Constellation Software - Stocktrades Canada

Hi Dan,

Elephant in the room in the Canadian market seems to be Constellations fall from grace. Do you feel as though the bear case is still intact? I am holding shares but am also worried that a long term trend may be that companies choose to build a proprietary service in house to avoid paying subscription fees. I think I am seeing this in the mining world and wondering if you share similar concerns. I know the software is sticky, but with rising costs all around, I think perhaps ‘ mission critical’ software is on more people’s radar as a cost savings and moving towards having in-house developers make something for a company.

Also, T these valuations, do you feel like it would be beneficial for the company to buy back shares? It would seem like a good show of confidence here.

I look forward to the next quarter earnings, but also wish that the company was a bit more active on updates.

Thank you for your input. I enjoy the education content in this platform and on the TCI podcast.

Regards,

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Asked on January 20, 2026 5:42 pm

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Private answer

Hey there! I recently did a video on Constellation. It is a company that has been featured here since 2019 but is one I have started to cover publicly over the last few years. I'm going to drop the video as it does answer most of your questions.

https://www.youtube.com/watch?v=N-BOCG91ffo

As for the buybacks, no I do not feel it would be beneficial. Yes, the company's share price is cheap, but even at these valuations they generate higher returns from buying VMS companies.

The company is notoriously "quiet" which is very frustrating. It has worked historically, as the company has had very little issues to ever talk about, but now it's kind of in the spotlight for keeping things quiet. It will be interesting to see if they start putting out routine updates or something like this during times like this.

If you don't feel like watching the video, I'll sum it up in 3-4 sentences.

I'm still bullish. Companies at this point in time are not going to spend millions of dollars developing and internally maintaining a piece of software versus paying Constellation a 5-6 figure SaaS fee every year. The drop in SaaS valuations might lead to more acquisitions, and Constellations share price has been cut in half, which paints a good picture for forward returns. And finally, it is being lumped in with a lot of subscription companies like Adobe, Salesforce, which are not mission critical. The situation is much, much different. But, the video goes over all of this in depth. It's worth a watch.

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Posted by Dan Kent

Answered on January 21, 2026 7:34 am

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