Roper Technologies at Goldman Sachs Conference: Strategic Growth Insights

On Tuesday, 09 September 2025, Roper Technologies (NASDAQ:ROP) shared its strategic vision at the Goldman Sachs Communicopia + Technology Conference 2025. The company outlined its dual-threat approach of organic growth and structured mergers and acquisitions (M&A), alongside its aspirations to enhance cash flow compounding. While economic headwinds challenge certain segments, Roper remains optimistic about AI as a transformative growth driver.

Key Takeaways

• Roper aims to transition from a mid-teens to a high-teens cash flow compounder.
• The company is shifting towards bolt-on acquisitions to boost platform growth.
• AI is seen as a major growth and operational opportunity.
• Roper targets a 100-200 basis point improvement in organic growth rate.
• Economic headwinds have impacted some businesses, but future growth is anticipated.

Business Model and Strategy

• Roper operates as a vertical market software compounder.
• The company employs a decentralized structure with 29 independently operated P&Ls.
• A centralized capital deployment strategy supports its dual offense of organic growth and structured M&A.
• Roper divested 40% of its business in November 2022 to focus on vertical market software.
• Leadership aims to enhance cash flow compounding from mid-teens to high-teens.

M&A and Capital Deployment

• The shift towards bolt-on acquisitions is intended to represent 25-33% of future M&A activity.
• Roper invests $5 billion annually in capital deployment, expected to double in seven years.
• The company emphasizes robust M&A sourcing and the availability of assets.
• Talent and inorganic strategies are key focuses across all businesses.

Governance and Performance Management

• Leadership attributes such as competitiveness and long-term orientation are critical.
• Incentive systems align with organic growth and shareholder value, without tying compensation to budgets.
• New acquisitions have predefined value creation drivers to ensure growth.

Organic Growth Initiatives

• Roper aims to improve portfolio organic growth by 100-200 basis points.
• Current organic growth rate stands at 7-7.5% through-cycle.
• Acquisitions like ProCare, SubSplash, and Central Reach contribute significantly to organic growth.

AI Opportunities

• AI is identified as a "huge TAM unlock" and a key growth driver.
• Roper is focused on becoming AI native, with over 25 AI products expected by year-end.
• AI facilitates upselling and pricing based on consumption or outcomes.

Financial Outlook and Demand

• Enterprise bookings rose in the high teens last quarter.
• Demand remains strong, particularly in healthcare, despite challenges in government contracting and freight matching.
• The "big beautiful bill" is anticipated to boost government contracting in 2026.
• Deltek faces a promising transition from ground to cloud, expected to accelerate.

For a detailed understanding of Roper Technologies’ strategic direction, refer to the full conference call transcript below.

Full transcript - Goldman Sachs Communicopia + Technology Conference 2025:

Joe Ritchie, Co-run Industrial Materials Research: Alright. Well, good morning, everybody. My name is Joe Ritchie. I co run our Industrial Materials Research. I know it’s odd to have me at a tech conference, but I do happen to cover a company that is mostly a software company called Roper.

So, we’re excited to have Roper here today. With me today on stage, we have President and CEO, Neil Hun. We also have the CFO, Jason Connelly. Guys, thanks so much for being here today.

Neil Hun, President and CEO, Roper: Thanks for having us.

Joe Ritchie, Co-run Industrial Materials Research: So why don’t we kick it off, Neil? There’s still probably some folks in the room that are still getting to know who Roper is. So why don’t we start with the story? What are the basic tenants of the Roper business model? And how do you compound cash over time?

Neil Hun, President and CEO, Roper: Sure. And thanks for having us. It’s great to be here, Great So to hey, Roper, dollars 8,000,000,000 business, principally vertical market software. We consider ourselves a software compounder. So we run a sort of dual threat offense.

The dual threat offense is sustainable and increasingly or always increasingly improving organic growth rate. I’ll come back to that in a second. And then we run a very structured M and A motion. So dual threat about cash flow generation on the organic side and capital deployment on the M and A side. On the cash flow generation side, it’s, as I mentioned, dollars 8,000,000,000 business.

It’s 29 P and Ls. So 29 businesses, that’s a very decentralized org structure because we need each one of our businesses who are the leaders in their vertical market to compete and win in that market. It’s a HITRUST autonomous structure. We have 29 of everything, 29 leadership teams, 29 strategies, 29 ERP systems. They’re organized around speed and the speed coefficient and accountability.

That generates the cash flow a little bit north of 30% free cash flow margins in the enterprise. And then we have a very centralized capital deployment structure to go find the next best business to put into the portfolio or the next best tuck in or bolt on acquisition to integrate into one of our existing businesses. When you put it all together, we’re a mid teens cash flow compounder. We have aspirations to become a high teens cash flow compounder or take our rate of double from every five years to every four years, plus or minus. So I know you’re going to ask a lot of detailed double click questions from there, but that’s

Joe Ritchie, Co-run Industrial Materials Research: Yes. Definitely Let’s little double click. So look, that’s great compounded growth over time. Just talk about why this has been the right strategy for your company, how the strategy has evolved? And then we’ll get into like there’s been a lot of there’s been plenty of success stories, but maybe just give some examples, there’s some tangibility

Neil Hun, President and CEO, Roper: to So, why this has our history, I mean, grew up as an industrial compounder, as you know. That’s why I’m here. And we closed that chapter of the transformation in November 2022, and we essentially divested 40% of our business in a series of transactions to become a principally a vertical market software business. But what’s been consistent across Roper over the arc of the portfolio transformation is a decentralized structure, having businesses that are leaders in small markets, having durable sort of organic growth, having continuing to invest in the talent and the people and the skills and the capability to drive enhanced organic growth on top line that leverages to the bottom line. Also, has been consistent throughout is a very centralized capital deployment structure.

So what’s changed is the nature of the portfolio over time, not a lot of the underlying capabilities. But what it has as we became or this inevitably more growthy four or five five or six years ago is we built capabilities at the center to promulgate best practices around talent and team, how to do strategy really well, how to do around a structured operating environment, increasingly how you think about using principles of continuous improvement, now obviously a lot around artificial intelligence. It’s sort of the, if you will, the pattern recognition that we have at the center, and then we promulgate those throughout. I’ll ask Jason to add a couple some success stories. It’s really about each business getting a little bit better.

So we have a business in the legal vertical, the business of law that the Adderant has gone from sort of a mid singles to a low double digit organic growth business. Gross net retention has gone from the 103, 104 to the low 110s over time. We have a business in the inner utility space, power plan, very sort of esoteric accounting tax sort of software. We’re a very complicated customer base. We bought we underwrote that business.

We bought it seven or eight years ago or six or seven years five or six years ago, I should say, in the mid single digits. It’s very much a high single digit organic growth business. Our freight matching business, DAT, has been in the portfolio for almost twenty years. It was sort of a market a transportation market growth business. Now it’s very much a high singles, if not low double digits organic growth business.

So it’s about just slow, methodical, systematic improvements to market position, product capabilities, go to market capabilities that drive that result. Yes.

Jason Connelly, CFO, Roper: I think the other thing that’s evolved, just to your earlier question, is on the M and A motion. And so we have invested in significant capabilities at the center to do a lot more sort of deeper dive market research. So we brought on some folks from the buy side. And that’s just enhanced our capability to get more proactive, both on the platform side, but importantly on the bolt on part of our acquisition strategy. So historically, we’re 10% of our M and A was towards bolt ons.

We just see a tremendous opportunity now that we have talked about talent as one of the things that we’ve spent a lot of time investing in our field leadership. Now that we have the right talent, we have an inorganic strategy for all of our businesses. So most of them are now turned on for bolt ons. So we would love for that to be a quarter to a third of our M and A going forward. And it’s only constrained by the ability of management, but we think there is a ton of opportunity to increase the organic growth of the platform.

That’s super important. So we’re not just doing a buy and build multiple arbitrage strategy. This is to sustainably have a higher growth set of platforms. And you’re obviously going to get some synergies back office synergies from those deals too. So they’re our best returning deals.

So that’s the other part that’s I think has been a significant shift over the last five years.

Joe Ritchie, Co-run Industrial Materials Research: We’re going to get to the bolt on piece of the story in a minute. I do want to ask you like maybe in light of the ProCare of the past year, when things potentially go sideways, what do you guys do? What’s the governance process to course correct? What are some of the actions that you guys typically take?

Neil Hun, President and CEO, Roper: Maybe I’ll sort of set the table, let Jason sort of add some a lot of details and color. So as we deploy capital, we very much are slope investors, right? We spend a lot of our diligence sort of understanding market stroke structure, competitive intensity and the slope of the growth rate. If there is a mistake that we make from time to time is we might get the intercept wrong, right? So in the first year, we might undershoot our model for revenue by a little bit.

The good news is we also probably overshoot sort of spending, so margins come in a little bit higher, so cash flow is closer to being on plan. So we spend a lot of time trying to get the root cause about why that’s there. But rarely do we have a slope problem where if we underwrote 12% growth business, it’s a seven percent. And so in ProCare’s case, this is a short term sort of intercept, if you will, operational challenge that we talked about in the last quarter. The slope, we underwrote to mid teens growth, and we very much believe it’s a mid teens growth business.

But why don’t you

Jason Connelly, CFO, Roper: get into some of the problem? I think so. Obviously, ProCare was our first deal, and it’s a tremendous business. They’ve one of the things we talked about when we first bought it is we had to make some changes on the go to market leadership because part of the some of this was going down market and competing there, and we are now having success there. We had our best bookings in their company’s history in the second quarter, but it took a while to ramp that team.

So that was sort of one factor. The other is just we have a now we have a value creation team, myself, Janet Glaser, Heads of M and A, Shannon O’Callaghan. So we are super focused on whether management is going to be able to hit the expectations. So we’re having just much more tighter governance around that. And that really starts with diligence.

So just our signals are there and we do countermeasures probably much more rapidly than we did before. And so since then, TRANZACT, our central reach business, SubSplash, we’re just our process is super refined now. And so, feel really good about where we’re headed with that.

Joe Ritchie, Co-run Industrial Materials Research: Yes. And so, maybe just digging a little bit deeper into the governance process. I know that you have business specific EBITDA growth metrics. Talk a little bit about how you ensure that you’re hitting those metrics. And again, we talked a little bit about course correcting at times, but you’ve had a good repeatable process and good track record over the last two decades.

So just maybe just for the benefit of

Neil Hun, President and CEO, Roper: I think governance is a a lot of people like, what is government? It’s like this ethereal, what is it? So I’ll try to put the subcomponents to it. First is, I think very important to our governance structure are the leadership the innate leadership attributes of the people we have running our businesses. And so we select people that are hypercompetitive, that are insatiable, curious learners that think super long term and can bring that into the urgent today and then are just totally geeked out to build things, right?

So we those are they’re either in your DNA or they’re not. And so when you have a competitive builder learner, long term oriented leader, that’s the beginning of the governance system. The second thing is we couple that with an incentive system that is totally aligned with growth, organic growth improvement, shareholder value creation. In our case, it’s very simple. It’s based on organic EBITDA growth.

Now that might sound like a very simple idea, and it is, but we have there’s no compensation in ROFR tied to budgets or plans, which is unique to most enterprises. In our case, if we and I think this goes to more of a cultural thing than anything else, in that if we did provide compensation based on budgets, then every year, we’d all 29 leaders would have an incentive to lie to us, and we’d have a filter not to believe anything they say. And so in that case, everything is construed around sort of compensation. In this case, every company is on a curve. The curve has not changed, a growth curve.

And if you’re able to get sort of into the money and you’re earning 150% or 175% of your target every year, year in, year out because you’re above the high end of your growth curve, that’s awesome and are not going to move the curve. So the incentives are totally aligned. And then as it comes to these new sorts of either early maturing leaders or higher growth platform businesses or bolt ons, now we have very prescriptive value creation drivers that are identified at the point of acquisition. So in the first twelve to twenty four months, there’s very discrete value creation levers that are being pulled, and we have much tighter accountability and governance around that. So it’s layers upon layers upon layers, and the execution has followed as a result.

Got it. Maybe we’ll just touch on the maturing leaders and why that’s the correct strategy. It

Joe Ritchie, Co-run Industrial Materials Research: seems like a pretty good unlock, both top line and bottom line, but maybe walk through your thinking.

Neil Hun, President and CEO, Roper: Yes. Goes back to the opening statement where we aspire to go from the mid teens cash flow compounding ZIP code to the high teens. And so we’re hunting for 300 or 400 basis points of cash flow compounding, which we think then will accrue into TSR and shareholder compounding. And we looked at all the options available to us. So the full menu of strategic options, we settled on two.

One is improving the organic growth rate of the portfolio 100, 150, 200 basis points. And then I’ll summarize simplify it by saying capture more value from our capital deployment sort of strategy. And so on the maturing leader sites, on that branch of the tree, we found that there is versus our historical legacy, we’ll call it business as usual, buying near perfected businesses at garpish sort of prices, there is between there’s 30% to 40% more cash flow that we get in year five deploying a bolt on strategy or buying a business that’s growing a bit faster, has margin improvement opportunity than there is BAU. So we get a couple of 100 basis points of cash flow compounding in the algorithm by running that strategy. And it’s, as Jason said, a quarter to a third will be tuck ins or bolt ons in the model, and the balance will be these faster growing businesses.

TouchPalash may be a good example. Our most recent acquisition of Church Management Software space, it’s a high teens organic growth business, and its margin profile will go from the high 20s to the low 40s over a three to five year period of time as there are some very discrete cost actions that we can sort of levers we can pull as well as it’s going to scale into its revenue base, and it will drive sort of the double whammy or double benefit of not just top line, but bottom line growth. So you have mid- to high 20% cash flow EBITDA growth in that business. So there’s a lot more value creation there than there is from the business as usual strategy.

Jason Connelly, CFO, Roper: I think what’s important to highlight, though, these businesses are still in niches and we have a clear understanding of where the kind of how the market is going to form, right? There’s usually still like two or three players in the space and there’s no it’s too small for sort of larger player disintermediation or interest in the market. So I think all the patterns of the things we bought for the last fifteen years are the same. It’s just earlier. And we have again, we’ve seen this we’ve seen the storybook long enough to know that there’s not any sort of risk on the horizon.

So we’re not underwriting sort of market risk. We just think there’s an opportunity to and most of the time, it’s the fact that, that whatever that industry has not digitized yet. So we have white space to digitize otherwise pen and paper type solutions that the customers are sort of behind the technology curve.

Joe Ritchie, Co-run Industrial Materials Research: Got it. That makes a lot of sense. You talked a little bit about 150 to 200 basis points of potential organic growth expansion versus your historical, call it, 6% to 7%. Can you do that with the current portfolio? So you talked a little bit about getting there with additions.

Are there maybe some subtractions as well to help try to drive that growth rate?

Neil Hun, President and CEO, Roper: I think that let me sort of break that down. So our if you look back at this portfolio, seven or eight years ago, this was a mid single digit five ish percent, plus or minus, organic growth business for the current fleet, the current assets we have today, excluding the divestitures. We’ve improved that into the 7%, 7.5% range sort of through cycle. And we think there’s another 100 basis to 150 basis points of opportunity as we just operate and optimize the product portfolios, not the company portfolio, but the product velocity, the and the go to market strategies. And each business has very bespoke things they’re doing to do that.

It’s the whole operational sort of organization, our operating executives, all 29 leaders are focused on pulling that lever for sure. Now we are buying businesses that are more growthy. So when you look at ProCare, SubSplash and Central Reach, the last three platforms, I think, plus or minus, they’re about 80 basis points accretive once they become organic to organic growth rate. And so in a perfect world, these stack on top of each other. The reality is there’s probably a little bit of hedging between the two, but to sort of skid our chin on sort of the very high end of the high single digit organic growth range.

Joe Ritchie, Co-run Industrial Materials Research: Helpful. So clearly something that’s unique about Roper specifically and probably to a lot of folks within the tech world is the fact that you do so much M and A, right? Talk a little bit about your sourcing process, talk through like the pipeline. One of the things that has come up numerous times over the past decade of covering you guys has been like when are they going to run out of room, right? So maybe just kind of talk through your process and why you believe you’ve got plenty of runway from Sure.

Jason Connelly, CFO, Roper: I mean there’s multiple vectors. First of all, I would say the market is never static. There’s always some product markets that somebody some founder figured something out that we’re always just wow that just came out of nowhere. Next thing you know, you’ve got $100,000,000 EBITDA business that some founder In a niche you

Neil Hun, President and CEO, Roper: didn’t even know was a niche. Didn’t even know it was

Jason Connelly, CFO, Roper: a niche. So I’ll start with that. I think we’ve always had a motion to have conversation with sponsors about the portfolio. I’d say we’ve gotten much more sophisticated around that. And so not only at the sort of the large sponsor, but the mid market sponsor, we’re having a lot more conversations with both the principals there, but then also more importantly, the management teams.

And so and then in period, we’ll probably talk about what’s happening in private equity right now. We’re getting a lot more looks to and access to management, but it’s really about getting up to speed on the business, developing relationship with management, specifically the CEO. Because they ultimately, they want to come work for a place where they’re going to like where they land, they’re going to they know we’re going to invest. So, we’ve become a good home for a lot of these businesses. And if the CEO has a say in it, which is more times than you would think happens, then we’re going to have a good shot at the business.

So that’s at the sort of platform level. And then on the I started talking about this a little early on the bolt ons, it’s developing an inorganic strategy and then working closely with management, the M and A team working closely with management on a cultivation process, how we’re going to outreach to that founder, we’re to go to a trade show, we’re going to start to talk about how the benefit of coming to selling your business to Roper is going to be wonderful for you and your employees. And so that motion has been going for the last two years, and we’re starting to see some benefits. It takes time. The first one we did with Neptune, that was a software company, and we’ve been cultivating that for two years.

So but that’s a super important part of the strategy. So anything you’d want to add?

Neil Hun, President and CEO, Roper: Just the punch line, the headline I’d say is of all the constraints in our compounding model, the availability of assets is not one of them. I mean we’re $5,000,000,000 a year in capital deployment. It compounds seven years from now. It’s $10,000,000,000 we have to deploy. So it’s the equivalent of running a 20,000,000,000 or $30,000,000,000 private equity firm in terms of scale of what we have to deploy, and it’s a drop in the bucket in terms of the assets that are in the marketplace.

Joe Ritchie, Co-run Industrial Materials Research: How do you guard against getting the right like getting the wrong assets?

Neil Hun, President and CEO, Roper: Yes. So we’ve alluded to it through the conversation. Jason certainly did. So in our case, again, we’re looking for leaders, the leader in a small market. We’re looking for the competitive intensity is low.

So oftentimes, we have one or two primary competitors. We’re looking for where the base of the competition is identifiable. And so if there’s if we identify zeros in the Monte Carlo, if we can’t answer those questions and there’s a zero in our sort of mind in the Monte Carlo, we’re out because we can afford to have nothing go backwards. We can afford for something to go a little bit slower than we thought. We cannot afford a compounding model for anything to go backwards.

So it’s we’re really attuned to be existential risk identifiers, and it’s not a valuation question. It’s a we’re not going to buy the asset question. And so that’s how we think about that.

Joe Ritchie, Co-run Industrial Materials Research: Fair enough. Sub splash is interesting for a variety of different reasons, the least of which is that you’re selling into 20,000 religious media organizations. I never thought I’d be covering an asset that was selling into that group. But also because you talked about the financial projections where you’ve got strong double digit growth, this really massive margin opportunity within the company as well. When you look at the pipeline of deals today, how unique is SubSplash versus what you see across the pipeline?

Neil Hun, President and CEO, Roper: So I think the attributes are not that unique in that you have a market that is that has, for whatever set of reasons, the market is growing 10% to 15%. The reason the Central Reach market and autism therapy software market is growing at its pace and subslash growing at pace are for different reasons, but they’re structural and they’re quite long term. The fact that the business is the leader in a category or the space and they’re using their distribution advantage and their scale against the competitive set to drive product velocity is common, but the exact product road maps and product features are different. And so those are that’s essentially what we’re looking for in terms of the acquisition, the attributes. The specific details are very different from deal to deal.

And then because you did make a recent acquisition with Central Reach, you want to

Joe Ritchie, Co-run Industrial Materials Research: maybe just talk about some of the proof points there, the Yes, other proof points on how that’s

Jason Connelly, CFO, Roper: sure. So Central Reach is a leader in the autism space that we provide ABA therapy to hundreds of thousands of We

Neil Hun, President and CEO, Roper: don’t provide the therapy, we’re software for it.

Jason Connelly, CFO, Roper: Software to provide therapy to millions of patients or they call them learners. So, it’s a leader in its space. It’s definitely had just a tremendous success so far. I think what we’ve talked about during diligence or when we announced it was that the supply demand imbalance is there and we’re seeing that. So the growth in seats for therapists has been tremendous.

Importantly too, we talked about the AI opportunity at Central Reach. They had launched new AI products a year before we acquired them. And so the cross sell, both the direct cross sell of the AI solutions has been just on track, if not a little better. And they’re also getting a halo effect because of the AI kind of first positioning in the market. They’re starting to attract new logos as well.

So they’re winning new they’re gaining share. And so on all metrics, they’ve been tracking gross, net retention, new logos, it’s tracking on plan and margins have been flowing just as we thought they would.

Joe Ritchie, Co-run Industrial Materials Research: So, it took twenty three minutes before AI was actually said in this discussion, but it’s a good segue. Clearly, a lot of focus on whether it’s an opportunity or a threat. So why don’t we start with how you’re thinking about the opportunity versus threat perspective? And then we can get into the specifics around like what you’re doing internally.

Neil Hun, President and CEO, Roper: Well, I’ll first say it is an incredibly fun and exciting time to be in technology and leading a larger vertical market software business. We’ve come to conclude, and we try to be as objective as we can on this. We’ve concluded that this is just a huge TAM unlock for us and will and as a result, will be a meaningful growth driver for us. The magnitude and the timing is still very much to be determined because I think all software changes go a little bit slower than what the initial hype would suggest. The reason that we like it is we’re and I think most people agree with this conceptually is we’re fortunate to have a vertical market software portfolio.

I’ll start with that. It’s better to be lucky than good. Back in 02/2008, when we did our first software investment, happened to be in a vertical, and continue with that trend. Why is that important? So we have enormous and it’s also important to have a portfolio of leaders.

So we have leadership. We’re vertical oriented. So we have enormous data advantages that are very, very specific to very small slivers of the economy, and we have massive distribution advantage. I think unlike other technology disruptions, Internet mobility, cloud, where Innovator’s Dilemma reared its ugly head, the incumbents thought that next technology wave need not apply to them, so they gave all the startups a huge sort of advantage timing wise. I think incumbency in this case matters matters is a ton because we were sort of well, the incumbents were donated speed by the technology, right?

So we can develop just as fast as a start up, but then we have distribution to put it into and the start up was not donated through a sort of distribution or a customer base. And so it is a very, very exciting time for us. The other thing is one of the things we’ve invested in, just going back to that growth opportunity, the TAM potential, is to be selected to be part of the Roper portfolio, we’re buying leaders in small markets. So by definition, we’re constrained by TAM. Like we’d like the constraint because it’s protective.

But now we’ve got the opportunity to sort of have softer eat labor and sort of upstream and downstream from what we do. So it’s hugely TAM expanding, and we have we believe an enormous right to win, and we’re getting after it. I’m sure you’re going to ask questions about how we’re getting after it.

Joe Ritchie, Co-run Industrial Materials Research: Yes. We’re going to talk about that, but I mean it sounds to me like you’re not concerned really about any of the horizontal players coming into the space and trying to encroach upon your on any of your businesses because

Neil Hun, President and CEO, Roper: That’s been a I mean, the horizontal or vertical debate, I think, has largely been asked and answered historically. I mean it’s the if anything, I think the market is getting more verticalized, not more horizontalized because of the data advantages, the workflow specificity, the very bespoke questions, like answers or problems are solved. I’ll give you like a very simple example. Like a generic question or problem is how you create a professional services bill accurately. That’s a very generic, unspecific problem that a horizontal player will sort of try to address.

What we try to address is how do you create a King and Spalding bill to Roper Technologies in the legal space that’s compliant with how Roper pays for the month of August. It’s a very specific problem. That’s a snowflake of complexity that our software solves. And I just multiply that times all the various verticals that we have. It’s we’re not we haven’t seen sort of horizontal encroachment in any if anything, it’s the other.

At the very, very, very tippy top of some of our markets, you might see horizontal players, and they’re generally slowly being displaced by us or our competition. That’s great to hear. Look, you guys called out Central Reach just a couple

Joe Ritchie, Co-run Industrial Materials Research: of minutes ago is already having AI enabled products. On your recent earnings call, you’re highlighting Adderant. Maybe just talk about where you’re seeing some wins on the top line. What is the opportunity here?

Neil Hun, President and CEO, Roper: Yes. So maybe I can set the table, then I’ll have Jason sort of talk about that. So this is one of the advantages, I think, of being part of the Roper enterprise. So again, 29 relatively small businesses that have a huge right to win. But what’s happened over the course of the last eighteen months or so is and again, we’re built for speed because we’re divided by 29.

So but once but we got to prime the pump. So once the pump is primed and it becomes in the front of the prefrontal cortex of all of our leaders and their team, then the engine just sort of runs itself, but we’ve got to prime the pump. And we started doing that one years point or so ago around AI, really sort of turned up the pace this year. So we’ve asked every one of our businesses that’s fundamentally re underwritten or reimagined their entire business model to be AI native. This isn’t like incremental thinking about fast forward one, two or three derivatives out from a customer value chain point of view, how your customers’ industry can be reshaped, how can we do the reshaping, how can we drive product there.

Same thing on the internal productivity front. And so we have very clear vision and direction of travel to be AI native for all of our businesses. We’ve certainly made it easier for them by doing enterprise layer agreements, so they don’t have to worry about contracting with the large models or the cursors of the world so they can try to get to speed. We’ve helped them with organizational structure about how do you sort of pull out pods of AI native teams that can iterate very, very fast versus being the slower sort of development sort of chassis of our businesses. And what you’re seeing is early results of that.

And I’ll say early, but a year ago, maybe we had five or 10 sort of five products, plus or minus, of any consequence. Now there’s 25 plus or minus products that will be either in market in market now or in market by the end of the year. That number will continue to sort of, I’ll daresay, explode as we head into next year because there’s so much opportunity in front of us. And so we feel really good about the forward leaning posture of our companies, especially against our relatively small competitors, right, in the markets that we serve. And then Jason can give you a couple of early data points on that.

Jason Connelly, CFO, Roper: Yes. I think there’s several vectors where we’re going to see opportunity. You think about like a Deltek where they’re creating new AI features on their core Costpoint product, and that’s only going to be available on the cloud. So they have a huge ground to cloud tailwind ahead of them that if that was going to take longer, it’s probably going to be pulled ahead. So that’s just sort of one vector.

The other is just AI and AI influenced solutions. So we talked about Centraleged Atorant. You’re seeing a little bit of that at iPipeline now. They’re starting to see some new products. So I think it’s going to happen slowly over time.

But the key is really to make sure that the customer is enjoying those features so that when you come to contract renegotiation, you have the opportunity to upsell those solutions. And it will take the form I think sort of the current thinking is in terms of pricing is you’re always going to have some fixed component of this. I mean, most customers want a predictable budget. And by

Joe Ritchie, Co-run Industrial Materials Research: the way, we’re a very So, sounds

Neil Hun, President and CEO, Roper: kind of

Joe Ritchie, Co-run Industrial Materials Research: like subscription based model.

Jason Connelly, CFO, Roper: There’s always going be a fee, and then it’s a consumption or outcomes based model on top of that. And so, again, we’re usually about 1% of the cost of our customers. So and if we have the ability to obviously provide productivity to them, then there’s ample opportunity to take price there.

Joe Ritchie, Co-run Industrial Materials Research: Are there any of the 29 platforms that don’t lend itself naturally to AI?

Neil Hun, President and CEO, Roper: I think they all lend themselves. There is 1% there’s of all of our businesses, there’s one where there is some there is potential existential risk to that business. It’s 1% of Roper. It’s our media entertainment software business called Foundry. But there’s a I think for the next three to five years, I think this is nothing but a growth tailwind for the business because it will be more this business composites, basically takes live action, anything computer generated and puts them in a single screen.

So think Game of Thrones, like the people and the dragons and our software puts those things in the same screen. There’s just got to be more CG, way more CG and still live action that gets overlaid. The question for ten years from now is, is there any live action? That’s I think the answer is we all think the answer to those, yes, it’s how much is there going to be. But that’s the only asset in the portfolio where we see sort of a potential, existential risk.

Jason Connelly, CFO, Roper: You could have some government contractor customers that are have classified projects that we may never because they may stay on prem the whole time. That would be another that’s small sliver.

Joe Ritchie, Co-run Industrial Materials Research: Yes. And then just so we talked about the top opportunity. You mentioned a little bit around like the operational and productivity opportunities. Does this result in higher margins for Roper over time?

Neil Hun, President and CEO, Roper: So we’ve asked our businesses to have all the productivity gains that they harvest. We want to play offense with that and put it to the product road map velocity or go to market. It’s just a mindset. I think Jason and I, when we’re sort of chatting in his or my office, we think we’ll probably not be able to spend it all. And so probably if you look forward five or seven years, it is a higher margin business.

But the short term, we hope that it drives the growth engine. Okay.

Joe Ritchie, Co-run Industrial Materials Research: Just maybe we’ve got a couple of minutes left, just closing it out on just this year. And look, you’ve got this really nice tailwind with your enterprise bookings being up mid teens I think or high teens actually this past quarter. How are you thinking well, what’s really driving that and how are you thinking about demand levels like exiting the year and into next year?

Jason Connelly, CFO, Roper: Yes. And I think we always think of it as sort of over a longer period first half, think was up low double because we were a little after coming off a strong Q4 last year we were low singles or mid singles in the first quarter. So really that’s sort of on plan. So we thought sort of informed our second half guide and into a little bit of next year. So demand has been it’s been pretty good across outside of government contracting.

We mentioned Aderant’s been really strong. They had their largest ground to cloud conversion in the second quarter booking as well as continuing to sell AI. Healthcare in general has been solid across throughout a bit, even our lab software set of businesses have been up nicely. So I think that the hangover of budgets in healthcare space has certainly abated now. And now for us, I think our DAT business is not necessarily driven, that’s been sort of bouncing along the bottom.

So but we’re still growing as we’ve been able to create more value for customers have been able to charge for that. So I would say that the environment in general has been pretty decent. Yes.

Joe Ritchie, Co-run Industrial Materials Research: I know that we still have few months left in the year and there’s a lot going on in background, a lot of discussion around the big beautiful bill as well. As you kind of take everything that’s occurring and the fact that your business right now is running at very healthy levels, how are you thinking about maybe just like early framework for next year?

Neil Hun, President and CEO, Roper: So there’s been two of our larger businesses have had some economic headwinds attached to them. Our Deltek, our government 60% is federal government contractors. The other is our freight matching business. So we organized a spot freight market in North America, and there’s been now a two plus year freight recession. So both those businesses in 2020 this year have been below trends.

The big beautiful bill, we think, is the unlock for the government contracting. It’s a very large spending bill in categories that are large contractor spend categories, DoD, DHS. It will take a quarter, two or three for that to sort of play into the bookings momentum. We think that sets up well for at some point in 2026. Exactly when, we don’t know.

And we’re very much wait and see in VAT. I mean we in the freight, it’s we’re very much reflective of what’s happening in the market in that regard, and it’s been a freight recession. And so we continue to be conservative in our outlook there. But when the freight when the market does turn around, we’re poised to grow with it very nicely. And it sounds like from an M

Joe Ritchie, Co-run Industrial Materials Research: and A standpoint, plenty of deals in pipeline to do over the next twelve months?

Neil Hun, President and CEO, Roper: There’s always plenty of deals to do. Yes, we’re very active.

Joe Ritchie, Co-run Industrial Materials Research: Neil, I’ll turn it back to you if

Neil Hun, President and CEO, Roper: you have any closing remarks before we I just really we appreciate being here. We’re very excited about the story, about the durability of what we do, about the cash flow compounding nature of it and the tailwind of AI. So we’re very excited for where we’re going.

Joe Ritchie, Co-run Industrial Materials Research: Great. Neil, Jason, thanks for joining us today.

Neil Hun, President and CEO, Roper: Thank you.

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