Roper(ROP) The Motley Fool·2025-03-09 10:00Core Insights - The article discusses the investment potential of Roper Technologies Inc, highlighting its ability to sustain long-term growth through a diversified portfolio of asset-light technology businesses [3][12] - Roper's business model focuses on high-margin, recurring revenue streams, primarily from software-as-a-service (SaaS) and related services, which accounted for 57% of its 2023 revenue [5][12] Company Overview - Roper Technologies operates a diversified portfolio of 28 businesses across three segments: application software, network software, and technology-enabled products [3] - The company has transitioned from its original industrial focus to a technology-centric model, divesting capital-intensive operations over the last two decades [4] Business Model and Growth Strategy - Roper's asset-light business model allows for minimal capital expenditure while enabling significant reinvestment of profits into mergers and acquisitions [6][9] - The company has a proven capital allocation process that supports sustainable long-term growth by acquiring niche businesses and enhancing their performance [8][10] Financial Performance - Over the past 15 years, Roper has achieved a revenue compound annual growth rate (CAGR) of 7% and a free cash flow CAGR of 11%, even after divesting 40% of its revenue in 2018 [12] - The diversified nature of Roper's business model provides resilience against market cycles, helping to maintain revenue and profitability during challenging conditions [7] Investment Considerations - Roper Technologies is positioned as an attractive investment opportunity due to its strong business economics and sustainable growth formula [13] - Investors are encouraged to monitor Roper as it represents a compelling example of a long-term compounder in the technology sector [13]