Roper Technologies, Inc ROP reported better-than-expected earnings for its first quarter and raised its forecast on Monday. The company posted first-quarter adjusted earnings per share of $4.78, beating the street view of $4.74. Quarterly sales of $1.88 billion outpaced the analyst consensus estimate of $1.82 billion. "Roper had a strong start to 2025 and our enterprise continues to execute at a high level," said Neil Hunn, Roper's President and CEO. "Our total revenue growth of 12% was driven by an 8% acqu ...

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Financial Data and Key Metrics Changes - Total revenue for Q1 2025 grew by 12% to $1,900,000,000, with organic revenue increasing by 5% [6][17] - EBITDA reached $740,000,000, up over 9% year-over-year, with a reported EBITDA margin of 39.3%, down 90 basis points from the prior year [18][19] - Diluted EPS was $4.78, exceeding guidance of $4.70 to $4.75 [20] - Free cash flow for Q1 was $507,000,000, down 1% year-over-year, impacted by a legal settlement [20][21] Business Line Data and Key Metrics Changes - Application Software segment revenue grew by 19% in total and 6% organically, with EBITDA margins at 41.4% [23] - Network Software segment organic revenue grew by 1%, with EBITDA margins remaining strong at 55.3% [28] - TEP segment revenue grew by 6% on both total and organic bases, with EBITDA margins at 36.2% [31] Market Data and Key Metrics Changes - Over 85% of revenues are generated in the U.S., with over 85% of software revenues recurring [8] - Central Reach, acquired for $1,650,000,000, is expected to deliver approximately $175,000,000 in revenue and $75,000,000 in EBITDA for the TTM period ending June 2026 [11][12] Company Strategy and Development Direction - The company is raising its full-year total revenue guidance from 10% to approximately 12% due to a solid start to the year and the completion of the Central Reach acquisition [7][38] - The company emphasizes its durable business model, with a focus on capital deployment and maintaining over $5,000,000,000 of available capital for acquisitions [6][41] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macroeconomic environment, noting that while there is uncertainty, the pipeline remains robust [49] - The company expects organic growth rates to remain in the mid-single digits for the year, despite some challenges in specific segments like Deltek [66] Other Important Information - The acquisition of Central Reach is seen as a strategic move to enhance the company's offerings in the autism care market, with expected growth drivers including a shortage of ABA therapists [12][15] - The company is actively pursuing additional acquisition opportunities, with a strong pipeline of potential deals [22][42] Q&A Session Summary Question: What is the perspective on private equity behavior? - Management noted a slowdown in deal activity due to macro uncertainty but highlighted a robust pipeline and ongoing conversations with sponsors [48] Question: What is the exposure of Deltek to government contracting? - Deltek's business is 60% focused on federal government contractors, with current uncertainties affecting growth rates [51][52] Question: Will free cash flow return to growth in June? - Management indicated that free cash flow is expected to be back-end weighted, with stronger performance anticipated in the second half of the year [56][58] Question: How does Central Reach's AI revenue look? - Central Reach's AI products are new and not yet a material revenue source, but they are expected to be significant growth drivers moving forward [81] Question: What is the outlook for core EBITDA margins? - Core EBITDA margins are expected to improve slightly throughout the year, with acquisition margins anticipated to increase as well [85]

Q1 2025 Financial results April 28, 2025 Safe harbor statement The information provided in this presentation contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements may include, among others, statements regarding operating results, the success of our internal operating plans, and the prospects for newly acquired businesses to be integrated and contribute to future growth, profit and cash flow expectations. Forward-looking statements may be indi ...

Core Viewpoint - Roper Technologies reported strong financial performance in Q1 2025, with adjusted earnings per share of $4.78, exceeding estimates and reflecting an 8% year-over-year increase. Net revenues reached $1.883 billion, surpassing expectations and showing a 12% increase from the previous year [1]. Financial Performance - Adjusted earnings per share for Q1 2025 were $4.78, beating the Zacks Consensus Estimate of $4.73, and increased by 8% year-over-year [1] - Net revenues totaled $1.883 billion, exceeding the consensus estimate of $1.878 billion, with a year-over-year growth of 12% [1] - Organic revenue growth was 5%, driven by the Application Software segment, while acquisitions contributed an 8% increase in sales [1] Segmental Performance - **Application Software**: Generated revenues of $1.07 billion, accounting for 56.7% of total revenues, with a 19% year-over-year increase and 6% organic growth [2] - **Network Software & Systems**: Revenues were $375.9 million, representing 20% of total revenues, with a 1% year-over-year growth and 1% organic growth [3] - **Technology Enabled Products**: Revenues reached $438.7 million, making up 23.3% of total revenues, with a 6% year-over-year increase and 6% organic growth [4] Margin Profile - Cost of sales increased by 17.9% year-over-year to $589.1 million, while gross profit rose by 9.5% to approximately $1.3 billion, resulting in a gross margin decrease to 68.7% from 70.3% [5] - Selling, general and administrative expenses increased by 9.8% year-over-year to $767.9 million, with adjusted EBITDA growing by 9% to $740 million, leading to a margin decrease of 90 basis points to 39.3% [5] - Interest expenses rose by 18.2% year-over-year to $62.9 million [5] Balance Sheet & Cash Flow - At the end of Q1 2025, cash and cash equivalents were $372.8 million, up from $188.2 million at the end of December 2024, while long-term debt decreased to $6.46 billion from $6.58 billion [6] - Net cash generated from operating activities was $528.7 million, reflecting a 0.5% decrease year-over-year, with capital expenditures totaling $9.5 million [7] - The company paid $88.6 million in dividends to shareholders, marking a 10.1% increase year-over-year [7] Outlook - Roper has raised its 2025 outlook, expecting adjusted earnings per share from continuing operations to be in the range of $19.80-$20.05, up from the previous estimate of $19.75-$20.00 [8] - Total revenues are anticipated to increase by 12%, compared to earlier expectations of over 10%, with organic revenues projected to grow by 6-7% [8] - For Q2 2025, adjusted earnings are expected to be between $4.80 and $4.84 per share [9]

Core Insights - Roper Technologies reported revenue of $1.88 billion for the quarter ended March 2025, reflecting a 12% increase year-over-year and matching the Zacks Consensus Estimate, with an EPS of $4.78, up from $4.41 in the previous year [1] Financial Performance - Revenue breakdown: - Network Software & Systems: $375.90 million, a 1.4% increase year-over-year, slightly below the average estimate of $377.41 million [4] - Technology Enabled Products: $438.70 million, a 5.8% increase year-over-year, also below the average estimate of $444.06 million [4] - Application Software: $1.07 billion, a significant 19.3% increase year-over-year, exceeding the average estimate of $1.06 billion [4] - Operating Profit: - Application Software: $276.80 million, surpassing the average estimate of $271.15 million [4] - Technology Enabled Products: $153.60 million, above the average estimate of $148.95 million [4] - Network Software & Systems: $166.70 million, below the average estimate of $171.42 million [4] Market Performance - Roper Technologies' shares have returned -4.3% over the past month, mirroring the -4.3% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Viewpoint - Roper Technologies reported quarterly earnings of $4.78 per share, exceeding the Zacks Consensus Estimate of $4.73 per share, and showing an increase from $4.41 per share a year ago, indicating a positive earnings surprise of 1.06% [1] Financial Performance - The company achieved revenues of $1.88 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.27%, and up from $1.68 billion in the same quarter last year [2] - Over the last four quarters, Roper Technologies has consistently surpassed consensus EPS estimates four times and revenue estimates three times [2] Stock Performance - Roper Technologies shares have increased approximately 7.3% since the beginning of the year, contrasting with the S&P 500's decline of 6.1% [3] Future Outlook - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $4.80 for the coming quarter and $19.87 for the current fiscal year, alongside expected revenues of $1.91 billion and $7.74 billion respectively [7] - The estimate revisions trend for Roper Technologies is currently mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6] Industry Context - The Computers - IT Services industry, to which Roper Technologies belongs, is currently ranked in the top 37% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Financial Data and Key Metrics Changes - Total revenue for Q1 increased by 12% to $1.9 billion, with organic revenue growth of 5% and cash flow growth of 12% over the last twelve months [7][19][41] - EBITDA rose to $740 million, up over 9% in total, with a reported EBITDA margin of 39.3%, down 90 basis points year-over-year [20][21] - Diluted EPS was $4.78, exceeding guidance of $4.70, driven by strong margin performance [22] Business Line Data and Key Metrics Changes - Application Software segment revenue grew by 19% in total and 6% organically, with EBITDA margins at 41.4% [25] - Network Software segment organic revenue grew by 1%, with EBITDA margins remaining strong at 55.3% [30] - TEP segment revenue grew by 6% on both total and organic bases, with EBITDA margins at 36.2% [33] Market Data and Key Metrics Changes - Over 85% of revenues are generated in the U.S., with over 85% of software revenues recurring [10] - Central Reach is expected to deliver approximately $175 million in revenue and $75 million in EBITDA for the TTM period ending June 2026, with anticipated growth rates of around 20% [12][16] Company Strategy and Development Direction - The company is raising its full-year total revenue guidance from 10% to approximately 12% due to a solid start to the year and the completion of the Central Reach acquisition [41][43] - The focus remains on capital deployment, with over $5 billion available for acquisitions over the next twelve months [9][43] - The company emphasizes its durable business model, which is well-suited to withstand macroeconomic uncertainties [10][43] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macro environment, noting that while there is uncertainty, the pipeline for acquisitions remains robust [52] - The company anticipates organic growth in the mid-single digits for the remainder of the year, despite some expected weakness in specific segments like Deltek [72][75] Other Important Information - The acquisition of Central Reach was completed for $1.65 billion, net of a $200 million tax benefit, and is expected to enhance the company's growth profile significantly [12][41] - The company noted that the current macroeconomic environment presents unique opportunities for capital deployment, historically advantageous during uncertain times [45] Q&A Session Summary Question: Perspective on private equity behavior - Management noted a slowdown in deal activity due to uncertainty but highlighted a robust pipeline and ongoing conversations with sponsors [51] Question: Deltek's exposure to government contracting - Deltek's business is 60% focused on federal government contractors, facing uncertainty due to budget issues, but customer sentiment remains positive [54][56] Question: Free cash flow expectations - Free cash flow is expected to be back-end weighted, with a stronger performance anticipated in Q3 due to seasonal factors [62][64] Question: Central Reach's gross retention rate - Central Reach's gross retention rate is in the low 90s when accounting for therapist turnover, but net retention is strong at 115-120% [65] Question: Durability of Deltek's business - Deltek's recurring revenue model provides predictability, but some growth has been trimmed due to current uncertainties [75] Question: AI-driven revenue for Central Reach - Central Reach's AI products are new and not yet a material revenue source, but they are expected to be significant growth drivers moving forward [92] Question: Core EBITDA margin outlook - Core EBITDA margins are expected to improve slightly throughout the year, with acquisition margins anticipated to enhance as well [97]

Revenue and Earnings - Total revenue for Q1 2025 increased by 12% to $1.88 billion, with an 8% contribution from acquisitions and 5% organic growth[7] - GAAP net earnings decreased by 13% to $331 million, while adjusted net earnings increased by 9% to $517 million[7] - Adjusted DEPS for Q1 2025 rose by 8% to $4.78, compared to $4.41 in Q1 2024[14] - The company expects full year 2025 adjusted DEPS to be between $19.80 and $20.05, up from previous guidance of $19.75 to $20.00[5] - Full year total revenue growth outlook has been increased to approximately 12%, compared to the previous outlook of over 10%[5] - Net revenues for Q1 2025 increased to $1,882.8 million, up 12.0% from $1,680.7 million in Q1 2024[26] - Net earnings for Q1 2025 were $331.1 million, a decrease of 13.3% compared to $382.0 million in Q1 2024[26] Cash Flow and Margins - Trailing-twelve-months free cash flow grew by 12% with a free cash flow margin of 31%[4] - Operating cash flow for Q1 2025 decreased by 1% to $529 million, while trailing-twelve-months adjusted operating cash flow increased by 12% to $2.39 billion[15] - Adjusted EBITDA for Q1 2025 increased by 9% to $740 million, with an adjusted EBITDA margin of 39.3%[12] - Gross profit margin decreased to 68.7% in Q1 2025 from 70.3% in Q1 2024, with gross profit amounting to $1,293.7 million[27] - Cash provided by operating activities was $528.7 million, slightly down from $531.5 million in Q1 2024[29] Assets and Liabilities - Total assets increased to $31,418.8 million as of March 31, 2025, compared to $31,334.7 million at the end of 2024[25] - Total liabilities decreased to $12,195.2 million from $12,467.1 million at the end of 2024[25] - Cash and cash equivalents rose to $372.8 million at the end of Q1 2025, up from $188.2 million at the end of 2024[29] Segment Performance and Acquisitions - Application Software segment revenues increased to $1,068.2 million, representing 56.7% of total revenues in Q1 2025[27] - The acquisition of CentralReach, completed on April 23, 2025, is expected to enhance the company's recurring revenue base[4] - Acquisitions of businesses in Q1 2025 amounted to $124.9 million, significantly lower than $1,858.7 million in Q1 2024[29] - The company remains well-positioned for future growth through disciplined capital deployment and a strong pipeline of acquisition opportunities[4] - The company reported an operating profit of $597.1 million, up from $542.8 million in Q1 2024, reflecting a margin of 31.7%[27]

Core Insights - Roper Technologies, Inc. reported a strong start to 2025 with total revenue growth of 12%, driven by 8% from acquisitions and 5% organic growth [3][4] - The company has increased its full year guidance for 2025, expecting adjusted diluted earnings per share (DEPS) of $19.80 - $20.05, up from the previous range of $19.75 - $20.00 [4][5] - Roper completed the acquisition of CentralReach, enhancing its cloud-native software offerings for Applied Behavior Analysis therapy [3][5] Financial Performance - Total revenue for Q1 2025 was $1.88 billion, a 12% increase from $1.68 billion in Q1 2024, with organic revenue growth of 5% and acquisition contribution of 8% [8][10] - GAAP net earnings decreased by 13% to $331 million, while adjusted net earnings increased by 9% to $517 million [8][10] - Adjusted EBITDA rose by 9% to $740 million, with an adjusted EBITDA margin of 39.3% [8][10] Cash Flow and Capital Management - Trailing twelve-months free cash flow grew by 12% to $2.39 billion, with a free cash flow margin of 31% [3][8] - Operating cash flow for Q1 2025 was $529 million, a slight decrease of 1% compared to $531 million in Q1 2024 [12][26] - The company maintains a disciplined capital deployment strategy, supported by significant M&A capabilities and a robust pipeline of acquisition opportunities [3][4] Segment Performance - Application Software segment generated $1.07 billion in revenue, while Network Software and Technology Enabled Products segments contributed $375.9 million and $438.7 million, respectively [24] - Gross profit margins for Application Software, Network Software, and Technology Enabled Products were 67.5%, 84.0%, and 58.7%, respectively [24][25] Guidance and Outlook - Roper expects full year 2025 total revenue growth to be approximately 12%, up from a previous outlook of 10%+, with organic revenue growth anticipated at 6% - 7% [4][5] - For Q2 2025, the company projects adjusted DEPS of $4.80 - $4.84 [4][13]