Constellation Software Inc.

Good day and welcome to the Constellation Software conference call and webcast. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Mark Miller, President of Constellation Software. Please go ahead.

Thank you. Good morning and thank you all for joining our Q2 call. Before we get to questions, two things I wanted to put on the table up front. The first is AI. It is changing two things for us. Our customers are asking our software to do more for them while our businesses are finding new ways to build better products faster. We are seeing both. What we are not doing is running an AI program out of head office. Our business unit managers understand their verticals far better than we do and they are making those calls themselves at their own pace, funded out of their own P&Ls. Some of that work will pay for itself and some of it will not. And we will find out the same way we find out about everything else we fund, which is slowly. As many of our businesses have been adopting AI, we are seeing them use the tools to rapidly move through our customer-driven product roadmaps and augment our products with AI functionality. Let me be direct about what that means to you. We are not going to give you an AI target, an AI revenue line, or an AI timeline. If we start reporting a number like that, we will start managing to it. Our software is primarily mission critical. It is embedded in how a customer runs their businesses every day. AI is something we add to make that software more valuable. The second thing we've been working on is verticalization. We have been grouping our businesses and our prospects into coherent verticals where possible. The purpose is simple. We want to be the obvious permanent owner of a niche so that when a founder starts thinking about the next 20 years and selling their business, we are the first call. That kind of reputation takes years to build. It will not show up in this quarter's results or next year's. I would ask The constraint is not structure. It is having the right leader for each vertical and leaders of that caliber take a long time to develop. We are setting the pace accordingly. The two are connected. Depth in a vertical is what lets you tell the difference between an AI product that matters to a customer and one that merely demonstrates well. We would rather have that judgment sitting close to the customer and understanding their needs. So thank you very much and I'll turn it over for questions.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw the question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Thanos Moskopolos with BMO Capital Markets. Please go ahead.