CSU Q2 2026 - Post-Call Earnings Update
Verdict
- The organic-growth question got a real answer. Reported organic growth was 3%, or 1% in constant currency, against 17% total revenue growth. Management named the drags: a tough Altera comp, a Dark Matter swing from +10% to -18%, Lumine at 1%, and a South American business losing a customer it knew was leaving when it bought it, worth about 30bp on its own.
- Normalised, they say the number is 5%. "If you back out those three, four things, you would normalize back down to that sort of 5% number that we have always trended at." Excluding Altera alone, constant-currency maintenance and recurring growth was 4%, still below the historical 5–6%.
- No guidance, and the call went further than usual in refusing it: no AI target, no AI revenue line, no AI timeline, and no prediction on second-half acquisition pace.
- The one thing that matters: two of the four drags are pure IFRS upfront-revenue comps that reverse next quarter, but the other two are not. Lumine's businesses are being fixed on no stated timeline, and Altera is expected to be "a slow shrinker for the next year or so, or a couple of years." The 5% is a claim about arithmetic, not a forecast.
Consensus scorecard
| Metric / basis | Quartr actual | API Ninjas consensus | Beat/Miss | Beat/Miss % |
|---|---|---|---|---|
| Revenue (total revenue) | $3,335m | API Ninjas estimate unavailable | — | — |
| EPS (IFRS basic and diluted) | $12.93 | API Ninjas estimate unavailable | — | — |
Guidance & KPIs
| Item | New on the call | Prior guide | Prior-year actual |
|---|---|---|---|
| Organic growth, normalised for one-offs | ~5% | None given | 3% reported, 1% constant currency |
| Maintenance and recurring organic growth, ex-Altera, constant currency | 4% | None given | 5–6% historical trend |
| 2026 acquisition cohort margin | +16% in Q2 | -16% in Q1 | High 20s to 30s for older cohorts |
| 2025 acquisition cohort margin | 20% | 16–17% at the start | High 20s to 30s for older cohorts |
| Current tax as a share of adjusted pre-tax income | Mid-20s%, described as stable | None given | — |
| Second-half acquisition pace | Explicitly not predicted | None given | — |
Management commentary
- On AI, CEO Mark Miller drew a hard line: "We are not going to give you an AI target, an AI revenue line, or an AI timeline. If we start reporting a number like that, we will start managing to it." Development productivity is improving, but a pickup in organic growth "is a ways out" — customers still have to budget for what gets built.
- The company does not yet know what AI costs it. CFO Jamal Baksh said general-ledger accounts to track token expense have only now been created, third-party maintenance is "slightly up, but nothing material", and he does "not have a great clear number of what the total expenses are relating to AI."
- Verticalization is a grouping exercise, not integration: businesses may move between operating groups so one leader oversees a vertical, but "there's no business integration going on." The binding constraint is leaders of the right calibre, and management asked explicitly that results not be looked for this year or next.
- On DerbySoft, management did not dispute an analyst's arithmetic of roughly four times annualised revenue, calling it "a high multiple" on "a very solid business", noting leverage was used, and confirming hurdle rates are unchanged.
- Acquisition competition has not eased: the funnel is robust across owner-managers, private equity and carve-outs, but pricing shows only "some weaknesses at the high end" and the number of copycat acquirers has not fallen.
Quality of earnings
- Profit growth remains mostly non-operating. Net income rose 386% to $274m, but excluding foreign exchange and the IRGA liability revaluation the increase was 8%; FX swung to a $14m gain from a $118m loss and the revaluation charge fell to $64m from $126m.
- Recent acquisitions are structurally diluting margins while they are fixed. The 2026 cohort moved from -16% margin in Q1 to +16% in Q2 and the 2025 cohort from 16–17% to 20%, against high-20s to 30s for every earlier cohort — a mix drag that grows with the deployment pace rather than shrinking.
- The organic-growth bridge is only half reversible. Two drags, Altera and Dark Matter, are IFRS upfront-recognition comps management expects to revert next quarter; the South American customer loss worth 30bp is permanent and was known at acquisition; Lumine's 1% has no stated turnaround date.
Gotchas & watch items
- Altera is guided down — "a slow shrinker for the next year or so, or a couple of years" — with trailing revenue off roughly a fifth since the 2022 acquisition on the questioner's figures.
- The path back to 5% organic growth rests on comps management described but never sized in total — only the 30bp South American item was quantified.
- Capital deployment is running far ahead of the disclosure that follows it: $893m of consideration closed in Q2 plus $818m closed or committed after quarter end, with hurdle rates said to be unchanged but no realised returns disclosed for any recent cohort.
- No headcount reduction is planned while peers cut, so AI productivity flows to output rather than cost; the leverage appears only if customers pay for that extra output.
Event: https://web.quartr.com/companies/3613/events/667893/overview Retrieved: 2026-08-12T20:45:00Z Comparison mode: maximal · Scorecard contract: v1 No API Ninjas consensus row matches this ticker, so no beat or miss can be scored for either metric.