of our revenue and expenses by currency, expressed as a percentage of total revenue and expenses, as applicable, for the three months ended March 31, 2025:

Three Months Ended March 31, 2025

Currencies	% of Revenue	% of Expenses
USD	53%	47%
EUR	19%	19%
GBP	8%	8%
CAD	5%	8%
AUD	4%	3%
BRL	2%	2%
CHF	1%	2%
SEK	1%	1%
Others	7%	9%
Total	100%	100%

Due to rounding, certain totals may not foot.

Off-Balance Sheet Arrangements

As a general practice, we have not entered into off-balance sheet financing arrangements. Except for insignificant and short-term operating leases and letters of credit, all of our liabilities and commitments are reflected as part of our statement of financial position.

Proposed Transactions

We seek potential acquisition targets on an ongoing basis and may complete several acquisitions in any given fiscal year.

Share Capital

As at May 12, 2025, there were 21,191,530 common shares outstanding.

Risks and Uncertainties

The Company's business is subject to a number of risk factors which are described in our most recently filed AIF. Additional risks and uncertainties not presently known to us or that we currently consider immaterial also may impair our business and operations and cause the price of the common shares to decline. If any of the noted risks actually occur, our business may be harmed and the financial condition and results of operations may suffer significantly. In that event, the trading price of the common shares could decline, and shareholders may lose all or part of their investment.

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Controls and Procedures

Disclosure controls and procedures:

Management is responsible for establishing and maintaining disclosure controls and procedures as defined under National Instrument 52-109. The President and Chief Financial Officer have designed or caused to be designed by those under their supervision, disclosure controls and procedures which provide reasonable assurance that material information regarding the Company is accumulated and communicated to the Company’s management, including its President and Chief Financial Officer in a timely manner.

Internal controls over financial reporting:

The President and Chief Financial Officer have designed or caused it to be designed under their supervision internal controls over financial reporting (“ICFR”) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. The President and Chief Financial Officer have been advised that the control framework the President and the Chief Financial Officer used to design the Company’s ICFR is recognized by the Committee of Sponsoring Organizations of the Treadway Commission.

The President and the Chief Financial Officer have evaluated, or caused to be evaluated by those under their supervision, whether or not there were changes to its ICFR during the period ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect the Company’s ICFR. No such changes were identified through their evaluation.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that its objectives are met. Due to inherent limitations in all such systems, no evaluations of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Accordingly, our disclosure controls and procedures and our internal controls over financial reporting are effective in providing reasonable, not absolute, assurance that the objectives of our control systems have been met.

Subsequent Events

On May 12, 2025 the Company declared a $1.00 per share dividend that is payable on July 11, 2025 to all common shareholders of record at close of business on June 20, 2025.

On February 4, 2025, the Company entered into a binding agreement in respect of the acquisition of 12,318,863 treasury shares of Asseco. These shares represent 14.84% of Asseco’s share capital and will be purchased at a price of PLN 85 per share. The completion of the acquisition of the treasury shares remains subject to obtaining relevant regulatory and antitrust approvals.

Subsequent to March 31, 2025, the Company completed or has open commitments to acquire a number of businesses for aggregate cash consideration of $342 million on closing plus total estimated deferred payments of $85 million for total consideration of $427 million. The business acquisitions operate in the asset management, media and communications, financial services, fleet, local government, international law enforcement, telecommunications, healthcare, retail management and distribution, enterprise resource planning, craftsmen, transport, utilities, production and visualization software, leisure, oil and gas, pharmacy, content management system and travel verticals and are all software companies similar to the existing business of the Company.