Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $1,940 million, representing a 13% increase year-over-year, with 7% organic growth and 6% from acquisitions [12][34] - EBITDA for the quarter was $775 million, up 12%, resulting in an EBITDA margin of 39.9% [13][34] - Free cash flow reached $433 million, a 10% increase compared to the previous year, driving TTM free cash flow to over $2,300 million [14][34] Business Line Data and Key Metrics Changes - Application Software segment revenue grew by 17% in total, with organic revenue growth of 6% and EBITDA margins at 42.9% [17][34] - Network segment revenue increased by 6%, with organic revenue growth of 5% and EBITDA margins at 54.6% [22][34] - TEP segment revenue grew by 10% with organic revenue growth of 9% and EBITDA margins at 36.7% [28][34] Market Data and Key Metrics Changes - The acquisition of Subsplash, a cloud-native software provider for faith-based organizations, was announced for $800 million, expected to generate $115 million in revenue and $36 million in EBITDA for the twelve months ending Q3 2026 [9][10] - The U.S. total addressable market (TAM) for Subsplash is estimated at $2.5 billion, with significant potential for international expansion [10] Company Strategy and Development Direction - The company is focused on capital deployment, with over $5 billion available for acquisitions in the next twelve months [8][34] - The strategy emphasizes acquiring vertical market leaders and enhancing organic growth through AI and technology integration [30][34] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macroeconomic environment, noting resilience in certain sectors like education and healthcare [40][55] - The anticipated impact of the "Big Beautiful Bill" is expected to unlock government contracting opportunities, particularly for Deltek [52][55] Other Important Information - The company is seeing strong momentum in AI initiatives, with approximately 25 AI-enabled products either in market or in development [31][34] - The recent tax legislation is expected to reduce cash tax payments by around $150 million for 2025, benefiting the company's cash flow [14] Q&A Session Summary Question: Can you provide insights on customer focus around productivity and AI? - Management noted high teens bookings in Q2, indicating strong demand for productivity gains through AI tools, particularly in less macro-sensitive sectors [39][40] Question: What is the positioning of payments functionality across the suite? - Payments opportunities are seen as earned through software, with a strategic decision to layer more payments functionality across various platforms [44][45] Question: Did tariff headlines impact business trends? - The impact of tariffs is relatively small, and while there is uncertainty in K-12 education, overall bookings activity remains strong [50][51] Question: What contributed to the high teens bookings? - Strong performance in Aderant and solid healthcare bookings were highlighted as key contributors to the positive trend [58][59] Question: How is AI impacting R&D and revenue? - Significant productivity gains in R&D were reported, with expectations for revenue implications to grow as more AI products are developed [61][62] Question: How does the company decide on investments versus bottom-line returns? - The current focus is on driving growth and competitive advantage rather than prioritizing immediate bottom-line returns [67] Question: What are the dynamics driving Adderant's record quarter? - Adderant's growth is attributed to market share gains and a strong move to cloud solutions, supported by AI-based products [92]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $1,940 million, representing a 13% increase year-over-year, with 7% organic growth and 6% from acquisitions [12][33] - EBITDA increased to $775 million, up 12%, resulting in an EBITDA margin of 39.9% [13] - Free cash flow reached $403 million, a 10% increase compared to the previous year, driving TTM free cash flow to over $2,300 million [14] Business Line Data and Key Metrics Changes - Application Software segment revenue grew by 17% in total and 6% organically, with EBITDA margins at 42.9% [17] - Network segment revenue increased by 6% with organic growth of 5%, maintaining strong EBITDA margins at 54.6% [22] - TEP segment revenue grew by 10% with organic revenue growth of 9% and EBITDA margins at 36.7% [27] Market Data and Key Metrics Changes - The acquisition of Subsplash, a cloud-native software provider for faith-based organizations, was announced for $800 million, expected to generate $115 million in revenue and $36 million in EBITDA for the twelve months ending Q3 2026 [9][10] - The U.S. total addressable market (TAM) for Subsplash is estimated at $2.5 billion, with significant potential for international expansion [10] Company Strategy and Development Direction - The company is focused on capital deployment, with over $5 billion available for acquisitions in the next twelve months [7][15] - The strategy emphasizes acquiring vertical market leaders to enhance cash flow compounding over time [36] - AI initiatives are being integrated across all business units, with approximately 25 AI-enabled products in market or development, aimed at driving productivity and expanding total addressable markets [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the operating environment, noting resilience in software segments despite macroeconomic uncertainties [55] - The anticipated impact of the "Big Beautiful Bill" is expected to unlock government contracting opportunities, particularly for Deltek [52] - The company raised its full-year total revenue growth guidance to approximately 13%, maintaining organic growth expectations of 6% to 7% [31] Other Important Information - The recent passage of legislation has reduced cash tax payments for 2025 by around $150 million, benefiting the second quarter [14] - The company is actively pursuing both platform and bolt-on transactions that reflect higher growth characteristics [15] Q&A Session Summary Question: Resiliency and strength across software segments - Management noted high teens bookings in Q2, indicating strong demand in less macro-sensitive markets like education and healthcare [39] Question: Payments functionality across the suite - Payments opportunities are seen as a natural extension of software offerings, enhancing customer retention and growth [46] Question: Impact of tariffs and government spending - Tariffs have a minimal impact on the business, while government contracting remains muted but is expected to improve with new spending initiatives [50][52] Question: High teens bookings performance - Strong bookings were driven by Aderant's record quarter and solid performance across healthcare and other segments [58] Question: AI impact on productivity and revenue - Significant internal productivity gains have been realized, with expectations for revenue implications to grow in the coming years as AI products are further developed [61] Question: Deltek's performance and outlook - Deltek is expected to benefit from increased government spending, although the timing of contract awards remains uncertain [74][75] Question: Confidence in improving growth profile of Subsplash - The acquisition is expected to sustain high teens growth and improve margin profiles through operational efficiencies [81]