Roper(US:ROP)2025-04-28 13:02Financial 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]