Adding to my position on Computer Modelling Group ($CMG.to)

After buying a first position in December I am increasing my stake and have add shares at 9.30 CAD.

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In December I have started a position in Computer Modelling Group and last month I shared a deep dive. Today the stock is down on their 3Q earnings update. Here is a summary on their update:

CMG's Q3 2025 saw a revenue increase to $35.8 million, up from $33.0 million in Q3 2024. This reflects a slight decrease of 1% in the Reservoir and Production (R&P) segment revenue, offset by a 9% contribution from the Seismic segment, which included 6% growth from acquisitions. Year-to-date revenue reached $95.8 million, compared to $76.4 million in the prior year, with the Seismic segment contributing 22% (21% from acquisitions).

Operating profit for Q3 2025 increased significantly to $11.2 million, a 37% rise YoY, while the year-to-date operating profit decreased by 2% to $25.3 million. Net income for the quarter was $9.6 million, a 71% increase YoY, but year-to-date net income decreased by 9% to $17.3 million. EPS for Q3 2025 was $0.12, up 71% YoY, but year-to-date EPS decreased by 13% to $0.21.

The R&P segment experienced a revenue decline of 1% in Q3, while the Seismic Solutions segment saw a 26% increase in revenue, driven by both organic growth (9%) and acquisitions (17%). The company is focusing on shifting its revenue mix towards recurring software revenue to enhance profitability and free cash flow, with acquisitions playing a key role in this long-term strategy. They are prioritizing customer support to drive software adoption and focusing on key product development opportunities.

Based on their release I have updated my reversed DCF and at the current purchase price of 9.30 they have to grow 8% the next 10 years.

CEO Jain is targeting a low double digit increase. He still has to prove he will manage this, but as I believe in his strategy I think the current share price gives a margin of safety for the long-term and gives me the opportunity to increase my stake from around 5.2% (smallest position) towards 8.0%.

My portfolio before the addition:

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