No. of Recommendations: 4
Well folks, what did you make of the latest earnings filing?
What is your owner earnings or free cash flow 2026 number now?
I see Pabrai has taken a position and is of a view that AI will reduce their operating costs and make acquisitions more likely and cheaper.
I also heard the Daily Journal (in a different but related field) CEO say at a conference at the Berkshire weekend, that when he thinks about a recent client workshop, to spec out a solution and the complexity involved, he is skeptical about how easy it would be with the current AI solutions to easily solve requirements. He thinks it’s more likely that the incumbents will use the AI tools to move faster.
One counter argument is that AI start ups my be able to develop edge case solutions that customers begin to blot onto their core SaaS solutions and over time they develop relationships and worm their way in gradually.
The Daily Journal CEO has publicly said he is looking at acquisitions. That could be how this plays out, with some of the new AI solutions bought out by the incumbents.
Certainly, anyone that has ever been involved in a major IT project and the complexity involved, probably believes we are a long way from an AI startup building a complete system solution for some tiny niche area that involves all kinds of human variables and interfaces. Building a poster website with AI is one thing but once you get into complex and critical systems that are very industry niche with no scale benefits for the developers, it’s is perhaps unlikely AI will simply take away all of Constellation’s business.
Would be interesting in what you think the current price for Constellation is in terms of current owner earnings and true free cashflow…?
