Thank you, John, and thank you for joining the conference call. As you all know, we go directly to questions, and John will tee those up.

Mark, maybe you can talk just about the M&A environment. In particular, both the sourcing of deals as well as the potential down the road to maybe shift the geographic mix, how you're feeling about moving into other new geographies?

Okay. On the sourcing side, we have been examining some databases to get a handle on our market share from a sourcing perspective.

There are no easy answers out there that we can lay our hands on. But we have gotten a sense that we haven't yet covered the market.

So we've roughly 25,000 names in our database, and we've been adding something on the order of 5,000 a year to that database. We think there's probably another 10,000 or 15,000 that we could add based on some of the database work we've been doing over the last little while.

Obviously, if we're doing that at 5,000 a year, we would get through that fairly quickly. I think, however, that once we've added those, we'll discover there are more to add.

So I think it is a fairly large market for vertical market software companies that potentially could be acquired. The trick then, of course, is to stay in touch with them in case they are available and for sale.

And that's a nontrivial effort. It's going to require lots of manpower.

We already have lots of full-time people working on it, and I anticipate we will add lots more over the course of the next few years based on what we've been doing today. So I'd say we're placing more effort on sourcing than ever before.

We've also started a bit of an initiative to figure out how we cover the high end, the larger transactions in the marketplace. These, obviously, are easier to spot and much more highly contested, and we will have a much lower hit rate with them.

But we'd like to make sure that we do see the larger transactions and get a chance to bid.

And then just geographically, you have done very little historically in Latin America or Asia. I don't know if there's a -- any view as to the thoughts of expanding towards new markets on that front.

So my sense is that vertical market software in low-wage countries suffers from 2 things. One is that software tends to be a substitute for labor.

And the other is that if labor is cheap, you can generate custom software fairly cheaply. And so I think those markets tend to be somewhat less verdant in terms of opportunities for things to buy, but we continue to look in all kinds of places.

I think we have our first Brazilian office with the CAE acquisition. And obviously, once you got local feet on the street, you start to leverage off of that and try and use those people to introduce you to other software companies they're familiar with in their local geographies.

We do continue to add lots of names in lots of different places, but it's a gradual learning experience. It's not that we're averse to going anywhere, but each one is a new set of learning curves to climb.

Okay. And I guess, the last one for me is, no update per the letter you talked about thinking about some compensation, structure changes.

Has there been any sort of advances in your thinking over the last 90 days or so?

Yes. We talked about it at the board yesterday.

I'm trying to make sure that everyone shares the same basic feelings about the facts and then start to build a solution from there, and I think we're making progress.

Okay. And then just to clarify as well, the materiality threshold, where does that stand these days in terms of your folks press releasing acquisitions at the parent corp level?

Jamal?

$10 million purchase price, U.S.

Professional services revenues were a bit light in the quarter. I was wondering on the private side, they were down Q-on-Q.

And historically, they are up sequentially. Could you tell us a little bit about what drove that?

And sort of what that speaks about the activity going into the second half?

I hadn't noticed that, actually. I tend to look at the businesses on an individual basis, and so there's a couple of hundred of them out there.

In aggregate, I don't know that you get a whole lot of information out of looking at the professional services number and trend. I do tend to think professional services, as a rule, are a fairly good leading indicator of the activity levels in the business.

If they start to go down, it's usually because you're chewing through your backlog and you're scratching for business. And that's never a good sign.

It could, however, depend upon whether you're deliberately reducing headcount and getting rid of professional services business that has low profitability. We tend to see a couple of different kinds of PS business in our verticals, the stuff that is working on our own proprietary product, and that tends to be pretty decent margin and business that no one else really can compete with.

And then we also provide a bunch of professional services that are commodities, and that isn't very good business. Sometimes we do it because we want to offer a full bundle of services to the client and not have other people in there fooling around with the systems and disturbing them.

But it's much harder to make decent money on that. But I think there's no obvious reason that I can see why PS has trended down.

The general feeling amongst the managers as we talk to them is that the second half is looking pretty decent. So I don't think, in this instance, the trend downwards in professional services is a scary thing.

There were some -- it's like Magic [ph], for example. There's a couple of business units where they have very lumpy, very large projects.

And so there were some that were tailing off -- that we had last year that now tailed off. Now that, again, doesn't show a negative trend, I would say, because you would probably staff up for those large projects and then staff down when they're not normal, of course.

And there was a few in public as well, though, like that. But again, I don't think it shows a huge parity [ph], but there are some that tailed off.

Got it. Mark, you mentioned the business you acquired from CAE.

Just wanted to see if there's anything different you're applying to your valuation framework as you look at industries or verticals that are arguably in a cyclical decline or a cyclical softness, let's call it. Is there something different that you might look, whereas those businesses might offer you attractive valuations now but may take longer to turn around?

Yes. I mean, attractive valuations are always attractive.

And we tend to buy off cycle, and we go where other people don't go because we intend to hold the businesses forever. So we think through the cycles.

We don't think about this quarter or this year. And in this particular instance, we're delighted to get into the mining space.

I remember, must be over 15 years ago, Bernie, our M&A guy, went to the mining conference in Toronto and came back with a bunch of names of software companies in the mining space. And we have been studying it ever since, and we're now in one of the biggest downturns the sector has seen, and so we're buying stuff.

It just kind of makes sense to me.

And maybe one for you, Jamal. R&D tax credits, they were higher in the back half of 2014.

How should we think about them as we head into the second half of 2015?

The 2014, if you sort of read through some of the disclosure, I don't remember the exact amounts. There were a lot of catch-up entries made where we started filing in the U.S.

We started filing some stuff in Australia. So that's not a trend.

I -- whatever is being booked now is probably the trends that you should expect.

Just in regards to the capital deployment and acquisitions this quarter, the amount looks like it was above what we're estimating. Could you just help us better understand?

And just -- probably an easy way to put the question is, was the takeout multiple in acquisitions this quarter closer to what you paid for TSS? Or was it closer to what you paid for in the past for smaller deals prior to TSS?

So the IRR on TSS that we were seeking was lower than the -- and I'm talking here on the equity portion of TSS, was lower than the IRR that we operated on this quarter. What we did decide at the board meeting, however, is that going forward, we will use a lower hurdle rate for larger transactions, and we're going to use a higher hurdle rate for tiny transactions than we have in the past.

So we're going to have a 3-tier hurdle going forward.

The -- what's your -- I mean, you've been dabbling, for lack of a better word, in larger transactions for the last couple of years. What's your sense on the ones that you didn't win on the bid-ask spread and your lower hurdle rate for larger ones?

How would you see that closing the gap? Or how close would you get?

I think it's very situation-specific and varies a lot. If you've got a troubled sector and the company isn't making money, we love those because there tend to be fewer bidders and the bidders can't use as much leverage against those acquisitions if they're PE firms.

And if you've got a situation that's highly optimized, running 50% EBIT, there's probably nothing we can do to make that business better and, in fact, probably believe that it is unsustainable at that level. And if they go out and the competitors leverage it 7x, we're not going to be competitive on those.

Lastly, just in regards to leverage, I think you mentioned before you'd prefer to be overcapitalized. I mean, what's the magnitude of overcapitalization we should think about?

And then I think, Jamal, or you made mention at the AGM that you're working on renegotiating your credit facility. How's that proceeding?

So overcapitalization is in the eye of the beholder. It's something that I suspect we will iterate towards over time if we aren't managing to deploy as much as we're generating, and we continue to raise debentures.

And it will be shareholders providing feedback, directors providing feedback and arguments about what the potential upside on having that excess capital around is. So I don't know what the answer to that is going to be, Paul.

I think we're going to figure that out over time. And on the credit facility, I've been the holdup on that and just haven't applied my mind to it.

Jamal's been working on it with the -- the bankers have a sketch of what it looks like, and I just need to focus and get it done.

Mark, as you start to look at larger transactions, how important is the notion of diversification across your business? So in another words, would there be a scenario in which you'd be comfortable having more than, say, 10% or 15% of your revenue coming from a single individual vertical if that made sense from an IRR perspective?

Or is that something that you'd be unlikely to do just from a risk mitigation perspective?

No. I think we would be comfortable with more than 10% of our revenues from a single vertical, mainly because recurring revenues tend to be recurring.

And so even in the downturn, we saw that these businesses held up well. Homebuilding was the one that got hit the hardest inside of our portfolio.

And even it, I think, remained profitable on an annual basis. Pieces [ph] might have had a couple of quarters of losses.

So yes, I don't think it's -- because of the nature of the underlying businesses with the high recurring revenues, I don't think it's scary to have concentration in a particular industry. I just don't see any industries out there that are likely to be 10% in the short term.

Okay. That's helpful.

Constant-currency organic revenue growth seemed to be a little slower this quarter. Given your commentary about the optimism for the second half from your managers, should we just assume that might have been related to maybe some restructuring, defocusing on lower-margin work or maybe the large projects that came off, as Jamal talked about?

Yes. I don't know what the causes were, but the -- I asked the meta-question of how optimistic are you about being optimistic in the second half, and they told me that they felt that they were reasonable about the optimism in the second half and that they probably would do slightly better.

We'll see.

Okay. And finally, can you comment on the pipeline you're seeing of larger M&A opportunities?

Or is that just -- are the deals so few and lumpy that it's really hard to comment on that?

So we saw 3 of 19 transactions in the first half that we would have considered elephants, so we're in 3 of the processes. And we only had 8 of those 19 in our coverage universe in sales force, in our database.

So it would have been both nice to have had full coverage, so to have had all 19 of them on the radar and to have been in a lot more of those processes. So we're working on that.

Mark, I'm a very happy retail investor. And my question for you is with the stock price about to touch $600, congratulations.

Could you talk about your philosophy as it relates to that stock price and the possibility of a stock split?

So the underlying thought on keeping the share price high is that we don't want people trading in and out. What we want are long-term-oriented investors.

It's a nontrivial company to understand, but to study it and read a lot of material and wrap your head around a whole lot of peculiar technology and terminology for the vertical market software space. If you do that, I think it can be rewarding, both in terms of your investment in Constellation and, potentially, in investments outside of Constellation in other vertical market software companies.

We track about 400 of those public companies, and many of them have done extremely well. It's an inherently good business model, and we love having educated shareholders in the stock.

We don't want to see them sell. The share price is a bit of a barrier to retail people popping in and out, and I'm comfortable with that.

I'm also an individual investor, and I would echo the comments in terms of what a great job you're doing. I wondered in terms of -- I know that the question of organic growth was kind of touched upon previously.

I just wanted to know from your perspective, given the fact of so many other positives in terms of net income, et cetera, is organic growth something that you are even concerned about? Or is your feeling that as long as the company continues to make, say, very favorable amounts of money, cash flow, et cetera, that it's something that doesn't particularly concern you?

So we're in a very -- I'll give you a long answer. We're in a very low-yield environment.

Multiples are very, very high for nearly all companies that you can see out there right now. And when it comes down to it, that's a function of growth and profitability.

Organic growth in our business is a particularly attractive thing because we don't tie up a whole lot of assets when we grow organically. In fact, arguably, we have negative capital employed.

And if you grow, you end up with more negative capital employed. So you don't actually have to put cash into factories and fixed assets and working capital.

So organic growth can be a tremendous lever in our business. And in an organic growth situation where you're generating sort of 5% organic growth and the discount rates or multiples out there are suggesting sort of 5% to 8% rates of return are adequate, that organic growth lever is enormously valuable.

So I'm a little disappointed with our organic growth and would like to see it higher. It's not something you can mandate.

You can't say, "Go grow organically next quarter." What you can do is say, "We're looking to make high rates of return on the money that we invest in R&D and sales and marketing."

We want to do it intelligently. Let's use processes around that, so that we don't piss away money on it.

But let's try and do it as much as we can. What we have is a wonderful collection of clients who spend a relatively small amount of their revenue dollars on IT.

And so if we can deliver value to those folks, they're probably willing to pay for it. And since our systems frequently run their businesses and help them ideally run their businesses better, we're in a great position to deliver big value to the underlying clients.

So who looks for that value opportunity? Obviously, it's the people who are interacting with those clients on a regular basis.

It's our support people, it's our R&D people, and it's our salespeople. And we're trying to encourage innovation and the creation of add-on products throughout the portfolio.

But I guess, bottom line, a bit disappointed in the organic growth. I think it has tremendous leverage.

We'd like to see more of it.

And I'd also just like to say just before I leave that I'm a relatively new shareholder, and I try to do all the research that I could do. And one of the things I've seen is that you personally seem to have a tremendous amount of integrity.

And I appreciate that as a shareholder, certainly, and it's certainly one of the reasons that I'm a shareholder.

I just wanted to circle back on the large deals. You mentioned that you'd seen 3 of 19 transactions.

Can you talk a bit about what you need to do to get more of those large deals into the database and into the pipeline?

So into the database isn't hard. It's not hard to identify the large vertical market software businesses out there.

We've done a bit of work, and we're going to do a bunch more. But I think we'll drive up coverage over the course of the next few months, and I'm hoping we'll take it from sort of 50% of available market to a lot closer to 100%.

So I think that's a few-quarter exercise, and it's just a bunch of Internet and database work. To then actually establish relationships with those companies is a massive task, and it's a senior management task.

It's not the sort of thing where you can take kids out of school and put them on to talking to major multinationals and developing relationships. So we have to parse out our efforts to build those relationships very carefully, and it's something that all of our senior managers have to do.

Obviously, they're going to do it in their own spaces much more easily than they are in new verticals. But we're also going to try and do it in new verticals.

We've got to prioritize amongst those companies, once we've identified them, those that are likely to transact. And obviously, there is some ways at getting at that.

Clearly, underperformance in the case of public ones is going to be one of the things you look for. But every private equity firm in the world is also looking for that.

So it's a hard one to distinguish yourself on. So we're trying to think through how you get, not proprietary deal flow because these are going to washup [ph] deals, but deal flow where you have an information asymmetry, and that's what we're focusing on.

Great. And in terms of your new IRR hurdle for some of the larger deals, given the 3 that you bid on that you didn't win, can you talk about the new IRR hurdle and the sale price of those?

And how competitive you would have been with the new IRR hurdle?

I don't know what the prices were on all of them, but I'm sure it would not have made a dramatic difference to the outcome on most of them. But it will make an incremental difference on some of them.

Fair enough. And then just finally, on SaaS and on the cloud, I think in the past, you've kind of talked about 30% of maintenance revenue with cloud base.

Has that changed at all the last couple of quarters? Or is it relatively stable?

I haven't looked at it since the last time I published on it. But next year, when I'm doing the maintenance review, I will take another cut at it and give you a sense of what the trend has been.

Just a quick question, going back to the organic side. Can you maybe sort of walk us through some examples of some of your more successful organic investments and, perhaps, an area that you're looking at now in terms of the opportunities for the future on that side?

The problem is that there's literally dozens, almost hundreds, of little initiatives that have created growth in revenues. And it's -- portals for your customers' customers is a very common one that we end up creating for many of our verticals.

And those tend to have high takeup. Reporting sort of BI in the grand sense, but in a much more specific sense of particular verticals, you create stuff that isn't as flexible as the Cognos-type application but isn't as tough on the user as a Cognos-type application.

Has a bunch more prepackaged reports that are industry-specific. Nearly all of our businesses offer a sort of BI add-on, and the list sort of goes on.

Every 3-letter acronym space that you can think of that has horizontal companies chasing it will end up with an analogue in the vertical market space that we can probably offer to our clients as a much more industry-specific add-on product.

Okay. So in the case of, let's say, you're reporting your [ph] BI, if one of your divisions were to roll out an organic initiative to build that out, would one of the sort of other divisions be able to use that same platform?

I'm just trying to kind of get an understanding of whether you get some leverage.

Generally not, but I'll give you one example where it did work. As you know, the smart meter market took off back during the recession with a lot of government funding down in the states.

All these meters popped up inside of all of our utility companies. Instead of collecting data on a once-a-month or once-a-quarter basis with a guy wandering around with a clipboard, they were getting streaming data off the meters in minutes on status, usage, things of that nature.

What do you do with this vast torrent of data? And we've created, or actually acquired and then subsequently built a product for meter data management.

And that grew by leaps and bounds. And that particular product line is offered through all of our utility businesses where the clients are of sufficient size to warrant it.

So that was a single-product leverage over multiple business units. However, most of the BI products for a particular industry end up being industry-specific BI products that are tied tightly to our database and, hence, are not useful across other verticals.

And we spend very little time looking for synergies because we believe that what you give up in terms of autonomy and flexibility when you start seeking those synergies is not worthwhile. I'd much rather have someone running a 50-person business doing what he thinks his clients need as opposed to some guru of BI sitting at head office telling everyone what they got to build.

Okay. And just one last question, sort of following up on Stephanie's question.

Your existing base, do you think they're becoming more receptive to these cloud subscription models? Or is it part of that base is receptive, others are not?

Some of the changes may have -- that may have happened year-over-year on that side.

I think there's increasing acceptance of cloud-based or SaaS solutions. Yes, no doubt about it.

It's just a question of how fast it happens.

I wanted to ask about the Constellation brand impact when it comes to acquisitions, and I'm referring to the fact that Constellation holds for [ph] license, probably viewed as a good home for the business. Do you think about that as a competitive advantage?

And how is the advantage different for tiny acquisitions versus large acquisitions like TSS?

So I think, as you suggest for the vendors of these businesses, Constellation, we hope, is perceived as a happy home for their business, the business that they've spent decades building. And because we're not a highly leveraged company, because we hold forever, because we don't take the business and wrap it together with another business and fire half of the staff, I think owners like that.

And so I think it does have some appeal. I don't know if it's the brand per se, but we're trying to make sure that the vendors are aware of what we do and how we do it.

But yes, it's not something that if you ask a dozen brokers, they would be able to say this is the Constellation way. So -- but whenever we get to a vendor, and we get to a lot of them, we do tell them how we operate, and there are a lot of people who have sold to us who we can use as references.

And do you think it has a bigger impact on smaller acquisitions or larger acquisitions or no different or not worth thinking about?

I think it's definitely worth thinking about. It has a big impact on family-owned businesses; has a lesser impact, I suspect, on corporate-owned businesses, particularly underperforming corporate-owned businesses.

Thanks very much. Look forward to speaking with you all again on the Q3 conference call.

Bye-bye now.