S&P Global Ratings revised its outlook on Constellation Software to positive from stable, affirming the company’s BBB issuer credit rating. The change reflects progress in deleveraging and sustained cash flow generation.
The company’s net leverage, adjusted by S&P, declined to 1.1 times EBITDA for the 12 months through June 30, 2026, down from 1.7 times in 2023. Free operating cash flow rose to approximately $2.5 billion in 2025, up from $1.6 billion in 2023, and is projected at $2.8 billion for 2026. Acquisition spending is forecast at $2.6 billion for the current year, with free cash flow exceeding outlays since 2024.
Constellation completed four acquisitions exceeding $100 million in the first half of 2026, including Derby Soft and Synchronoss. The company holds minority stakes of 24.8% in Assecco and 12.7% in Sabre. Its operations span more than 100 verticals, with no single customer contributing more than 2% of revenue.
Maintenance and recurring revenue now account for nearly 75% of consolidated revenue, up from 70% two years ago, supported by customer retention above 90%. Maintenance revenue is expected to grow at an average of 5% annually, driven by price increases and new add-on products.
S&P indicated the rating could be raised over the next 12 to 24 months if leverage remains at or below 1.5 times after debt-funded acquisitions or if EBITDA margins expand materially. The outlook could revert to stable if leverage exceeds 1.5 times due to more aggressive dealmaking or weaker operational performance.
