Roper Technologies Q4 Earnings Call Highlights

Roper Technologies (NASDAQ:ROP) reported fourth-quarter and full-year 2025 results that management described as solid execution, while acknowledging organic growth came in below expectations and emphasizing a more conservative stance in its initial 2026 outlook.

Fourth-quarter results topped expectations on margins

Chief Financial Officer Jason Conley said the company finished ahead of its guidance on adjusted diluted earnings per share (DEPS), driven by “very strong margin performance.” Fourth-quarter revenue was $2.06 billion, up 10% year over year, with acquisitions contributing 5% and organic growth of 4%, which Conley said was below expectations.

Adjusted EBITDA was $818 million, up 10%, while core EBITDA margin expanded 60 basis points in the quarter, representing 54% incremental margin. Adjusted DEPS was $5.21, above the company’s guidance range of $5.11 to $5.16 and up $0.40 from the prior year. Conley noted the company repurchased 1.1 million shares for $500 million during the quarter, though the buyback did not impact DEPS versus guidance due to partial-quarter share count benefit and higher interest expense.

Segment performance: recurring revenue steady, non-recurring pressured

In Application Software, fourth-quarter revenue grew 10%, including 4% organic growth. Segment margin expanded 70 basis points to 42.2%. Conley said recurring revenue grew 6% in the quarter, while non-recurring revenue declined 8%, which drove the lower-than-expected organic result.

Management repeatedly pointed to Deltek as a swing factor, citing disruption tied to a prolonged government shutdown that affected GovCon commercial activity and pressured perpetual license revenue. Conley said most of Deltek’s GovCon Enterprise customers still buy perpetual licenses and that dynamic weighed on results. While the company said it is “cautiously optimistic” about improvement in 2026, it is not assuming that in guidance until it sees sustained customer activity.

Network Software revenue rose 14% in the quarter, with organic growth of 5%. Margin declined to 52.8% due to recent bolt-on acquisitions at DAT that are “currently scaling into profitability.” Conley said recurring growth was 6%, while non-recurring revenue declined 3% due to lower services revenue and some customers moving from perpetual to SaaS, which management said weighs on near-term revenue but improves long-term growth and customer lifetime value.

In the Technology, Engineering and Products (TEP) segment, revenue increased 6% (5% organic), while margin was flat at 34.8%. Conley said NDI outperformed on strong demand in the cardiac ablation space. Neptune was down slightly as it cycled a stronger prior-year quarter and worked through final surcharge negotiations.

Full-year 2025: acquisitions drove growth, free cash flow remained strong

For full-year 2025, management reported revenue of $7.9 billion, up 12% year over year, with acquisitions contributing nearly 7% and organic growth of about 5.5%. Adjusted EBITDA reached $3.1 billion, up 11%, with a 39.8% margin. Core margin improved 30 basis points and represented 47% incremental margin, which Conley said aligned with the company’s long-term algorithm.

Free cash flow was nearly $2.5 billion, up 8%, representing 31% of revenue. Conley said the company expects higher growth in free cash flow in 2026 due to working capital and cash tax improvements, though first-quarter 2026 free cash flow margin will be lower because of the timing of coupon payments for bonds issued in the third quarter of 2025.

On capital deployment, CEO Neil Hunn said Roper invested $3.3 billion in vertical software acquisitions in 2025, highlighting CentralReach, Subsplash, and several tuck-in acquisitions. He also pointed to opportunistic repurchases, including the $500 million spent in the fourth quarter. Conley said the company ended 2025 with a net leverage ratio of 2.9x, about $300 million of cash, and nearly $2.7 billion available on its revolver, supporting “over $6 billion in capacity for capital deployment” in 2026. The company has $2.5 billion remaining on its current $3 billion buyback authorization.

2026 guidance: conservative assumptions, back-half weighting

Roper initiated 2026 guidance calling for full-year revenue growth of about 8%, organic revenue growth between 5% and 6%, and adjusted DEPS of $21.30 to $21.55. First-quarter adjusted DEPS is expected to be $4.95 to $5.05. The company’s guidance assumes an effective tax rate of about 21% for the full year and about 22% in the first quarter.

Management emphasized what is not included in its forecast:

• No assumed improvement in Deltek’s GovCon market conditions, despite management describing the Omnibus appropriations as a positive development.
• No meaningful recovery in DAT’s freight market environment.
• A modest top-line decline at Neptune versus 2025.
• No meaningful revenue uplift assumed from AI initiatives, which management characterized as incremental upside as commercialization scales.

Hunn and Conley said they expect stronger second-half organic growth largely due to CentralReach and Subsplash turning organic and easing non-recurring revenue comparisons in the back half. In Application Software, Hunn said organic growth is expected to land in the higher end of the mid-single-digit range, with modest back-half weighting. In Network Software, Roper also expects organic growth in the higher end of the mid-singles and cited Subsplash turning organic in the fourth quarter as a contributor to a stronger Q4. In TEP, Hunn said the segment is expected to post mid-single-digit organic growth, with a low-single-digit first half as Neptune’s backlog normalization continues.

AI efforts and portfolio focus

Management spent significant time discussing AI as an opportunity in “mission-critical, high-frequency workflows” supported by proprietary data and embedded distribution. Hunn said the company hired Shane Luke and Eddy Raphael to lead a Roper AI Accelerator team to coach operating companies, build a small development “strike team,” and identify reusable capabilities across the portfolio.

When asked about quantifying AI’s contribution, Hunn said the company will not “AI wash” revenue, but does aspire over time to report credible AI SKU-related revenue while acknowledging monetization could also come through packaging and cloud migration. He characterized 2025 as focused on developing AI products across the portfolio and said 2026 will center on commercialization—selling, deploying, implementing, and monetizing those offerings.

On acquisitions versus buybacks, Hunn reiterated the company intends to stay “disciplined and unbiased” between M&A and repurchases, focusing on the “best risk-adjusted path to durable cash flow per share compounding.” He said the acquisition pipeline is robust and suggested private equity liquidity pressures may bring more assets to market, while also describing the current valuation “dislocation” as making buybacks attractive.

About Roper Technologies (NASDAQ:ROP)

Roper Technologies, Inc (NASDAQ: ROP) is a diversified technology company that acquires and manages businesses delivering specialized software, engineered products and data-driven analytics to niche markets. Its subsidiaries develop enterprise and cloud-based software, scientific and analytical instruments, industrial and medical devices, and other applied technologies designed to solve specific operational, regulatory and commercial challenges for customers. The company emphasizes recurring revenue streams from software licenses, subscriptions and service contracts alongside sales of hardware and instruments.

Roper operates a decentralized operating model in which acquired businesses retain entrepreneurial autonomy while benefiting from centralized capital allocation, legal and financial support.