Q: In a Presidents Letter several years ago, there was a detailed explanation of why organic growth was more valuable to the company than acquisition growth. In recent quarters organic growth was strong (4-5%) by historical standards. Of course no further information was provided. Do you have a sense of why organic growth has accelerated? Is it the influence of AI improving their businesses? Do you feel the higher organic growth rate is sustainable and if so should that lead to a rerating of the stock valuation?
Thanks.
Thanks.
5i Research Answer:
We can't exactly pinpoint the change here. As CSU absorbs its acquisitions, it is possible customers become more comfortable overall. A takeover is always a bit worrying for customers. There could be buyers' paralysis, in that with AI developments customers may be simply staying with what they know until they see what else becomes possible with AI systems. CSU's subsidiaries AI-initiatives themselves are likely helping customer retention and expansion. Organic growth is a very hard metric to predict, and we would expect continued lumpiness and perhaps not a full trend here. However, IF it does see sustained growth, we would expect a re-rating somewhat, especially after its unusual recent weakness.