Hello, and welcome to the annual meeting of shareholders of Constellation Software. Please note that today's meeting is being recorded. If you participate in today's meeting and disclose personal information, you will be deemed to consent to the recording, transfer, and use of same. If you disclose personal information of another person in today's meeting, you will be deemed to represent and warrant to Computershare and the corporation that you first obtained all required consent for the disclosure, recording, transfer, and use of such personal information from all appropriate persons before your disclosure. During the meeting, we'll have a question-and-answer session. You can submit questions or comments at any time by clicking on the Q&A icon. It is now my pleasure to turn today's meeting over to Mark Dennison, who will be acting as Chairman of the Annual General Meeting of Shareholders of Constellation Software. Mr. Dennison, the floor is yours. Thank you, and good morning. I'm Mark Dennison. I'm the General Counsel and Corporate Secretary for Constellation Software. Mark Leonard, Constellation's President, and John Billowits, Constellation's Chair of the Board, have asked me to act as Chairman of today's meeting. Jamal Baksh will act as Secretary of the meeting. I ask Shirley Tom, of Computershare, to act as scrutineer and compute the votes of any polls taken at the meeting. We are conducting today's meeting virtually via live webcast. Since the meeting is being held virtually, we want to outline a few logistical items regarding the conduct of the meeting. As indicated in our press release dated April 9th, 2025, shareholders of Topicus, shareholders of Lumine Group, and shareholders of the company have had the opportunity to submit questions in advance of today's meeting. We have received a large number of questions. On behalf of the shareholders, our panel of questioners has collated the questions received and organized them by theme. Following the formal part of this meeting, our panel will pose those questions to our senior managers during the Q&A session of the meeting. Additional questions can also be submitted by any meeting attendee using the instant messaging service of the virtual interface. Questions which are already addressed in the questions submitted in advance of the meeting or that are redundant or repetitive will not be answered. Any questions regarding procedural matters or directly related to the motions before the meeting may be addressed during the formal part of this meeting. When asking the question, please indicate your name, which entity you represent, if any, and if applicable, confirm if you are a registered shareholder or a duly appointed proxy holder. For each question we answer, we will summarize the question and read out loud the name of the person who asked such question, and if applicable, the entity such person represents. For the purposes of the meeting today, voting on all matters will be conducted by electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on each business item after the presentation of all business items. When you are asked to vote, you will receive a message on the virtual interface requesting you to register your votes. Before we commence, the polls will be open for two minutes. We will now proceed with the formal portion of today's meeting. To expedite the formal part of the meeting, I will move and second all of the motions. The Secretary of the meeting has filed with me proof of mailing of the meeting materials, including the notice of availability of proxy materials and formal proxy, and where applicable, the notice of meeting and management information circular. The consolidated financial statements of the company for the year ended December 31, 2024, and the auditor's report thereon have also been mailed to all shareholders of the company who have requested them. Copies of these materials are also available on the company's SEDAR Plus profile and on the company's website. We would be pleased to deal with any questions concerning the financial statements subsequent to the completion of the formal business of this meeting. The scrutineer has reported to me that we have at least two shareholders present by electronic means and holding or representing by proxy at least 15% of the votes entitled to be cast at this meeting. As such, I declare that a quorum is present for the conduct of business, and this meeting is properly constituted for the transaction of business. Voting today will be conducted by electronic ballot. The balloting will be open to registered holders and appointed proxy holders who have properly logged in with their patrol numbers or invite code after the presentation of all business items. The first item of business is the election of directors. There are nine directors to be elected at this meeting. The management information circular made available to shareholders contains information about the nine nominees. Those nominees are Jamal Baksh, John Billowits, Lawrence Cunningham, Claire Kennedy, Robert Kittle, Mark Leonard, Donna Parr, Andrew Castor, and Laurie Schultz. The meeting is open for nominations for the election of directors for the ensuing year or until their successors are elected or appointed. I will now nominate the directors and second the nominations. I nominate each of the persons whose name appears in the management information circular under the heading "Election of Directors" to be a director of the company until the close of the next annual meeting of shareholders or until their successors are appointed, and I also second the nominations. If there are no further nominations, I declare the nominations closed. I note that as described more fully in the management information circular, the company adopted a majority director election policy in May 2009. This policy enables shareholders to vote separately for each director nominee at meetings of shareholders where directors are to be elected. If a director nominee does not receive the support of a majority of the votes cast at a meeting of shareholders, that director will be expected to tender his or her resignation from the board following such meeting. The resignation will be effective upon acceptance by the board and will be disclosed via press release. For more information about our majority director election policy, please see page 21 of the management information circular. I will now move and second a resolution appointing the auditors for the current year and authorizing the directors to fix their remuneration. I move that KPMG LLP, Chartered Accountants are appointed auditors of the company to hold office until the close of the next annual meeting of shareholders or until their successors are appointed, at such remuneration as may be fixed by the directors and that the directors are authorized to fix such remuneration, and I also second the motion. Unless there are any questions, I will move to the next item of business. The next item of business is an advisory resolution to endorse the company's approach to executive compensation as further set out in the management information circular. As the vote is advisory only, it will not be binding on the company. However, the compensation, nominating, and human resources committee of the board will take into account the results when considering future executive compensation arrangements. I will now move and second the approval of the advisory resolution. I move that it be resolved on an advisory basis and not to diminish the role and responsibilities of the board of directors of the company, that the approach to executive compensation disclosed in the management information circular is accepted, and I also second the motion. Unless there are any questions, I will move on to the voting process. As previously mentioned, voting today will be conducted by electronic ballot. I will now take a moment to ask that the balloting be opened to registered holders and appointed proxy holders. The polls are now open, and at this point, all registered holders and appointed proxy holders who have properly logged in with their control numbers or invite code and who wish to vote will be able to see on the screen the election of directors, the appointment of the auditors, and the advisory resolution on executive compensation motions brought forth at this meeting. Please register your votes by accessing the voting page and selecting the for or withhold buttons next to the name of each proposed director and next to the resolution with respect to the appointment of KPMG as the company's auditors. Please select the for or against button next to the advisory resolution on executive compensation. The voting will be open for two minutes. Once the electronic balloting closes, the voting page will disappear, and your votes will automatically be submitted. The line will now be paused for a two-minute period. The full voting results will be published on Cedar Plus following the meeting, but I can report that based on the proxies received in advance of the meeting, all matters that were put to a vote today have passed. The formal items of business set out in the notice of meeting have now been dealt with. I move that the meeting be terminated, and I second the motion. I declare the resolution carried and the meeting terminated. The formal agenda for this meeting is now completed. We will now take a short break until 9:15 A.M. when the question-and-answer session will begin. Okay, it is now 9:15 A.M. Welcome to the question-and-answer session. I ask that all attendees who would like to ask a question use the instant messaging feature of the virtual interface to do so. When asking your question, please include your name, the entity you represent, if any, and if applicable, confirm if you are a registered shareholder or a duly appointed proxy holder. I'll now turn the meeting over to Larry Cunningham, who will be leading the question-and-answer session this morning. Thanks to Mark Dennison. Welcome, Constellation shareholders. We have another sizable crowd. So far, more than 400 people are signed in. Last year, we peaked out at about 1,000. Within that shareholder group, we have all of Constellation's directors, officers, and the managers you'll be hearing from during this Q&A. Before we dive into the Q&A, I'd like to introduce that panel. First, John Billowits, Chairman of the Board. Next, from head office, we have these officers: Mark Leonard, President; Bernard Anzarouth, Chief Investment Officer; Jamal Baksh, Chief Financial Officer. From the operating groups, we have all these leaders in alphabetical order: Jeff Bender from Harris; Damien McKay from Vela; Mark Miller from Volaris; David Nylund from Lumine; Dexter Salna from Perseus; Barry Symons from Jonas; and Robin van Poelje from Topicus. I'm also pleased to be joined by our two co-hosts, Will Pan of RBC Capital Markets and Howard Loom of Viera Capital. As background, Howard was an equity research analyst at Veritas, covering Constellation from 2016 until 2022 when he moved to his present position at Viera. The Canadian equity team at Viera has been a Constellation shareholder for more than a decade. Will has been with RBC Capital Markets for 15 years and a shareholder of Constellation for more than a decade. I joined the Constellation board in 2017 and became Vice Chairman of the Board in 2019, and I've been a shareholder throughout that time. Howard, Will, and I have been co-moderating this annual meeting Q&A since 2020, making this the sixth time we have worked together. We received many questions from a diverse group of shareholders. We've edited, trimmed, and condensed them to avoid asking substantially similar questions posed using a variety of different styles, premises, and so on. If you hear a topic you submitted on, but it is not exactly how you phrased it, that is why. We've designed the composites or chosen the duplicate submissions with an eye toward generating the most useful information. This is also designed to enable us to ask a greater portion of the submissions. Because of the sheer number of questions received, in order to ask as many as possible, we may also skip over some duplicates that were answered last year. We usually end up asking almost all questions, but we make no promises or guarantees. We are prepared to ask virtually all questions submitted, except for those that would probe into proprietary matters whose disclosure would hurt the company and its shareholders and help its rivals or copycats rather than the company. As in previous years, as Mark Dennison noted, you can use the chat function to submit questions during this meeting, and we will periodically consult the chat to synthesize questions posed there under the same ground rules. Whether you submitted them earlier or at the meeting, we do not think it is going to be possible to pose all the questions. If yours is not asked, we apologize, but please know that you can use our website to pose questions throughout the year. We publish answers periodically. We have not shared the questions with the panelists, except in a few cases where that called for computational or involved personnel matters. We collated the questions by subject and divvied up the topics between the three of us, and we'll take turns posing them as we've done previously. Here's the outline of the topics we plan to cover. First, M&A strategy led by Will. Second, Howard will take up large M&A investments. I'll pose a series of questions on operations. In round two, Will will kick it off with technological innovation, including questions about AI. Then Howard will pose a series of questions on governance, and I'll wrap it up with a collection of questions that might be called potpourri or unassigned in any event. Welcome, everyone, and I'd like to now begin the questioning with Will. Will, thank you very much. Hi, thanks, Larry. Thanks for having me ask questions again this year. It's an honor. I'm going to talk about this section is about M&A strategy. Just to introduce this section, we're going to delve into the company's M&A strategy. We will ask about your strategy to grow by acquisition, the competitive landscape, and the quality of the businesses that you're acquiring, among other things. To kick it off very broadly to Mark Leonard to start, CSI has historically been able to deploy the majority of its free cash flow on acquisitions that meet its hurdle rates. As CSI and its free cash flow continue to grow, does the company continue to have a long runway to be able to do this moving forward? If so, how long a runway seems reasonable/predictable? Historically, we haven't done a great job of predicting how long the runway is, and use that as context. Whatever I say probably isn't based on great experience forecasting. When we look at the marketplace, I think we do a reasonably good job of covering and knowing about the acquisitions that happen in our space. The amount that we succeed in acquiring does not feel uncomfortable to me. That doesn't mean that we're always the acquirer of choice. We lose far more than we win, and we end up having to follow literally tens of thousands of acquisition prospects. We're adding to that base every year of prospects that we follow, but the quality of the additions in our funnel is nowhere near as good as it used to be, say, 10 years ago. Ten years ago, it would have been vertical market software, tightly defined. It would have been in geographies that we knew and loved. Nowadays, it tends to be much more far-flung geographies, and it's less tightly defined. We will look at horizontals. We will look at hybrid software/hardware companies. We'll look at hybrid software data companies. You'll see that we're experiencing what investors call style drift, and that's frequently associated with less good performance. To date, we haven't seen that less good performance. We're still hitting the hurdle rates that we set as we attempt to deploy our capital. It's useful to put our capital deployment history in context. The last four years, we've deployed over $1 billion of equity in each of those years at what we believe are high rates of return. It certainly seems so when we deployed it, and we do track it every quarter thereafter, and there's no sign that it's deteriorating any worse than any previous vintages that we've seen. Just think about that. The average private equity firm isn't deploying $1 billion of equity each year at high rates of return. It's an extraordinary achievement. Implicitly, what shareholders are asking as they ask if we can deploy our capital is, can we double that? Can we deploy $2 billion a year at high rates of return? I think the answer is, at some point, we're going to run out of runway, and we're going to have to find other places to deploy our capital. We have undertaken with our shareholders that we will do that. We won't pay out big dividends, and we won't buy back shares, certainly not at high prices. We'll look elsewhere. Our style drift is going to increase over time, and it's something we accept, and we're exploring all the time. It may not have nailed the answer, but that's what we're doing. Yeah, I think that will dovetail with a lot of questions that we'll get to over the course of this conversation and preempt many of them, but we'll dig into them deeper. One of the things that you talked about was deployment over the last four years. The next question is, an investor says they've noticed, and I haven't verified, that the number of small and medium-sized acquisitions has flatlined over the past three years, despite additions to your business development staff and M&A headcount. They also say the same is true of CSI's copycats. They don't think this relates to competition. Why do you think this may be the case, and do you see ways to remedy that? That's open to everybody, but whoever wants to. I think we should get Bernard comment on that. Do you have the numbers in front of you, Bernard, on the small acquisitions? I do not. Why do not you dig? I fill the silence. Those have been enormously profitable acquisitions for us. They tend to generate higher rates of return. They have greater dispersion than our big acquisition IRRs. We want to keep doing them. They are expensive. If you actually look at the cost of deploying small amounts of capital in many situations, it is non-trivial and something that we monitor and are concerned about because it will eventually hit diminishing returns. If you model up the cost of private equity when it deploys capital, it spends on the order of 20%-30% of the capital deployed on deploying that capital. When you factor in the carry and the fees over the period of time associated with the ownership, it is an incredibly painful toll that is taken on investor returns. With us, because we're buying and holding forever, we get to spread that cost of deploying the capital a lot further, and we're not spending anywhere near that amount to deploy a dollar's worth of capital. Yes, the rate of growth of the small investments is slower than I'd like to see. I think there is a siren song of larger transactions that tends to drag a lot of our capital deployers off into middle-sized and large-sized acquisitions. I fundamentally feel that it's a place where we add enormous value. If we can bang out somewhere between $500 million and $800 million a year of small acquisitions, that would be an enormously good thing to keep on doing. It would just be a question of sort of what we pull in in terms of large acquisitions that will make the difference between deploying all of our capital or just a portion. I'm curious, if you allocate the cost to the smaller deals of all the activity and weigh that against the capital deployed, does it make the returns on the small deals more equal to the rate of return on the large deals? Do you find that the large deals are still lower return then, even after you factor in the higher cost for the small ones? Very, very difficult thing to do. I've modeled it and looked at nurturing cost per acquisition, and then transaction cost per acquisition. You spend a huge chunk of the money that you spend on a pursuit in the last sort of six months of the process. If you are engaged in nurturing for, and we're looking at nurturing of many, many years, sometimes well over a decade, the Asseco relationship, for instance, was over a decade before it became a transaction, an investment. Yeah, nurturing costs add up. Your question, I think, is a very good one. Do we have accurate numbers? No. Do we have a sense that we're still making higher rates of return on the small transactions or acquisitions? I think the answer is yes. Great. Bernie, did you find that information on the small deals? Yeah. I mean, we're continuing to execute on the small deals, and it varies quarter to quarter. You can have some good quarters and some bad quarters, but generally, we've been at a steady state. We usually use CapIQ as a good proxy for the number of transactions that occur on an annual basis, looking specifically for VMS- type of transactions. That has remained pretty steady over the last three years. It hasn't increased, hasn't decreased. We're getting a share of that. CapIQ doesn't cover all of the transactions, but it's the closest proxy that we've seen. It's not like we've seen the market increasing dramatically. It's just been pretty steady. I've always expected the market to increase into the next decade just because of the baby boomers retiring and not finding successors and trying to sell their businesses. I haven't seen so far, we haven't seen an increase in the number of transactions. We still continue to maintain our focus on the small and medium-sized businesses, and the large ones come in from time to time. Great. Bernard, do you have one question that's sort of generally about how the businesses you're acquiring today look versus the ones you were buying five years ago? Do you have any thoughts on that? Not really. we do see more horizontal businesses, and I think we do execute on more horizontal businesses. We are still very opportunistic, and whatever is out there that is available for an acquisition, we will look at it seriously. I think maybe you will see a little more of that, as Mark mentioned before. We are just looking in other places as well. Okay. A more specific question on that, a questioner wonders, is the underlying quality of the businesses you're acquiring today lower than those you acquired 5- 10 years ago, even if you may be getting the same or similar IRRs? In other words, do the businesses you're acquiring today require more, for example, shuffling or improving than those bought in the past? I wouldn't say so. I mean, on the fringe, you can see a fraction of the businesses always need a little bit more help than others, but I think we've been pretty consistent overall. I mean, some places you say, "Okay, maybe that business wasn't as good," but when you get it down to an operating level that we're comfortable with, they tend to last quite a while. These businesses are quite resilient. Even some that are poorer quality— meaning they're not going to continue to grow by 5% every year, maybe they'll grow 1%- 2%, or even stay at zero, they'll still spit out the cash that we're looking for. From that point of view, that's what we're looking for. We're not looking for rocket ships that are going to the moon. We're looking for steady businesses, average businesses that bump along, that we do the best that we can for our customers, and the employees stick around for a long, long time, and they just produce cash. A couple of questions about the current environment, including one that's coming in live about capital deployment. I guess the one that's live is, why was Q1's capital deployment so much lower, particularly excluding its spinouts? Should Constellation not be a beneficiary of macro volatility with M&A somewhat countercyclical? This dovetails with a question about the landscape for private equity somewhat softening with more challenging fundraising, forced redemptions, etc. They're wondering whether you've seen any impact on competition for potential acquisitions in the near term. Yeah, certainly the competition has been increasing. It has been increasing for the last several years, both from copycats, from strategics, and strictly private equity firms with their roll-ups. I do not see Q1 as being any different from any other quarter, as it is just a question of timing for some of these acquisitions. I took a poll amongst the operating groups as well. I checked with the guys to see what was going on because I thought, yes, the volatility is a little odd and whether that volume should be increasing or decreasing. Everybody came back with "it is transaction- specifics". Some of them are just being pushed off for whatever reason, but there is no major trend across the board because of what is going on in the macro world. I cannot really point to it. Nobody can. It's just one of those things where it's going to differ from one quarter to the next, and it's just not predictable. Great. Howard, a quick interjection. I think if you parse our investments into two groups— the large and the small, when times are good, I think we're more likely to see generational sales of businesses that are small, and the owners will prepare them for sale. It will be a one-, two-, or three-year process, and then there will be an opportunity for us to buy those businesses. There is an optimization that happens. When times are bad, they're much less likely to look for the one-time sale of the business they've spent their life building. I think there's the opposite effect of what the questioner was proposing. Where we do see advantage in difficult times is buying bigger businesses, so things that are carve-outs of larger businesses that are either suffering in tough times or have made decisions to go in a different strategic direction or have asked their CEO, and the acquisition he loved, which has not worked out, gets sold. Those tend to be trying situations, one where if we are successful, it is because we have the opportunity to add value and are not just buying something that is big and beautiful and has performed great. That does require extra effort and is a distraction, but the rewards can be large, and the capital deployments can be large. Those bigger investments are sort of the ones that one would hope for in these difficult times. As to private equity over-leverage situations, there are a whole host of them. We've seen a number of them restructured, and hence they've gone away. That requires a certain leniency on behalf of the lenders. Sometimes, particularly if they're non-bank lenders, they are more lenient than I would be in their shoes. They used to call this extend and pretend, but I'm sure there's a much more polite term these days. We haven't seen the over-leveraged PE deals come our way. As long as the PEs are still in control of the situation, they'll keep on going as long as the lenders let them: It requires a lender to truly step in and either start a process or take control. That is relatively infrequent. You can see it a little bit in the debt numbers that are coming out. The CCC-rated debt instruments are popping up as a percentage, and we monitor that and try to figure out the obscure names in which software companies they relate to. Interesting. Great. Thanks for all that. I have a number of questions now for Robin and others, but Robin to start. Robin, how are you seeing the competitive landscape in M&A in Europe, and how does it compare to five years ago? Yeah. I think what we have been seeing in North America, we see in Europe as well. There are copycats coming up, and people try to see what we do. They might have different styles, focus on different segments of the market. Yeah, when I started off in 2006, competition was less than it is today. Does anybody else who's active in Europe have any thoughts on this? This was addressed to more than just Robin. Maybe Jeff. Yeah. I think to Bernie's point and to Robin's point, I think when I say it's more competitive now, it feels more competitive now, but we're such a different company now, and we're in so many different geographies now; I'm not sure it's necessarily a fair assessment. I think it's always been competitive. We've always done really well in certain parts of the market, whether it's the small owner-manager who's looking to monetize their life's work and create a legacy for their customers, their product, and their employees. We've always done really well there. I think to Mark's point, we've always done well being a great home for unloved large assets. I don't think any of that's changed, and I'm not sure the competition for those is a ton different. I think we try and play, I think, in— I'm not sure if it's this style Jeff and Mark talked about—, but I think we're trying to play in more areas. I think when we move into different areas, we see different competition. Maybe that feels like a bit more competition. When I look at what Harris is doing and how I assess our success, losing to competition or not being able to compete is not high on the list of the things that are causing us to be successful or to not be successful. Great. Robin, you have a live question, which is, did anything change at Topicus recently, or has this just been the ebb and flow of M&A? They're amazed that you've deployed over EUR 700 million year to date. Yeah. I t's just last year was one of the other operating groups, and this year it's us. Like Mark said, one of those larger transactions we've been working on for a longer period of time. I think they just came together. We tried to do our stream of the typical transactions we do, and we had two larger transactions we've been working on for a longer period of time, and they then worked out. That goes a little bit like, yeah, some ups and downs through time. I think you should not judge us on one year. You should judge us through time. If I then take a look at our stats, we have been gradually improving, and we had a nice start of the year. Another question came in for you, Robin, which is that TSS has been hiring business development people in the U.S. as of a few months ago and in January completed a deal in Indonesia, apparently. Does that speak to a lack of opportunities in Europe at your desired IRRs? I would see it more as people, let's go back in time. We started off in the Netherlands, and then when we joined Constellation, we slowly went to neighboring countries, and then we went a little further in Europe. Like that, it evolved. We're building out our business development teams, and we hire people with certain focus on certain areas. One of them is that we're exploring a bit also outside Europe. Over time, it might go a little up, but our focus is still predominantly on Europe. Okay. The last one's this set for you, which is, how should we perceive the increase in non-core VMS acquisitions in recent months at TSS? They characterize MoneyView and Doolist and Hockmeister as more like information services or data providers or consultants, which is a little bit to Mark Leonard's earlier point about going more hybrid or horizontal. Do you have a take on whether those are fairly characterized and how investors in Topicus should think about it? Some transactions are pure FEMS, but a little bit lower recurring. Other ones are very highly recurring, very attractive, and very close to home and where we're active. For example, the Topicus operating group— they're taking a strong look at data propositions. We follow that. We track it like Mark said before. If we think it fits, we're willing to do it. Then we track it, and then we follow it. If we think we're heading in the right direction, we might consider doing more of them if we like what we see and if we meet our hurdle rates. Also here, a few might have stumbled together in this quarter, but we might have a lower quarter next time. What we're exploring, I think it reconfirms what Mark earlier said. Great. Thanks for all that, Robin. The next question is for all operating group managers, and it's about whether you've made any acquisitions that broaden your focus from core VMS into adjacencies like services or payments. Since we've already covered this at the beginning with markets, it's possible that everybody has, and it might be more interesting to hear from those who may not have. Is there an operating group manager who feels like they really haven't broadened beyond VMS? I suppose everybody's done it. Maybe an experience with doing that. Maybe Barry Symons, Jonas, and Cora, do you have any thoughts on maybe some of the things that you've perhaps done in adjacencies to core VMS software? I would say the biggest thing we've been doing outside of core VMS is on the payment side of things. I would say we're one of the larger payment processors in Constellation. We believe, because of the nature of a lot of the business we own, there's a lot of payments opportunities in the businesses. Our hospitality businesses, our fitness businesses— that type of stuff. Yeah, we're definitely focused on payments. We've done a couple of acquisitions in the space. We're looking at other ones, and it's something that I think can add tremendous value. What we see from our competitors in this space is a lot of coupling of payments and software. If we want to remain competitive and be leaders in our field, we'd have to be better on the payments side of things. We'll keep dabbling in that space and hopefully get better quarter after quarter. Great. This quarter, we profiled one of Barry's companies that is rapid growth. We profiled for the directors of Grower every quarter. And that particular one had very high payments contribution, and it was a great example, I think, for the rest of the operating groups and business units that review our quarterly information and was a wonderful example of sharing best practices. Great. There's an M&A question for Lumine that came in live. A common theme amongst the operating groups is competition for copycats and PE. Why is this seemingly less applicable in your vertical, and how confident do you feel in your 5- to 10-year investment runway compared to history? In terms of copycats? W e haven't seen yet too many or any real significant communications and media vertical market software consolidators. I think it's partially because of how specialized the space is. The barriers to entry from a domain knowledge perspective are pretty high. Therefore, we really don't yet see any specialized copycats. We seem to be more opportunistic across many verticals and geographies. It doesn't mean it won't change in the future. We just don't see it yet. David, I've got a question for you. We've obviously come across a bunch of PEs who have strayed into that space. They've often done fairly sizable transactions. They may not have had, well, they usually have not had the same success that you have. Do you foresee being able to shake loose from private equity any of the media and telecom assets that are tied up in that space? There's a lot of aged investments that we've seen over many years have come to market many times. It's just, it's the trigger point to get those assets really seriously on the market and at our hurdle rates that we can afford to buy them. They're sitting there, and there's a lot of them, particularly in media. We've seen a lot in media, the aged and problematic investments. We would expect they should transact. Predicting when is a difficult question, but I think there's a reasonably high volume of them in our vertical that we should be paying attention to. Great. This one's to Mark Leonard. As an outside investor, how can I best judge the quality of the acquisitions you're making? I think you're in a tough spot. If we're acquiring over 100 companies a year, you're not going to be able to drill down into how we're doing with them. The best you can do is sort of aggregate analysis. Look at the incremental recurring revenues each year and the incremental capital deployed and try and run those sorts of macro-level calculations. It is a very difficult one. I think it comes down to trust. We do sort of provide you with a sense of what our hurdle rates are and how we're doing against them. If you believe us, that does give you some insight, but it's not like having a set of audited numbers on each one of our acquisitions. There is a cute thing I came across, which is in some of the European jurisdictions where they are forced to file financials, you can drill down and look at the financial performance of companies after they are acquired. You can get a handle on sort of how we do with those companies and to some extent how our competitors do with those businesses. That is an analysis you can do, but it tends to be time-lagged. The actual filings happen a year and a bit after the performance, etc. It is not a leading indicator. It is a fairly significant lagging indicator. Great. You may have anticipated this earlier, but the question asks, what would you prefer, lowering your hurdle rate or deploying less capital? My tweak to this would be, you said earlier you do not want to deploy less capital. How do you feel about the hurdle rates where they stand right now? We experimented with dropping the hurdle rate for both large and medium-sized transactions. We discovered when we did it for the medium-sized transactions, it did not result in significantly more capital being deployed, but it did result in lower returns. That is a useful experiment, but not one I anticipate redoing in the short term. Vis-à-vis the larger ones, it has obviously made us more competitive and allowed us to deploy significant chunks of capital. As you point out, the cost of deploying those large chunks is lower than the cost of deploying small amounts of capital on small acquisitions. It is something we will continue to do, and I think we will try and be as creative and contrarian in those large capital deployments as we can. Now, as the capital piles up, or if the capital piles up, that will be the true test, right? We will try some things, and we'll probably fail at some things. The rates of return on the failures obviously will not be good. Hopefully, we'll learn, and we'll either get better or we'll stop doing that particular flavor of capital deployment, and we'll move on to another flavor of capital deployment. We have some ideas. It doesn't mean they will be great. Everyone and his mother's looking for places to invest billions at high rates of return. If you happen to find one, let me know. I think that's a call to everybody. Do you have any further updates on these efforts to develop capital allocation skills in areas beyond VMS? Would I be willing to tell other people where to go find high rates of return on billions of dollars? No, the answer is no. All right. I think that's a fitting close to my section here. I'm going to turn it over to Howard, I believe, for large M&A. Thanks a lot, Will. Same as well. It's a pleasure asking these questions and getting to learn from the panel. On the large M&A segment, it's going to focus on CSI's bigger acquisitions. We got a lot of questions on Asseco and Alterra. Shareholders ask about valuation, integration strategies, and the impact these acquisitions have on the overall business. A common thread that they're all picking at is how these long-term investments, these large-scale investments, align with Constellation in terms of its objectives and financial performance. Firstly, I'll direct this first set of questions to Robin because we've got a lot of questions on Asseco. Just to set this groundwork, first on the accounting and valuation, this questioner asks, how should we look at the valuation of Topicus now that you guys bought a big stake in Asseco? This will be a big portion of net income but does not flow into cash flow from operations or free cash flow unless dividends are received. How do you think about that? You will not see it consolidated because we are not going to consolidate it. Currently, we are trying to see how it all fits because we bought one part of Asseco, but the other part still needs to get clearance. We will most likely have an equity pickup in our books. Just from the perspective, we see this as a long-term investment, a company we like and love to partner with for the long term. We have no other approach than we have to other acquisitions we have. Clearly, we do not own a majority. That is not something we do each time. The company has been built many, many years ago. I think the founder, Adam, did extremely well in a different area of Europe and built out the company. He calls it a federation and has a lot of similarities with our decentralized model. There are also differences, and we can share learnings. It's one of those examples like I mentioned before. We work long, long, but we don't have a different approach to our horizon and finally the returns we want to make. I know in the first quarter, you had to mark to market the investment because that's how the accounting is. But do you view that gain in the value of the investment as part of the return, or is it more the underlying net income? We didn't sell it. It's on paper. It's not cash. So that's how I look at it. Makes sense. Yeah. We had some questions about that too. There's another question about this. When you acquire a private VMS business, you own it in perpetuity. Do you find it the same way when you're acquiring 25% of a public-listed company, especially given I think there's a cap as part of the agreement that you wouldn't exceed 28%? How do you think about this versus a regular M&A? Yeah. Like I said before, it's not different than any other. We see it as a long-term investment. Let's round it to this 25%. It will be our largest transaction ever. It's big despite its 25%. Important is that, with our partner and the business they have and the area they're in, they're strong in different areas than we are. I think it can develop into a mutually beneficial relationship. Again, we need to wait for clearance, but it's a big investment for us. Fingers crossed on that. It seems kind of similar to when you first thought Topicus is the operating group. There is a lot of learnings that you could use from Topicus. Maybe one way to look at it, Asseco, is that you can also learn from them. They can learn from you. You better acquire it from both sides. We can learn from two sides and also the transaction itself. When we did the spin-out in 2021, it was the first time we did it. This is a different concept as well, but in the space we like. That is what we like to do. So far, it worked out. We have to wait here for clearance. Maybe opening up to the other operating group managers, this questioner asks if any of the other OGMs make these kinds of investments already. Any considerations of doing similar Assecos where maybe you own a large minority stake, but there is a certain cap? Is that something that you have done already or potentially appeals to you? Maybe I will start with Chad because he has done some big acquisitions. We have not, Howard, done what Robin and his team have done yet. Although, watching Robin and team as how they did it, I think we would also be willing to do that because we're still earning the returns that we're looking for. I think if we had the opportunity to invest a large amount of capital in a great business, to Robin's point, over the long term, we are absolutely willing to do that irrespective of whether it's 100% equity ownership or not. I think we would be more than willing to follow along and do the same thing. Anyone else want to comment? All right. All right. There is another question just to Robin about the other large acquisition in Q1 of Sipal, I believe. Given that the Sipal acquisition has been part of your business, questions have also been raised in the Belgian parliament concerning this acquisition. The questioner just wants to get an update on the current status, given the delays. We are currently going through the FDI approval process. There are questions asked, we provide information, and there is a discussion. It is the people of TSS Public who take care of it. Of course, I follow it. We are going through that now. We still expect that one day, I do not know exactly when, but that it might take a little bit longer than expected, and we are waiting for a final clearance. The business itself resembles the business we have in municipalities, local government in the Netherlands, and there is one that is in Belgium. Belgium is not the Netherlands, although it is a neighboring country. From that perspective, we know the business pretty well. The Belgian management is deep in the vertical. It is an acquisition that fits well. We would love to take care of that business for the long term in the interest of clients and the country. Good luck with that. We'll choose this one to mark, a more general question. This questioner asks, in the 2021 presence letter, you mentioned that a majority of large deals were marketed by fewer than a dozen brokers, and that CSI would focus on working with these brokers. It's been four years since then. Can you give us an update on these endeavors? Yeah. We track our broker relationships every quarter. We look at how we're doing with them and what we're seeing from them. I think we're much happier with how we're doing now versus five years ago, and think that they understand us better than they ever have. Very pleased with sort of where we've come to. Do not see any dramatic shifts going forward, but we're in a good place. The deals are still concentrated by these large brokers. Should folks still be unknowing them, or are there other kinds of avenues you're exploring to find large deals? are large brokers, large deals, and there are small brokers, small deals. We work the whole gamut. For the large brokers and the large deals, we do have a focus group who stay on top of that and report it and manages them as you would expect for any sales activity, w e are selling money. The next questions here are about Alterra. It is directed to Jeff. This person asks that given that Alterra has a relatively smaller market share, is there a tipping point where attrition starts to accelerate because a lot of health providers want to be on a more interoperable program with greater R&D investments? How can Harris afford to invest the R&D required to keep pace with its competitors that have a larger maintenance base? More generally, does management believe Alterra can return to positive revenue, organic growth? What learnings have they taken from the acquisition so far? All right. There are a few questions in there. I think this year for sure, Alterra will have negative organic growth due to attrition that sort of was known at the time of the acquisition. We have a pretty detailed schedule of customers who have already made a decision, and they are in the process of moving to a different solution. I think we have good visibility as to what is happening there. Alterra is a big business. There are a lot of customers who had made previous decisions to move to a different solution. I think the strain on or the downward pressure on organic growth is significant. I think it is significant in Alterra as a business unit. It also has a large impact on Harris' overall results in terms of Harris' overall organic growth as well, reducing it substantially. I think from an R&D investment perspective, we still spend a lot of money on R&D within Alterra. I think the key, we talked about it actually on the board call a little bit yesterday. Marcus and team, their focus now is on, I think, I apologize. Got an Amber alert. Their focus is on, I think, being relevant to a large part of the existing Alterra base, which I think they've done a good job of continuing to modernize the solutions. I think in Alterra's case, it was changing the expectation and the quality of the delivery of the Alterra solution. I think Marcus and team have been doing a fantastic job, I think, realigning that and redefining what that is. The key to Alterra's long-term ability to grow organically or return to organic growth as a company will be finding those parts of the market where we can be successful and offer a differentiated solution that provides great value to the customers where we can capture a portion of that value. That will not be competing head-to-head with Epic or with Oracle, the former Cerner solution. We are in the process of, we have lots of ideas. We've got toes in all kinds of waters. We're doing all kinds of different things with existing customers and with new customers. I don't really see it as a, we can't spend the R&D to be competitive. I see it as more where within the market do we want to spend our R&D dollars to actually create an enduring business. I would see it that way. Still very happy with the investment. Again, lots of learnings. L arge acquisitions with over 5,000 employees around the world require carefull integration. Culture change and implementing best practices has taken us a lot longer, I think, maybe than we thought. There is nothing wrong with the best practices. They still work. It is just a question of how do you get them going at scale in these very, very large organizations. I think, Mark, I was at a presentation with Marcus actually last week, and he was sharing some stories actually with the Perseus Group. One of the learnings that he had also was part of our solution or part of our integration strategy with Alterra was to take some existing Harris leaders who had very good experience in different domains. Let's take R&D as an example because that was the question. We move over a very successful R&D leader. She's done a great job, but I think understanding that her experience set is in dealing with employee populations or group sizes, in this case of R&D of 50-100 people. Now she's dealing with 1,000 people spread across the world. It's just a different way of going about it. Again, she's done a great job learning and adapting. These are things that I think we've learned that if you asked us to when we first went in, were we thinking at that level? I think the answer was no, we weren't thinking at that level. Now we understand and would apply those practices differently as we move forward with the next acquisition. It seems like it's a better strategy than going head-on-head with some of Epic and others. Thanks for the answer. This one, next, moving to David. This one is about the acquisition of Wide Orbit. Two years after, can you give some comments about what has exceeded your expectations and what has fell short so far? Also, can you discuss the growth potential is in the ad tech space, both organic and inorganic opportunities? The investment's gone very well. The business has continued to grow organically. We have continued to consolidate our position with those major customers. We have had a number of contracts come up for renewal, the five- to seven-year contracts. We have been lucky enough to retain all the customers and with price increases in many cases, a sophisticated negotiation, of course, respectful negotiation. The business has continued to innovate so that it can be perpetually relevant to those customers. Obviously, expanding beyond those customers into digital-only customers has been a key focus. That is where we see the growth, both digital with the existing base as they experiment and themselves need to remain perpetually relevant. They need to be in digital. Those digital-only platforms like Amazon, for example, is a real space where high-volume content, high-value content like in Thursday Night Football, for example, so sports in particular, command really good ad spend. In those situations, Wide Orbit has a very sophisticated platform that can apply with that large amount of ad spend. As digital grows within the base and as we approach those high-value digital-only platforms, I think that's really where Wide Orbit's future will be strong, with sustained organic growth over the next 5-10 years. It seems like a lot of the content buyers are there. I know before when Wide Orbit was first bought, they had kind of a marketplace feature and kind of viewed it maybe as a free option. D oes the digital space kind of blend in with this marketplace? How is that doing so far? The market has slowed down bit on the marketplace product because, as anybody that knows about marketplaces, you need virtually everybody on board for it to be sustainable and profitable. The industry is not quite ready for that yet. We have the tech stack, and to the extent that becomes real in terms of large-scale adoption, obviously, we'll be there. There are lots of other areas for growth beyond that that we've accelerated as a result. Thanks, David. The next set of questions are more general about large M&A. First, maybe start with Bernie in this question. The questioner asks, if you deploy a deliberate strategy to focus on large acquisitions based on trends you see? I know earlier there was some discussion about when times are good, these kind of acquisitions pop up. When times are bad, maybe larger ones pop up. Are large acquisitions more opportunistic or random in timing based on you r experience? I think Mark described earlier that we've made a real push in communicating with the brokers of the large transactions, the investment bankers. We have been included in many of those transactions and auctions. It is very difficult for us to compete with private equity for some of the large ones. Just generally, it's a difficult market out there for us. Some of the prices have really gone up dramatically. By the same token, there are some auctions where they just do not get the price that they want, and they just go sideways, or they do not transact, and they wait a year or two years. We are always there ready to pick up whatever is available at the large end. You can call it opportunistic. You can call it a focus. We are focused on it. When they do come up and it's something that looks like an acquisition that we can be competitive in, we put a lot of effort into it. Sometimes it works, and sometimes it doesn't. It is very hard to predict what's going to happen. Yeah, there is a focus on it. It's like there's a focus on small and medium as well. You have to have the right people interacting with the bankers to get this right. I think we've got the right people in the right places to do it. Maybe in that same vein, how does the coverage ratio look like? And how is Farley Noble's large acquisition group team? It seems like its coverage ratio improved. Has the team grown at all? Again, the team hasn't grown, but the coverage is really good. Do not forget, we're not looking to increase people within headquarters. It is the folks in the operating groups that are selected to deal with the very large transactions. Those folks work in conjunction with Farley to be in touch with the investment bankers and looking at the larger transactions. Our coverage is really good, I have to say, way better than it was five years ago, largely due to a Farley's effort in contacting the bankers. Keep in mind, Halle, 70-80% of these auctions never close. They literally spin everything up, have a data room, lots of action, visits to lawyers' offices with groups of managers and groups of investors, catered lunches, private flights, and nothing happens. You have to pick your spots. Going back to that 20%-30% of the deal, is the cost a comment that you put earlier? It makes a lot of sense given those private flights. There is another question here about the spin-offs. It seemed like, based on last year's comments, the spin-offs would only happen to fund a large acquisition. Has there been any change of thinking? This questioner asks since then. This person talked about cultural reasons for spin-off. Any thoughts, o ris it been pretty similar to comments made last year? Spin-offs are not an objective on their own. We view them as a tool to help us make acquisitions that we could not otherwise make. We do not just want to swap shares. We want to be able to invest capital as well. We will take a portfolio of our businesses in a particular vertical or geography along with some cash and combine it with another entity, whether it be vertical or geographic— to create something of a size that could create a spin-off. By its very nature, the constraints that we place upon these ideas means that they will be infrequent. They have the potential to create either geographical concentrations of capability or industry concentrations of capability that could evolve into quite different entities that are more strategically driven, that are more synergies-driven, that are more financially driven than Constellation is. I view it as both a tool to do large acquisitions and a way to deliberately evolve our model into something different. I'm near the end of this section, and now it's safe to find one from the audience. This person asks, the largest single deal size that CSI will be willing to do, plus the debt taken, if the right investment opportunity came. What is the largest single deal that you would tolerate? Maybe I'll ask Mark and then see if anybody else wants to chime in. We analyzedthis a couple of years ago. We talked about the concept of bet sizing and the Kelly criterion and how it relates to what we do. We talked exactly about how big we would go and pointed to two or three large public companies that we would be willing to ingest if they were at the right kind of prices. A) we've thought it through. B) I think we're very sensible about how we've thought it through. we're not about to tell you. If we can model it ourselves or if you cut a gap in Excel. That is it for this section for me. Thanks for answering. I will turn it now over to Larry for questions on operations. Thank you very much, Will. Operations, we've defined fairly broadly and loosely to include topics of culture, organic growth, bonus schemes. There are some specific questions for managers, Rob and Dexter, Jeff, and David. We first want to ask a question that came in this morning that we just did not have an obvious location for. It is really about capital allocation philosophy. It is not directed to anyone in particular. People who think deeply about capital allocation, which is probably everyone on this screen, feel free. Mark, Robin, both Marks. The question is first to imagine a software business with high-quality recurring revenue, strong retention, growing ARR, but also carrying meaningful debt and enjoying good free cash flows. When you're advising the leadership team of such a business or running it yourself, how do you think about prioritizing uses of cash, such as reinvesting in the business, paying down debt, returning capital through dividends or buybacks, or funding expansion into adjacent verticals? What framework, what capital allocation framework do you guys use in thinking about a situation like that? Let me be directive. Damien on the line, and he's in a geography where most people are sleeping. Why don't we give him a crack at allocating capital? What are your priorities, Damien, and what would you do with it? Thanks, Mark. I t depends on the options are available. Look at the potential options out there, weigh them up, model the outcomes, and then deploy accordingly. You've been successful in deploying most of your capital, so it hasn't really been an issue. T hat your acquisitions, despite your efforts, end up plateauing and cash flows keep on growing. You are going to have this capital. What are you going to do with it? I think if we do not have the debt, maybe I think it was in this example, but organic growth or expansion into new markets or adjacencies and initiatives, all options if there is no capital to deploy in acquisitions. I think there is definitely, I think we can do a lot more on organic growth than what we have done. We definitely have not reached the ceiling of what we can do there. I think we are probably better at deploying than we are at sort of growing organically. We are improving there, but there are definitely some more levers we could pull and invest in growing organically. Larry, adjacencies are something all operating groups are exploring. They aren’t focused solely on vertical market software. Mark, can you discuss a recent large investment, which included substantial hardware, and explain why it was a significant capital commitment? We acquired a large business from Conduent that handles both parking and red-light camera technology. This involved acquiring considerable hardware, sometimes ahead of cash flow. We felt that for our Medexo operating group—actually, we call it a portfolio—that focuses heavily on people, transportation, and sales to cities and governments worldwide, this was a natural adjacency to step into. Clearly, this brings a different mindset to management. Leaders are no longer just income statement managers; they must be balance sheet managers, where cash flows often matter more than EBIT. Carve-outs highlight this even more. Conduent has been great to work with. When doing carve-outs—which we’ve done for decades—often the team you acquire hasn’t previously had to worry about balance sheets because they were part of a larger organization that didn’t measure at that level. We We’ve had hardware in the organization since around 2005. Each business that includes hardware typically integrates it with a software suite. Mark, w e'll get back to the capital allocation question, but just on the hardware, and that is an adjacency. You're well known to be an educator and a sharer of best practices. You've got the universities. Do you have sufficient intellectual depth in that area across the organization, or is that an area where you are? We've had hardware in the organization since probably 2005, that sort of time, Larry. As far as sharing best practices around it, I'd say there's probably some of that going on. Each business that has the hardware, it's integrated into usually a software suite as well. I'd just say it's a more complicated business to run. I think you need to be sure that the hardware is very proprietary to the industry. The more proprietary it is, the better. In some cases, it is much more proprietary, especially particularly in our transit businesses. We have a lot of devices and vehicles across the world. That equipment is very unique to the application and the particular problem that's solving. It isn't something you can kind of buy off the shelf, right? I think that's one of the, if you're talking about things that you want to be thinking about when you're acquiring it, I always do. I do like looking at businesses that have proprietary hardware, and especially if it's integrated vertically with the software we're providing as well. You have end users inside the customer, and then they have equipment out in the field that's being used by people, and it's unique to that particular industry. That's sort of an interesting place to deploy some capital. You have to think differently. You've got to worry about inventory and repairs, and there's a whole bunch of different metrics that we normally at Constellation typically isn't tracking well, because it's so different than a pure vertical market software business. Can we get your thoughts on that capital allocation question? You have opportunities to reinvest in the business, pay down debt, send dividend, or invest as you have just described. Do you have a framework for thinking about that, or is it much like Damien described? It depends. I t's very similar to Damian's description. It depends on, first of all, I think very important as to who's running that business. You want to, the old me would have done whatever, as Damien suggested, whatever you're going to get the best returns doing, right? I think Damien's correct. There's more you can do in organic growth moving into additional areas of the customer. You can do that in some cases with customer funding, which as well. That's a really good place to deploy capital. I would consider every opportunity I could. It's obviously a lot easier to deploy capital acquiring businesses or competitors if you're one of those business leaders than doing organic growth in a lot of cases, right? Some of our businesses are generating pretty high EBITs. Deploying all of that in organic growth would be a challenge. You'd like to make sure you can do a bit of both and write a check to maybe acquire a competitor or a product that would sell well into your customer base, potentially, again, if I'm talking about a business, not a portfolio. The last thing you'd want to do would be ship the capital. If you've got the wrong leader in that business or a leader who you don't feel is going to patiently and rationally make good decisions around either organic growth or acquiring businesses, you'd much rather have that cash back and put it somewhere else. Robin, I'll give you a chance to add or subtract from that, but move into a question about operations loosely defined. The questioner first wonders whether TSS has more of an M&A culture than Topicus does. That speaks to the point Mark was just making. Are these cultures aligned, and are they becoming more aligned or staying the same? To start with the second one, Larry, TSS has historically grown by acquiring companies. That was also my background as a founder of the company. The Topicus operating group came way more out of developing software. That was the background of the founders. They grew that company organically with their own money. They did not like to carry a lot of debt. They also, over time, did smaller acquisitions and turned those acquisitions together with their development capabilities, knowing how to read the market. They were really able to develop those companies. They are doing acquisitions as well, but they are doing a little bit more synergetic kind of acquisitions, which TSS historically has not done, where they use their developer capability, where they use their market positions in existing verticals, where they try to build value chains in those verticals. They do things differently than TSS has done, but both have been successful. Both use M&A, but Topicus operating group historically grew more through organic growth. Your first question, for me, it's always simple, and I think the other guys refer to it as well. Where can I make my best return given the risk profile? If there's something in the business where we can strengthen the business, widen the moat, then I would love to invest in that business. You started your question with depth. My experience in vertical market software is that the really high-quality companies can carry the depth. If you structure the depth properly, you don't need to amortize and pay back, and then you can continue investing in the company. If that doesn't work, but the other guys already said it, you can move into adjacencies or acquire other companies. Definitely, we take a look at where can we make the best return on our dollar investment. Just on the cultural question, it sounds like two different cultures there, and you sort of respect those differences. Part of the culture is because of the founders. You have similar companies, but they have distinctive cultures, and you are going to let them continue in that. You are not trying to impose yourself on. No, that's not what we're trying to do. That was also the idea from the outset that even TSS has been cut into two operating groups. We have three operating groups. One is called TSS Public. The other is called TSS Blue. One does more Southern Europe. The other does more Northern Europe. In the spinout with Topicus, they became the third operating group. From the beginning, the idea has been that it will be a standalone operating group with their own DNA, with their own history, with their own culture. There was not a problem to be fixed. It was trying to benefit from the strength. Even the two TSS companies are slightly different because the gentlemen running it have slightly different approaches. They have lots of stuff in common as well. TSS, sorry, Topicus operating group has always been a standalone operating group company. P eople go to each other's academies and learn from each other, and people, after a couple of years, know where to find and where to cooperate. We really left it standalone to certain things Topicus operating group did differently than TSS did. If that works, that's fine. If it does not work, then you have to think. It counts for both TSS as Topicus operating group. We try to learn, but things which are different and work, why would you not cherish that? A follow-up question from a different shareholder for you in that spirit. The question starts by observing that you're a long-term shareholder in Topicus. Then wonders how you see the company long-term, 10-20 years from now. In particular, do you envision achieving the same growth rate, they say 15-25% as currently? I study different serial acquirers. I study the other operating groups within Constellation. Some of the operating groups within Constellation are larger than Topicus currently is. If I take a look at the data and see how they developed over the last five years, I see that as something encouraging for us to continue doing what we do. Like I said earlier, it's not year-to-year, but over time. Yeah, we love to build. As Mark said as well, really further out in time, we have to see how often we go to more adjacencies and edges markets. I said already, we slowly move outside of Europe as well. We'd love to continue building the firm out for the long term. We're not interested in the next quarter. We're building it for the next 10 years, let's say. Excellent. Thank you very much. Turning to the next question, this is addressed to Mark Leonard. The shareholder wonders if Constellation is relaxing the reinvestment requirement in its employee bonus program. We have heard, the shareholder says, from former employees, and also the MIC noted that executive officers are now, quote, generally required to invest 75% of after-tax bonus into shares. Should we read anything into that word generally? We're not relaxing the requirement. We are creating another alternative option. Currently, it's in the experimental stage where we're allowing employees to invest their bonus directly in underlying businesses. It's very complex from a tax point of view to explain exactly how this all works. Basically, we're hoping that it helps people understand investments more and relate more directly to them rather than just investing in the parent company shares. They'll be aligned employee co-investors still. It's just they may have a different portfolio than they do when they invest in Constellation shares. The 75% criteria for senior execs is still in place. Once every five years, they're allowed to take theire full bonus in cash rather than shares. That is the general, and I struggle to think of exceptions rule. That is still in early pilot or experimental stages? The alternative investment idea of co-investing? Yes, very early stages and will not be significant for a number of years, even if it is highly successful. Next question, sticking on bonus schemes. The question is directed to Dexter. And it reads as follows: Is Perseus experimenting with a new bonus scheme? They've heard that it is. Is it intended to increase managers' focus on organic growth? And if so, can you share your assessment of the results so far and any learnings that you can share? Thank you, Larry. I think it's too early to tell. That's admittedly early to judge. We've only had one year where they have organic growth. You really can't make any forecast based on one year. What it's done, it's kind of gone and made it clear to a bunch of the managers that they can also make good bonuses with organic growth than acquisitions. There was, to the earlier question, I can speak a little bit more on where would you invest. My opinion is that it depends on the company. If you have a legacy software that has a small share, would you invest in R&D on that, or would you just go and run it and keep your customers and try to invest in R&D and sales to grow something that you can't grow? It's better to invest it in things of higher probability. You have some companies that have high organic growth, and there's opportunities to invest more. We have a few companies like that. Always, it's great to invest in organic growth there because they're market leaders. They can grow. They can add on products, steal more customer share. Organic growth is, in most cases, way more valuable than acquired growth because you gain market share. One of the exceptions is that if you're able to buy a competitor and reduce the competitive nature of the industry, it's another good place to invest, even if you're growing organically. Obviously, allocation of capital and buying new businesses is what Constellation does best. That's the best use of our funds. I think the worst use of our funds, as Robin said, is that if it can pay off the debt, why would you—if it can support the debt, why would you pay it off? What you're doing is that you're trading in 20%+ IRR or more for a 5% or whatever your loan costs. It's better to ship it off to Constellation and keep the loan because we get a higher rate of return from loaning it to Constellation. Thank you for that additional illumination, Dexter. Yeah, I think the sample company this question was asking is sort of high-quality recurring revenue base. It is important that the answer will depend on the particular leadership and the business. The higher the quality of the company, the more you're willing to invest in organic growth. Also, a good management team, you're willing to invest in acquired growth. Again, it's like Mark Miller said, it all depends on the management team on where you invest. There's a nice question here about organic growth, I guess, sort of aggregate organic maintenance revenue growth. The shareholders are observing that they often hear us or Mark or others say, "Don't expect us to achieve 5% long-term. Expect more like 2-3%." The questioner wonders why that would be so and what role inflation plays. Mark, if you want to be directive and pick on somebody who you think would be most useful to answer that, please feel free. I do not think I ever said expect 2-3% organic growth. I think that is a misquote. I would hope that we at least keep pace with GNP. I think inflation would impact that significantly. Yeah, I am annoyed. Feel free to have someone else try and talk to organic growth targets. If anyone would like to, feel free; o therwise, we can move on. Jeff, the next question is for you. It invites your assessment of business performance at Allscripts. In particular, how would you evaluate the investment from an acquisition point of view? Do you continue to have an appetite for large acquisitions of that sort, including companies facing significant challenges? We have been very happy with the return. We call it Altera now, and I think we are very happy with the business. I think we have an appetite to do it again. I think if we are always knocking on doors and talking to people for assets that look like the Altera business, we are always having conversations. As Bernie's and Mark's mentioned, they just do not always come to fruition, right? All that often. I do not think there is anything that we have learned. There is nothing we have learned through our Altera experience that would cause us not to do it. I think we have had a lot of learnings through our Altera experience that we would put to use on the next one to try and make it better and less painful and do things faster than we did. Those types of learnings, there's plenty of those that we would do. No, I think we have a definite appetite for it. The Altera one was a significant equity check and significant third-party leverage to Dexter and to—I'm not sure I'll set it. Maintaining the debt has not been a problem, right? These businesses have strong cash flows. To Mark's point, even though Altera is, I would still say a vertical market software business that does not have hardware or not significant hardware, it does have a more complicated balance sheet. I do think there's been some learnings there on making sure that our leaders are not just focused on, right, the P&L, but also incorporating thinking about the balance sheet and tying up cash on the balance sheet. Again, some good learnings there. Again, we would just take forward and apply. Thank you very much. That concludes this segment of the Q&A. The next topic in the fourth round is technological innovation, including AI. I will turn the floor back to Will Pan. Thanks, Larry. W e got so many questions—expectedly, we had so many questions about AI this year that we promoted it to its own section. This will focus on technological innovation, particularly the impact of AI on operations and competitiveness. We're going to be asking questions about how Constellation is adapting to and leveraging new technologies to stay competitive and drive growth and how these are shaping our strategy. We've got a lot of sort of somewhat repetitive questions, but we have enough to cover pretty much all the operating group heads. The questions are going to be similar with different flavors for each of you, but each of you will have sort of your time to opine on how AI may or may not be impacting your business so far and how you're thinking about it. To start with, Mark Miller, starts a little bit philosophical. What do you think are the barriers to competition when it comes to success in vertical market software? It suggests between development of software and distribution of software, what usually carries the bigger weight for a vertical market software company's success? You do not have to limit yourself to development and distribution. I think development is usually the biggest, right? If you look at Porter's Five Forces, it would be that the barrier to entry would be generally around how many years it takes to develop software. You also have a customer base there too, which in some of our businesses, very low attrition. Those two things combined provide you sometimes more comfort than you deserve, I would say, because it takes a long time to get there. I think you do want me to talk a little bit about AI-related. Right. Do you see these barriers that you have found with AI, and which of them are? I try to put it in perspective. This question gets asked a lot at our internal events. I'm a developer by background. I've been through so many different cycles of mainframes to mini computers to PCs that were not networked and networked PCs. Then we had Y2K come along, and the emergence of the internet in 1995 triggered another wave of disruption. Everybody was just going to change the world. For B2B, in some of our businesses, it has not changed that much. I used to write transit software, and many things that were done on mainframes are still happening today on PCs, right? Then mobile computing came along. After that, they are saying, "Well, mobile computing is going to change our businesses substantially." 'Mark,' everybody is going to be using their mobile computers to do things. Interestingly enough, many of our businesses had all sorts of great organic growth plans because of mobile computing, and it was going to change. It has not had the impact that you would think. Technology change has been an ongoing thing. One of the common threads you always hear with new platforms, development platforms in particular, is, "We are going to be able to build this product quicker because we are using more advanced tools to do it." I have yet to see that happen. AI might provide some of that. We have some of our leaders working on looking at replatforming or rewriting products using AI. I will have some better information on that as time passes. We're encouraging most of our businesses, because we do have a very good network of learning between them, to share best practices around how they're using it to improve their product, sort of from a low-hanging- fruit perspective, right? Just adding some efficiency gains and how they interact with their customers from a customer support perspective or what have you. I have to say, we're worried about it. We're paranoid about it, but it's just I haven't seen it having a dramatic effect. It's kind of, again, go back to the internet's going to change everything. Mobile computing is going to change everything. AI will, and our good leaders will adapt to those changes. Inside of Constellation, they will accelerate things they do from a development perspective, how they interact with their customers. If they've got good moats around their businesses, which means it's taken maybe years of development, but they're also connected into a lot of other systems that our customers have. It isn't just the standalone application that's just used by itself. I think there's also that to take into account as well. If it does accelerate development, great. I think we should be doing that. I think our leaders will do that. If it does create—if you do have harsher competitors in markets that you're starting to lose share because someone is being able to enter that market and take away some of your customers, you're just going to have to respond to that either by reducing your costs as well or let's deploy that capital elsewhere inside of Constellation. That's just a quick overview of my thinking on it right now. Right. Mark, the next flavor of this question comes to you. How do you assess the risk that AI reduces switching costs through things like automated implementation or barriers to entry through lower cost of development and software? Could this risk lead to an impairment across Constellation's businesses? Yeah. I mean, obviously, I think Mark hit a lot on those things. Obviously, it's going to probably accelerate the time to develop a product. The question is, is it going to accelerate it from a current product might take 5 to 10 years to develop from the beginning to the end and can accelerate it to 2 or 3 years? Maybe. I don't know. We'll see as we go along. It definitely will shrink the barriers to entry. The trick for us is to make sure that as those barriers to entry shrink a little bit, we're building other barriers to entry and making sure that we're adding tremendous value to our products, add-on products, additional things, additional services we can do for our customers, all that type of stuff. Because if someone does build a product that's exactly what we have today, which is fine, but I would hope that we're doing something to make what we have today better tomorrow and the next day and the next day. We're also using these tools to be efficient in how we do it so we get there quicker and quicker. I always think there will be a barrier to entry. It might shrink a little bit, but the barrier to entry will always be there as long as we do our jobs. The key is going to be the people we have running these businesses, doing their jobs and making sure they stay ahead of the competition. The other trick for us will be I'd love to say we're perfect and we never make a mistake, but we do make mistakes. There will be some businesses that miss the boat. A competitor will creep up on them and catch up to them and maybe even surpass them. It is our job to decide if it is a great allocation of capital to keep chasing that market, or maybe the better option is to not chase the market as hard and work on strong retention and use that capital in another business that did not miss the boat and accelerate it. We are thinking about all those things, and I am paranoid about it as well. I do believe if we act rationally and have great people working for us, we will figure it out most of the time, but we definitely will make mistakes. There is no question about it. Thanks. Jeff Bender. This question says, "Constellation's business has been built on relatively small acquisitions. Looking at new AI tools like Cursor, it appears as though the barrier to creating relatively specialized small pieces of software is coming down fairly materially. While we appreciate that a meaningful part of the value of good software is in understanding a problem set and ensuring system stability, etc., we're curious about the extent to which these emerging AI code tools are playing into your understanding of the types of assets you're looking at, the expected resilience of existing portfolio businesses, and even your willingness to invest in product extensions and feature development within your existing portfolio. Every business that we look at currently, we are always look at the competitive landscape to understand what we believe. Because again, we own these businesses forever. That has always been part of how we look at deploying our capital. I think there hasn't been a change in how we do that other than we now incorporate, right, how might AI impact that. Obviously, we are looking at that. I think as Mark and Barry have said, we are all still learning what that means, how that works, what it will look like. I think really our approach, at least in the Harris organization, and I think it is pretty similar with all of the sister codes, is really just doing as much as we can, experimenting as much as we can, sharing as much as we can across all of our different businesses. I think that really is probably one of the things that makes Constellation most successful, is this ability and willingness to share and to experiment and to measure. I think AI is no different than any other thing that we've done relative to a best practice. When you go to our best practices sessions, we held one a month ago. There's all kinds of AI sessions now. I was just at one again. I was at a Perseus one. Again, there are AI sessions now. I think if you're a shareholder and you're concerned that we're not thinking about it, you heard Mark say paranoid, you heard Barry say paranoid, we are absolutely thinking about it and really driving it down into all of our businesses to understand where it will have the best or the most impact in terms of what it is that we're trying to do. Great. Dexter, on the topic of Perseus, the question is, how do you think about AI risk coming from self-provisioning? In other words, customers doing it themselves versus the risk of someone else or new entrants creating software with AI? What I understand about AI is that it requires data. And how much data does a customer have to train it? I'm not an expert enough to talk about that. My idea about AI and reducing the moat is you can program it faster. I possibly program it faster. I would agree with that. One of the other things that AI can't do is they can't sell the software. They can't put people in there to train people. That all takes experts and people who know the industry. There's a lot of AI is very good for expert tasks of, for instance, comparing images, say, for instance. In the medical field where you have expert, where you have very defined limits, AI is very good at that. When you have a broad question, you need a person that has the experience outside of what the AI has been controlled with. I'll get back to my comment on selling the software. Some of these software packages, they're throughout the whole organization. They've used it for years. It's a very small vertical. If I was developing a new AI product, where would I go after? Would I go, and I use pulp and paper a lot, would I go after the pulp and paper sector where people can't change out that software very quickly? It's very big. It's very complicated. It's taken decades to develop it. An AI guy wouldn't go after that type of market. They would go where there's more potential customers. I can see that happening possibly in real estate where you have a million real estate agents in the U.S. and developing something to sell to a million people, but to sell to fourty pulp and paper plants or fifty pulp and paper plants or pulp and paper companies in the U.S., that does not make sense. You will find some areas where you should apply AI. Again, like everyone else, Perseus is doing some experimenting, and we are all conscious of it. It is just a matter of gaining experience on it and sharing ideas and sharing results, both good and bad, in what happened with AI. With Constellation, it is not like we are so decentralized. There are just so many other minds thinking about it rather than a single, solitary, centrally controlled company where the CEO says, "Let's go to AI. Let's hire 1,000 people in a developing country and h ave 1,000 people punching in the data to train these things." They may end up not selling any or spending too much on it. I've seen that happen in some acquisitions we've done too. We've picked up companies that have spent millions and millions of dollars on AI with no return. A lot of things you have to do, experiment. It's not like we're a venture capital firm that will go and spend a lot of money on something that may either be a home run or a strikeout. We share. I get to the network of people that we have, the number of ideas that are coming out. If we share those best practices, that's the best way to kind of grow AI. Somebody will stumble upon, since we have hundreds of companies, somebody will stumble upon one good use for it, and that will kind of be communicated out to other companies at Constellation. Maybe I could interject and try and throw a couple of conceptual frameworks around the questions. We have hundreds of people using AI internally, hundreds of our business units using it internally in development and increasingly in support. In development because you've got a constrained rule set, and therefore AI performs reasonably well, generating 90% solutions. In support because we have knowledge bases that are already created for the support groups, and therefore training an AI on them is pretty simple, and the tools already exist. That stuff is happening everywhere, pretty much everywhere. Where it is more of a threat or more of an opportunity depends to some extent on the kind of business you're talking about. If you're talking about a SaaS business with very few people, with software that is sold through the internet, that has very little training, very little support that isn't automated, then I would think AI would be a pretty significant threat. The other end of the spectrum, and Dexter gave the example of pulp and paper, is where we deploy a solution that looks like an awful lot of people who spend an awful lot of time around pulp and paper and software. We're providing advice, support, customization, integration, and intimate knowledge of the pulp and paper industry. At that end of the spectrum where it's a bundle of services and software, I think AI is much less of a threat and much more of an opportunity where we can deliver what we're learning about AI to our end customers. I believe in many instances we are the trusted IT partner of our customers and are the most logical source of AI knowledge and learning. Although it isn't ready for prime time and you can only get 90% solutions, I think a lot of clients are willing to work with 90% solutions just to get experience. I think we're the most obvious source of those 90% AI solutions for clients. I'll let you get back to questioning other things. Do you have any views on whether there's some quotient of your portfolio, of the Constellation portfolio overall, that is that lighter weight SaaS solution that's sold without high touch? Do you think that's the case? What quotient of our portfolio? We used to think of when I think about AI and development, I do think back to earlier AGMs years ago when SaaS was coming on, and people would ask, "W hat percentage of your portfolio is SaaS?" I think SaaS is many things, not just technology, includes not just the business model, and there are stronger and weaker SaaS companies. You were talking in particular about the more vulnerable type of SaaS companies. I'm sort of wondering whether you think about the portion of your business that may be more exposed like that. The high churn, low switching cost, price-driven, market share-driven model, let's call it a monopolization model. If I'm trying to win a particular point solution market with a SaaS solution, I'm going to offer it for free. I'm going to try and get people using it. I'm going to try and have brand. I'm going to drive into the marketplace. I'm going to lose money for years on the promise of one day making 30% or 40% or 50% EBITs. And how many of those companies exist? There is a tiny, tiny handful that we've actually experienced. And that's because I think a lot of the promise of true economies of scale and price-based competition hasn't evolved. People aren't really looking for the cheapest IT system they can lay their hands on. They're looking for an IT system that gives them the ability to run their business efficiently, as efficiently as their competitors. Very occasionally, in the case of large clients who view IT as a strategic advantage, they're looking at it as a strategic tool. What they really want is customization. Now, customization is the antithesis of the SaaS low-priced, win-at-any-cost sort of approach. I think there's an awful lot of space in most markets for a strategy that isn't economies of scale-driven and low price, and that the high service model is one that will be least attacked and least frequently attacked by AI. It can be improved. Customer support can get better. The cost of development can get better. If you really can produce twice as much software with the same number of people, what's the number of backlogged apps that the average large client has? It's literally years of things they would like us to do for them that we can't really afford to do at the prices they really want to pay. If the cost just came down by half, boy, we can deliver huge amounts of value to those people. It is exciting, but it's obviously also very scary. No one's got a crystal ball. As the guys say, we will monitor. We will stay abreast. We will experiment. We will get better and better over time. Hopefully, we'll be that trusted IT partner who delivers AI for most of our clients. Great. Robin, you did have a question specific to you and Topicus about this that I'll just run by you. How is Topicus competing with or addressing new deployments of AI models aimed at specific verticals, if you've seen any? I think most has been just said. We run those experiments as well in different businesses in different units. We have one of our expert directors who's really involved in this field, who loves this, who studied this the whole day. He's involved as well in monitoring and seeing what works and what doesn't work. That's what we're doing. Like the other operating groups, we think about it. We have our mental models. I think Mark just said a lot about it. We have the distribution power, like Mark said, we're the trusted partner for our clients. There is data. There are lots of angles that we have a position to be played out. That's what lots of people believe. Like the other guys already mentioned, we have to be on our toes, and we have to do a good job. Great. David Nylund or Damian, do you have thoughts that you want to share? Okay. One last one for Bernard is, if it is, when did AI become part of your diligence process? Do you have any examples of investments you've passed on due to AI uncertainty and examples of investments you've made where you've gotten comfortable with AI risks? We're not looking at AI as a solution within the businesses that we're buying. We're looking at the businesses as they stand on their own and whatever risks surround them, be it competition, be it AI. That's the way we really look at it. I guess the way that we would flip it around is we are looking at AI as a tool to help us make acquisitions. We're looking at various aspects of the whole process of acquisitions to see how it could help us. That's about it. We're not looking at businesses specifically with that AI lens. Okay. Great. Thanks very much, everybody. That's it for the AI and technology questions. I'll hand it over to Howard for governance questions. Thanks, Will. On to the governance section. These are questions about board composition, ethical standards, as well as conflict of interest. Sometimes thorny ones about how Constellation ensures transparency, accountability, and high ethical standards across a global operation. Maybe the first one to Jamal. This questioner here asks, as you become larger around the globe with over 1,000 operating businesses, how do you ensure that operating units carry a high standard of ethics, especially in jurisdictions where the rule of law may be different than in a developed world? Are accounting practices and protocols standardized across the board? The questioner elaborates, they're thinking about companies like S&C, which have gotten in trouble in corruption scandals. Is that a risk that keeps you up at night? So we definitely have an internal audit group across Constellation. We do have a standardized set of accounting policies, so we ensure everybody is meeting. We have internal audit at head office. We have internal audit at all of the operating groups. We also have our VP of Finance has an accounting compliance committee that he has these he calls them accounting ninjas in each of the groups where they understand all of the intricacies of what we're trying to account for and ensure it's pushed down. High level, though, the accounting for Constellation and the companies we own, it's pretty straightforward. I mean, it's software. It's maintenance of current revenue. The amortized, there's professional services. There are key things you could look at, such as WIP, aging of WIP, aging of AR. All of the groups are focused on this. Head office is focused on it. Internal audit is focused on it. So it's not a concern that keeps me up at night. When you talk about some of these practice services, is there any kind of review either in the internal audit group or kind of beyond in other groups of contracts awarded to government agencies in developing countries or where there's more higher risk in geopolitical jurisdictions? Without a doubt. That's not even just head office. A ccounting and legal would be involved there. There's a list of those nations that are troubled, and they would be reviewed. I mean, all contracts over a certain threshold are reviewed, not just by the legal at head offices or, sorry, at the operating groups, but also by head office. Yeah, there's a lot of rules and ways that we monitor this. Thanks, Jamal. The next set of questions are for David. The first one, the questioner asks, he says, "I hope you're doing well and your health continues to recover. Would you be open to briefly sharing an update on your health following your leave earlier this year to the extent that you feel comfortable? When I embarked on this journey 12 and a half years ago, I didn't know it was going to be a 25-year journey. That's the way I feel about the journey right now. We're just getting started. We're halfway through about 25 years. I'm super excited about the future and super motivated, surrounded by a team that's super motivated. Really, that's all I can say, is that there's a huge amount of confidence in Lumine, and I'm super motivated to drive it forward. Thanks, David. T he questioner wants to know, what are the advantages so far of being, quote-unquote, "independent" now within the Constellation framework, but relatively independent? Do you find any advantages in being spun off? Obviously, we now have a currency which is directly related to our own performance. There is a sense of pride and ownership that comes with owning shares in Lumine because you can directly influence the future of Lumine. That has been very positive over the last couple of years, and I expect that to continue over time as it relates to management and key employee long-term incentives. That is very different, obviously, than being inside Constellation. Beyond that, we follow the same voter race. We have the same governance and control framework. We operate very much like an operating group. It is tried and tested, and it works well. We fall in line, and we support it in any case. If we were to test boundaries, I think there would be some appetite to consider our ideas as we venture out and see new things and experiment. That I feel confident about in the future and within the constraints we operate within, which, like I said, are net positive for us in terms of being a safe haven for deploying capital. It's kind of best of both worlds. The next question is for Mark Leonard on buybacks. You have previously written to shareholders indicating that you do not think CSI stock purchases for Constellation are appropriate due to moral hazard or insider information. However, at last year's AGM, you indicated that you would be open to stock buybacks in the future. Any updated thoughts on this topic? I know you mentioned it briefly in the beginning, but any further thoughts on buybacks? I enjoy the implication that I've gotten rid of my moral hazard concerns, and my ethics now allow me to buy back shares. My concern about buybacks is the ambush concern. If I, at the end of a quarter, report that we bought back a bunch of shares at a particular price, then there are people who have been selling to us not having known that we're buying back shares. That feels wrong. If we, at the front end of a quarter, say, during the course of the next year, we will buy back this many shares at this price, I feel much more comfortable about buybacks. That is the moral hazard issue. It's still a concern that we know vastly more about the business than the people selling shares to us. I'm always going to be uncomfortable with it. If I have yelled from the rooftops that this thing is way too cheap and you should be buying shares and you should not be selling shares, then buying back shares is less of a concern. The problem with that, of course, is you do not get to buy back any shares if you make enough noise and people believe you that it is too cheap. It just becomes a way of manipulating price as opposed to actually deploying capital. Buying back shares as a method of deploying capital where you are being ethical about it, I think, is a bit self-defeating. In view of Constellation's current valuation and, or at least your thought and valuation, we're not, I don't hear you shouting from the rooftops. I am not a big fan of generating market rates of return. If you want to generate a 6-8% rate of return by buying an ETF, go for it. We are part of those ETFs. O ur stock is priced to generate a 6-8% rate of return for the foreseeable future by the market. That is their discount rate. If you want to make 20% or 25% rates of return, I would love that. You probably have to buy Constellation at a quarter of the current price to acheive that. Those are good thoughts. Next set of questions are around the changes to the board. Maybe I'll ask those to John. This questioner asks, "Seven directors are not standing for reelection to the CSI board. That seems like a high turnover for one year. Can you provide any insights on this change and how it links to the new advisory board? John, do you want to take a crack at that, or do you want me? Sorry. I was trying to find my mute button there. I can take a crack at it. When you say 40% seven board members, it sounds a lot more than it is. Howard, the bulk of those people are moving to the advisory board. That is a new structure we have set up. We put it in there because there have been a number of people over the years that we wanted their input on the board, but were constrained by the various constraints out there, the TSX and the proxy firms. This gives us more flexibility to get that input. You will know that Damian came on the advisory board as an example of that. There was one of the board members moved over to Topicus to fill a void that Robin had. The purpose of the advisory board is to bring in more varied points of view. They will be attending all of the board meetings moving forward so that their knowledge will be on par with the directors, and the directors will be seeking their input on an as-needed basis. The advisory board essentially is going to be concurrent, having meetings with the board, and they'll just get to listen in and offer their input. That sounds like the main purpose. Correct. Just as a follow-up to that, this questioner asks about whether the panel here has any views on the board becoming a less important body, given that there have been six meetings in 2024 versus 13 the year before. Any thoughts about how to maximize efficiency of the board without maybe taking up too much time? When you put the numbers to me, I'm surprised at those numbers. But my guess is, if you go through our annual calendar, we obviously meet on a quarterly basis, and we have some other mandatory meetings. When you're seeing meetings outside of that, it's likely because we couldn't fold in the approval of large acquisitions, which is the reason we would call meetings. Sometimes we're able to put those on the regular agenda of our board meeting, and sometimes we're not. My guess is, in the prior year, there were either more large acquisitions that required approval, or we just couldn't put them into our regular meetings. I'm assuming it would have been in 2024, and that would have been the cause of some of those meetings. It didn't feel like a year that was any lighter than the year before or any less involvement by the board. Nothing philosophical changing. It's just based on timing. No timing. T here is over time, we would change the threshold of what needs to be approved by the board as the company grows, but I don't think that had any impact last year. Maybe another question about the board and more generally the philosophy of how it operates. This questioner asks, "The board, including now the advisory board, has had many insider executives, which have been very successful. This brings great depth. But how do you or how does the board invite an alternative view, and who surfaces hidden risks? I'll start there, but I think probably the managers are the first ones who dive into the biggest risks. Mark has mentioned a number of times that profiles of copycats are discussed at the board and profiles of disruptors as well. Those SaaS companies that are burning a whole bunch of cash to try to enter into one of our verticals. I think historically, that's been done by the management team. On the board itself, as you know, we have some governance experts. We have some legal and tax experts. We have a couple of investor experts. There's a whole host of skills on the board. Yeah, I think that's where we get the opposing views. That could be an internal. The executives who are there to share best practices and lessons and find the hidden risks. Maybe one about conflicts of interest. This is kind of like a theoretical situation that the shareholder brings up. This shareholder envisions a threat of a competition from within your own employees. Maybe this person asks that they must be tempted to borrow money and buy a particularly attractive target themselves, especially in a decentralized organization. This shareholder wonders what kind of private investments are employees prohibited from making, and how does the board oversee the senior execs' private business interests? At the board and executive levels, this varies by geography, but employment contracts include restrictions around investments. Outside of that, the analogy you mentioned has occurred before. It is incumbent on CSI and managers to ensure we remain a desirable workplace and that employees understand the benefits of staying with Constellation versus acting independently.Any exceptions, such as board positions in other software companies, require approval and are disclosed in our circular. Employees can technically break rules, but the focus is on retention and advancing the company. One final question on succession: given Buffett’s recent retirement announcement, can you provide updates on succession planning for Mark Leonard? It seems well planned, but are there any remaining steps or decisions in the process? When I heard that Warren Buffett announces—sorry, Mark—announces retirement, I thought for sure that Mark would do the same thing at the AGM at some point in time. This would be the forum we hear about it. I don't think it's changed. Every two years, you rotate through all of the subsidiaries, their succession plans. I think we're very fortunate that everyone on this phone here has been with the company for 20- 30 years. There's a very deep bench with a lot of experience. We have a discussion about Mark's succession as well on a regular basis. That changes and evolves over time as people change and the organization changes as well. It hasn't been a consistent answer for 20 years. Mark, do you want to say anything about your—or show us any signs? I was thinking of trying to recruit Greg Abel, but since the announcement, I'm less likely to pull that off. Yeah. Yeah. I don't know if he's signed anything yet, so maybe reach out again. That's it for me. Thanks so much for answering these tricky questions. I'll turn it over to Larry. Thanks. This is the final segment of questions unassigned to other categories. It is a mix of topics, some for particular managers, most open to all, several addressed to Mark Leonard. This is to David and Robin about the units they lead. Would you consider your company, Lumine, Topicus, relisting from the venture exchange to the Toronto Stock Exchange? What are the pros and cons of each, both from a corporate and from a shareholder perspective? Robin, please go firs t? We currently don't have any plans for that. We are trying to be focused on building intrinsic value. We love to see our shareholders as partners that can be on different exchanges. You might have more investors like indexers on the TSX. There are some different pluses and minuses. The regulations are a little bit lighter on the TSX fee. Currently, weighing out those pluses and minuses, we're happy where we are currently. Just to echo what Robin said. Obviously, we're very, very new. A new public company. Very happy where we are right now. David and Robin, have you considered writing an annual letter to shareholders? This shareholder notes that the annual meeting, this conversation is a good way to convey information and respond to shareholder questions. Might a shareholder letter be an additional valuable way for you guys to do so, especially given the age of your public listings? Let's go in the opposite order this time. David first, and then Robin. Robin, you have to follow me, right? Yeah. I do not see any reason why we would not do that. Like you say, we are still relatively early in our journey. There are some unique things about Lumine that still require some explanation. For sure, that is something we would consider. I haven't considered it yet, Larry, but we could have a discussion internally about it and see if it really brings something in addition, but haven't considered it yet. Okay. Thank you very much. I know that it takes a lot of effort. That's all I'll say. People who do that and do it well spend an enormous amount of time. Shareholders should consider that as they think about that question. Here's a question for anyone who wishes to opine. Mark Leonard, feel free to be directive if you want. The question is, there appears to be an emerging or existent wealth disparity between longtime Constellation employees and newer ones. It's just a reality. What challenges or benefits does that circumstance present? How do you think about it? I mean, greed is not a problem. I don't mind people aspiring to wealth. Jealousy over other people's wealth just seems inappropriate. Obviously, the Constellation shares have outperformed most traded stocks in most markets in most parts of the world. The people who were lucky and good enough to buy them in the early days have benefited enormously. I don't think that's the issue. The issue for me is the opportunity that people have investing their bonuses to generate good rates of return going forward. You mentioned the co-investment scheme that we're working on. It's designed to address that issue. It's designed to give people an alternative to investing in Constellation shares and allow them to invest directly or somewhat slightly indirectly, but in the underlying companies that we're buying. I think it will provide people who are long-term oriented an opportunity to create wealth that will far exceed what they will be able to generate in the public markets 99.9% of the time. That is the solution that we have come up with. I am proud that both the board and the operating group general managers have allowed us to do this. It is complex. It is difficult. It is not an easy sell. If we make it work, I think it will be revolutionary and will provide our newer employees with an opportunity. I think. Would anyone else care to comment or we could move on? Here's one again for everybody. It seems like an inevitable question in our current moment. The question is, how exposed is Constellation Software or its individual operating groups or businesses to U.S. tariffs and global trade wars? What protections do you take against that risk? I think that's a meaningful question. The other part of the question is, do you face any risk from the Government of Department of Government Efficiency (DOGE)? This is probably a business-by-business topic, but if anyone would like to take the lead. I can kick in if you want. Thanks, Mark. It really—obviously, keeping a close eye on it. There are some contracts you've had to do some things that are DOGE-related that we've had to write some things for customers and what have you. Overall, there hasn't been any impact to date. The only concern would be any of our businesses where we're importing hardware and what impact tariffs might have on those. That yet has—it's still, again, too early to say if any material impact will have on us at this point. Sort of sit and wait and see and keep an eye on the situation as we join in. I think it does very well. Anyone else? I have a general comment, Larry, if you want it. Obviously, tariffs will impact the economy in general if they are, A) volatile or, B) high. To the extent that happens, we will be hurt. If our clients are suffering, they will spend less on IT, and it will be a setback. Tariffs are going to affect us. I would not be surprised if in the second half of the year, we do not see ourselves doing less well than we currently expect if the tariff noise continues on for any length of time. I am concerned about them. I think all of our people are. There are a few of our business units that are more directly affected, but very few so far. Another topic: The stock price, basically, it's come up a couple of times today. This is sort of a philosophical question, I guess. This shareholder observes that people analyze or conduct valuation analyses in different ways and then relate the stock price to it with different multiples. The multiple, if you're just looking at free cash flow, for example, is high 20s. Looking at FCFA2 asset, a lot higher. Does that differing set of analytical appetites or tools matter to you? Does it create any opportunities or problems for Constellation? I guess let's start that with Mark Leonard. I can't remember the last time we sold a share to raise money. But it's a long time ago, decades. The stock price doesn't directly affect us. To the extent that it doesn't reflect intrinsic value and we're requiring our employees to buy shares, then they're either getting them cheaper or more expensive than they should. We'd like the stock price to be priced around intrinsic value, not too high and not too low. It's sort of Goldilocks is what we're looking for in terms of our stock price. Do you have any impression over sort of a long-run relationship? Are they—does it typically Goldilocks? I mean, over long periods of time, I know there's lots of fluctuation in between. Apparently, we do not fluctuate as much as most stocks. I think our beta is less than one, but could be wrong. Yeah, do not really have a view on whether it should go up or down. Another one for you, Mark. This person refers to comments she remembers from last year to the effect that the board reviews one or two Constellation copycats per quarter. She wants to know if you'd care to share any learnings from the collation of that material and whether there are any lessons that Constellation applies from studying those copycats. We study them. We look for any lessons that there might be. Obviously, periodically encourage our friends to hire any quality employees they have. Other than that, not that much, Larry. It is not obvious yet if any of them are working well. They are not public or they have not had exits where the information has been broadly available. As you know, if an investment banker puts out a document, it is very hard to pass through to the underlying data frequently on how the businesses are actually doing. Even when they are fundraising and we get hold of a fundraising document, it is hard to read. Thanks. Flip it around with a similar theme. A different shareholder recalls from last year's annual general meeting, you mentioned that you were studying or planning to study Motorola. She wants to know if you've learned any particular useful lessons from them and if you've studied other high-performing conglomerates this past year. We studied Motorola Solutions and Hexagon to understand hybrid hardware–software businesses. Motorola was an excellent example of a company that transitioned from a device-focused model to a recurring revenue model, with software forming a significant part of its offering, complemented by specialized services to establish and maintain networks. It is a remarkable business. It was fascinating to observe the influence of large investors on the company’s strategy over time—a rare occurrence, as strategy is usually developed internally. In this case, it appeared that major outside investors played a significant role in shaping the strategy. In the case of Hexagon, the company originated from the hardware side of the business, later acquiring significant software assets—much of which related directly to their hardware. They subsequently invested in software unrelated to their hardware, with no evident synergies. They have since announced plans to spin off this unrelated software. This, in my view, was a very strong strategic decision. I personally gained valuable insights from both exercises, and I hope the board and managers did as well through reading and discussion. Thank you. Follow up on that theme, I think. This is verbatim from a shareholder. To Mark Leonard, what management issue that you're currently working on do you have the least confidence in achieving? I've got finding high-return places to invest billions of dollars of capital. Interesting. Is that a management issue or an investment issue? If you have the right managers, perhaps you can find them. What is the most—flip it around. What's occupying your—what management issue is occupying your time, energy, and attention the most these days? The search around adjacencies of one form or another has been a big chunk of time. Monitoring what's going on in AI is a big chunk of time. The experiment of Perseus of putting the organic growth as a much bigger component of the bonus system and having the profitability be a much smaller component of the profitability of the compensation system is one I'm fascinated by and trying to get rolled out. It takes time. It also takes time for people to change behavior as it relates to compensation. Those are things I'm thinking about. VMS Ventures, someone would like to know how that experiment is going. The good news is that if I had been this successful doing venture investments back when I was a venture capitalist, I wouldn't have started Constellation and you wouldn't have to be sitting through this meeting. It's going well. It has had very small take-up. We've only made a half dozen investments. The success rate is way too high for true venture, probably due to a couple of things. We're working with a group of managers, often whom we know or vertical markets that we know. Our depth of knowledge surrounding the investments is greater than the average VC would have. We're probably aiming lower. The bar is lower. We're not aiming to create billion-dollar companies. We're aiming to create $10 million companies. Perhaps that's why we're having more success. I'm really happy with it, except I just wish we had 50 of them instead of 5 of them sort of cranking away. Excellent. Before I return to some questions for the panel, one final one that's just for you relates to compensation, I guess. I'm just going to read it verbatim too. Addressed to Mark Leonard, when you look back on your gesture of, quote, "working for free" for the past decade, what has been the impact on the business beyond the amount saved on one individual's compensation? I think it just makes the board really reticent about firing me. In terms of value for money, I am a spectacular deal. That's what we're—every meeting, that's what we're saying. I figured. Speaking of which, Larry, I just wanted to point out that Potpourri, as the name of your section, is a branding mistake. You really have to work on that. Maybe for the next AGM, we'll come up with a new section head for the part where you pose the questions. We had six different words: miscellaneous, unassigned, potpourri. I think we thought it was nice because I forget the actual etymology. It is from French. We thought that would be fun for our friends in Montreal. Let's turn—the joke about Greg Abel was very funny. He's obviously paid a lot more than you. A couple of these final questions are all referencing the Berkshire meeting or things that have been said about Berkshire Buffett here. The first one, and this is for anybody who would like to volunteer because it's directed at the Holdco or operating group level. I'm again going to read it. We were intrigued by your comments last year about Charlie Munger and how he felt Berkshire should have used more financial leverage. How much leverage would you be willing to take on, again, Holdco level or operating group level? Would you consider taking on leverage to do dividend recaps? I wouldn't consider taking on leverage to do a dividend recap at the Constellation level. I would, however, be happy if any of the operating groups wanted to do so if they felt that was something that served their shareholders best. I don't mind people experimenting with financial leverage at the sublevel. Partly that's because Constellation can act as the lender of last resort to those subsidiaries if we have to raise capital at the subsidiary level. If Lumine decides that they're going to buy a huge underperforming telecom software business and leverages to the gills, I would encourage them to do so, just knowing that we at Constellation can underwrite that risk on their behalf, knowing, however, that other shareholders share that risk. They should also be thinking the same way that you might have to write a check if this goes south if you want to remain undiluted at Lumine. I'm pretty comfortable with management teams taking higher risks than I personally would take as part of trying to create significant wealth for themselves and their shareholders. Anybody else? Anybody who has experience with leverage and its appeal and limits? Robin or Jeff? At Topicus, we work with leverage, but it's still at very modest levels. We agreed upon that a couple of years ago. I think I mentioned it before, the height of the debt, the structure of the debt, the quality of the companies you finance, all that kind of stuff you should take into account as well. We take a look at it over time. I think we're aware of it. We don't mind using leverage for some of the larger transactions. I look at how much capital we are generating or creating, our goal is to deploy that capital, not to just go out and use somebody else's capital. I think until that maybe rebalances, using some to provide our return or to get our return levels where we want them to be, I think, is a perfectly reasonable and useful tool. Fundamentally, our focus is on deploying our actual capital generated to earn high rates of return for our shareholders. That's our focus. I can think of an example that might be useful, instructive. Inside of Mark Miller's portfolio, we ended up with an investment, which we do not need to identify, which has a whack of debt in it, far more than we would be able to get from a third party because they got into financial difficulty. We assumed the debt, pushed it out a very long way, put up a little bit of equity to show that we were acting in good faith and have been working to turn that business around. Now, I think that is something that may come back. Basically, other lenders are also in the position of not wanting to write things down. Hence, they extend and pretend. They push off the debt. They do not require principal repayments. They may drop the interest rate. Whatever it is to not take a current hit, they will do in some instances if we're willing to take the reins and put up some money to show earnestness. Mark, how's that worked out for you? It's worked out great. It's a tough turnaround, but it worked out. It put us in a unique position to pick up that business, right, because it was really suffering. Yeah, got to deal with the banks on it. It worked well. Yeah, absolutely. That can be a useful tool, Larry. Coming up on the end of our meeting. There are two more questions left. Again, anyone can opine. The penultimate one, I'm going to mostly read it verbatim, but add a little bit. The shareholder wrote, "Trust is clearly important in your decentralized organization." Buffett described this month in Omaha how much he and Charlie enjoyed the fact that people trusted them and cited it as a reason they both had worked so long. How important is trust to you? I also note that I think Constellation as a company was listed as one of the most trustworthy companies in a reputable survey last year. How important is trust in your organization? What initiatives have worked best in building trust in your business? I'll throw something out. I mean, we've acquired hundreds of businesses in the Volaris portfolio over time. You're acquiring a lot of those businesses from people who have spent a lot of their life, sometimes a few decades, building that business. Your ability for someone who you're discussing potentially doing acquiring the business, bringing the business on board, it's important that they can call one of those people and that how you've operated as a leader is consistent to trust and integrity and that you're far from perfect, but at least you do what you say you're going to do to the best of your ability. I mean, for me, that's been very, very important to us. It has helped us succeed and sometimes make things happen that would not have happened because someone was willing to write a larger check for that business than we were. I will put that angle out before you throw it back at it. The commitment to permanence and autonomy, you can't really write that in the contract. It's just you either live it or don't. You develop a reputation. What about within the structure? I mean, you push a lot of responsibility down. You delegate deeply. You've got to be trusting the troops as well, right? It's a two-way street. You can't grow your business in a decentralized conglomerate like we are without giving things up, without letting people go run with them and making mistakes and learning from those mistakes. You can't do that. It is another form of building trust over time. I have to say some of our leaders do that better than others, right? They're willing to give them that rope. People do appreciate that. Some people do not do very well, even though you've given them that and signed. Many do do very well. That is really important as well. O ne of the architectural issues in an organization like ours is that you end up with a pyramid. As you get bigger, you add another layer to the pyramid. If you do not have trust, you supplement with bureaucracy, right? You have guards watching the guards. Your bureaucracy grows in a geometric fashion with the size of the organization if it is multi-tiered. You have to have trust. Otherwise, bureaucracy eats you eventually. How do you prevent, how do you mitigate that, Mark? Is it cultural? Are there actual tools that help an organization maintain that trust-based culture rather than a bureaucratic or red-tape one? Experience is part of it. I mean, I trust the people with whom I work directly. Now, they presumably, in turn, trust the people who work for them and therefore do not need to have the systems to monitor and control those people to any great extent. If they do not trust them, then they do need those systems. Therefore, the bureaucracy does grow. I think as trust grows, bureaucracy can shrink. Does bureaucracy naturally shrink? Generally not. You have to go out of your way to shrink it. You have to go out of your way to lop off some of the bureaucracy periodically that surrounds you. When your central headcount is growing proportionally to the size of our business, you've got a problem. Your bureaucracy is just going—it's guaranteed. It is just going to go up, up, and up, and up because those people, again, will just grow their functions within it. You've just always got to be pushing those people down, pushing them down and letting other people figure out how they want to spend their money rather than you becoming a big central taxing authority downloading all those costs that you've built up over time. You can see that that's the key measurement, right? Yeah. That's a feature of what Buffett called the institutional imperative. It requires permanent, relentless opposition. We're really nearly out of time. Here's the final question. The writer—I'm going to quote it, and it's directed to Mark. I think one of the great things about this group is it's an amazing bunch of investors, really. It says, "This is a general question to Mark Leonard. If Mark answers general questions like Warren Buffett does, then there are two questions, really. What advice do you have for younger investors in choosing investments? And two, what are the most important red flags for you when you look at a company?" We'll start with Mark, but others should feel free to add or subtract. Yeah. I don't give investment advice. And obviously, focus is key to success. So unless you're asking about vertical market software, I probably won't be able to help you anyway. In terms of red flags, if you're an investor as opposed to a speculator, I don't think there are a hell of a lot. If you're deep and you've studied what you're doing and you know your history, then whatever others would perceive as a red flag may well be an opportunity for you. Hard to give generic advice, isn't it? Boy, it kind of sucks. Anyone else want to give it a shot? I'll give an add-on, Mark. I, like you, don't give investment advice. I always tell people when they're asking me about investment advice, "Don't invest in what you don't understand." They go, and they spend hours and hours on the internet to buy a pair of scissors. They'll spend five minutes with their broker to buy shares. They should look at the balance sheet, income statement, and understand it themselves before they make that investment. Otherwise, it's gambling. Agreed. There are wonderful investors around our board and around our group of managers. Many of them are very, very specialized, but some of them are also quite broad in terms of their investment skills. It is wonderful to be in this environment where you have all of these terrific investors as constant feedback people on what you're doing. Creating that sort of environment where you are getting both feedback and learning is something that I think you should strive to do if you're going to be an investor. Anyone else? My two cents, I think what Dexter and Mark were just talking about is the circle Buffett calls it, the circle of confidence. Know your boundaries and stay within it. I'll finish with a quote from my stepfather. He said, "Surround yourself with great people.