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    ROP
    Earnings call· Jun 2026(Q2 FY26)

    ROPER TECHNOLOGIES INC ROP

    Jul 23, 2026 Source

    Executive summary

    Roper Technologies Q2 FY26 — Solid Results and Raised Outlook

    Roper Technologies delivered solid Q2 FY26 results, exceeding expectations and leading to a raised full-year outlook. The company is experiencing accelerating AI momentum across its vertical software businesses, with numerous agentic product releases aimed at automating customer workflows. Management is preparing its balance sheet for increased M&A activity in the coming quarters, while maintaining its disciplined capital allocation approach.

    Highlights

    5

    • Total revenue grew 9%, with organic revenue up 5% in Q2 FY26.

    • Adjusted DEPS guidance for the full year was raised by $0.30 at the midpoint to $22.15-$22.30.

    • Free cash flow increased 11% to $447 million in the quarter, with TTM FCF at $2.6 billion.

    • Repurchased 3.6 million shares for $1.2 billion at an average price of $341 per share, reducing share count to 2013 levels.

    • Expected gross proceeds of $1.4 billion from Indicor's instrumentation businesses divestment, strengthening deployment capacity.

    Concerns

    4

    • Core EBITDA margin for the enterprise was down 70 basis points, primarily due to lower margins in the TEP segment.

    • TEP segment EBITDA margins declined 220 basis points year-over-year due to input cost pressure at Neptune and mix shift to lower-margin consumables at NDI and Verathon.

    • Organic recurring and nonrecurring revenue at MHA and iPipeline (Network Software segment) were weaker, offsetting strong recurring growth.

    • Deltek's GovCon market showed encouraging signs but is not yet a confirmed trend, requiring consistent sales pipeline conversion over several quarters.

    Guidance & targets

    9
    CategoryTargetConfidence
    Adjusted DEPS
    $22.15 to $22.30
    high materiality
    High
    Total Revenue Growth
    north of 8%
    high materiality
    High
    Organic Revenue Growth
    6% area
    high materiality
    High
    Tax Rate
    21% area
    medium materiality
    High
    Adjusted DEPS
    $5.75 to $5.80
    high materiality
    High
    Capital Deployment Capacity
    $5 billion or more
    high materiality
    Medium
    Application Software Organic Growth
    mid-single-digit plus range
    medium materiality
    High
    Network Software Organic Growth
    mid-single-digit plus range
    medium materiality
    High
    TEP Organic Growth
    high singles range
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Application Software
    Revenue grew 8% total, with 5% organic growth, slightly exceeding expectations. SaaS transitions are advancing meaningfully, and AI momentum is building. Aderant performed excellently, Deltek was solid with encouraging signs in GovCon, and Vertafore delivered strong ARR growth with its AI Velocity platform. CentralReach is ahead of its deal model and turns organic next quarter.
    Organic revenue growth: 5%Core EBITDA margin decline: 20 bps YoYOrganic recurring and reoccurring revenue growth: mid-single digit plusNonrecurring revenue growth: low single digits decline
    		$1.2B8%—42.8% EBITDA margin
    Network Software
    Total revenue grew 12%, with 4% organic growth. Strong organic recurring growth was offset by weaker reoccurring and nonrecurring revenue at MHA and iPipeline. EBITDA margins were down 370 bps YoY due to the SubSplash acquisition and investment in DAT/Convoy, though core margins improved slightly. DAT saw improving freight market conditions, and Subsplash delivered strong double-digit software growth.
    Organic revenue growth: 4%Organic recurring growth: high singlesCore EBITDA margin improvement: 30 bps YoY
    		$500M12%—50.9% EBITDA margin
    Technology Enabled Products (TEP)
    Revenue grew 7% total and organically, exceeding expectations at Neptune, NDI, and Verathon. EBITDA margins were down 220 bps YoY due to input cost pressure at Neptune (bronze ingot inflation) and a mix shift at NDI and Verathon towards lower-margin, reoccurring consumables. NDI saw sustained demand for tracking solutions, and Neptune's metering business is on track to return to growth in H2.
    Organic revenue growth: 7%
    		$400M7%—34.5% EBITDA margin

    Operational metrics

    17
    EBITDA
    $815Mup 5%
    Q2 FY26
    EBITDA Margin
    38.6%
    Q2 FY26
    Core EBITDA Margin
    down 70 bpsYoY
    Q2 FY26

    Mainly driven by lower margins in TEP segment.

    Core Margins across Software Segments
    down 10 bps
    Q2 FY26

    Includes investment in AI team.

    Free Cash Flow per Share Growth
    19%YoY
    Q2 FY26

    Resulted from growth in FCF coupled with share repurchase activity.

    Net Debt to EBITDA
    3.4xup from 3.1x at Q1 end
    Q2 FY26 end

    Reflecting capital deployed towards share repurchases.

    Cash Balance
    $365M
    Q2 FY26 end
    Revolver Drawn
    $2.9B
    Q2 FY26 end
    Share Repurchases (Q2 FY26)
    $1.2B
    Q2 FY26
    Share Repurchases (Cumulative)
    $3.2B
    since program began

    Returns share count to 2013 position.

    Indicor Divestment Proceeds (Gross)
    $1.4B
    H2 FY26 (expected)

    From sale of instrumentation businesses to AMETEK.

    Indicor Divestment Proceeds (After Tax)
    $1.2B
    H2 FY26 (estimated)

    Estimated after tax proceeds from instrumentation businesses divestment.

    AI Team Investment
    —
    Q2 FY26

    Included in core margins across software segments, which were down 10 bps. Investment is at about halfway point in terms of headcount, but higher on spend due to senior level hiring.

    AI Cost Increase
    3x
    annualized since January

    Expected to go up by year-end. Company is pushing adoption of agentic coding and implementing controls to manage spend.

    Organic Recurring Revenue Growth
    7%
    Q2 FY26

    Consistent with Q1 performance. Expected to inflect higher in H2.

    SoftWriters Order Entry Processing Time Reduction
    80%from 90 seconds to 18 seconds
    current

    Achieved with AI-powered order entry and review solution, reducing manual entry and review time.

    Vertafore Submission Processing Time Reduction
    from ~1 hour to ~2 minutes
    current

    Achieved by the submission processing agent converting unstructured emails/documents into underwriting-ready data.

    Industry KPIs

    8
    MetricValueDetails
    Revenue growth$2.1BUSD
    Arr net new arr—
    Bookings billingsmid-single digit plus%
    Pricing model mixtransactional
    Customer account countmid-90s%
    Gross retention renewal ratemid-90s%
    Operating FCF margin rule of 4038.6%%
    Ai product adoption monetization—

    Orderbook & backlog

    1
    Enterprise Software Bookingsmid-single digit plusQ2 FY26

    up on a TTM basis

    Core bookings

    Product announcements

    12
    ProductTypeDetails
    Deltek agentic capabilitieslaunch
    Vertafore AI Velocity Platformlaunch
    Strata AI-enabled Financial Decision Intelligencelaunch
    Aderant Agentslaunch
    Procare Room Runnerlaunch
    CentralReach AI Solutionslaunch
    DAT Proactive AI Recommendation Enginelaunch
    SoftWriters AI-powered Order Entry and Review Solutionlaunch
    Foundry SmartRoto and Grip Tapelaunch
    Subsplash AI Assistantlaunch
    Verathon CFlex single-use cystoscopelaunch
    Verathon BFlex specimen collection systemlaunch

    Deals & partnerships

    1
    AMETEKSale of Indicor's instrumentation businesses

    Indicor announced an agreement to sell its instrumentation businesses to AMETEK. Roper, as a minority holder, expects significant proceeds to strengthen its balance sheet and deployment capacity.

    Risks & headwinds

    5
    GovCon market stabilizationnext few quarters

    not enough yet to change outlook

    Mitigation: Waiting for sales pipeline to convert consistently; market tailwinds from OBBB expected to support improvement over time.

    Input cost pressure at NeptuneQ2 FY26

    bronze ingot inflation

    Mitigation: Expect some offset on the price side and more static meter shipments in H2, which have lower input costs.

    Mix shift to lower-margin consumablesQ2 FY26

    lower gross margins

    Mitigation: This shift at NDI and Verathon leads to more durable and reoccurring revenue profiles, which is a strategic positive despite margin impact.

    Weaker reoccurring and nonrecurring revenueQ2 FY26

    offsetting strong recurring growth

    Mitigation: Primarily at MHA and iPipeline in Network Software segment; some service timing issues.

    Change management for AI adoptionearly in commercialization curve

    rate of adoption is still developing

    Mitigation: Company is investing in customer service and implementation resources to drive utilization and manage workflow changes; learning curve for pricing and deployment.

    What to watch in Q3 FY26

    5

    Deltek GovCon sales pipeline conversion

    next few quarters
    Currentencouraging signs, not yet a trend
    Targetconsistent conversion

    Why it matters

    Indicates a sustained recovery in the GovCon market, impacting Deltek's growth outlook.

    Deltek was solid in the quarter during [indiscernible] in its private sector solutions. GovCon was decent, and we saw some encouraging signs. That said, it is still too early to call💬 it a trend. Before upgrading our GovCon outlook, we'd like to see the sales pipeline convert consistently over the next few quarters.

    Q&A highlights

    8

    How does Roper evaluate buybacks versus M&A for capital allocation, especially considering the recent large buybacks, and what does a risk-adjusted accretive deal look like?

    Roper prioritizes compounding cash flow per share over 5-7 years. Historically, M&A offered better returns, but recent share price levels made buybacks more attractive. The company expects private valuations to align with public values, shifting the math back towards M&A. A risk premium is applied to M&A due to better internal knowledge of their own stock.

    “We've always looked at it this way, until the last 8 months, the capital allocation mathematically always favored M&A. When you look at the returns, both the time [ 0 ] return, a time [ 5 ] return, whether it's a year 5 EBIT, EBITDA or year 5 ROIC to M&A. But obviously, with the last 12 months or so, 12 to 18 months with the current share price level of Roper in the broader software sector, all of a sudden, buybacks became significantly more attractive.”

    asked by Deane Dray · answered by Neil Hunn

    2 min read5 chapters

    Detailed Narrative

    01

    AI Momentum and Product Velocity

    Roper is experiencing accelerating AI momentum across its vertical software businesses, with a significant increase in product release cadence. The company's 'right to win' in AI is grounded in deep domain expertise, embedded customer workflows, unique data assets, high-trust relationships, and scale distribution. The AI accelerator team is increasing velocity and scaling reusable patterns across the portfolio, leading to positive signals despite being early in the commercialization curve. Products are designed to improve with use, creating a flywheel effect where adoption expands, products get better, and value increases.

    02

    Capital Allocation Strategy

    Roper continues its disciplined capital allocation approach, prioritizing long-term cash flow per share compounding. The company repurchased 3.6 million shares for $1.2 billion in Q2, bringing cumulative repurchases to 9 million shares ($3.2 billion) since the program began, returning the share count to 2013 levels. With strong free cash flow and expected proceeds from the Indicor divestment, Roper anticipates over $5 billion in annualized capacity for capital deployment. Near-term capital deployment will favor deleveraging to prepare for M&A opportunities, which are expected to improve later this year and into 2027.

    03

    Segment Performance Highlights

    Application Software saw 5% organic growth, with strong performance from Aderant and Vertafore, and CentralReach exceeding its deal model. Network Software grew 4% organically, driven by DAT's improving freight market conditions and strong growth from Subsplash. TEP segment organic revenue grew 7%, with NDI showing sustained demand for tracking solutions and Neptune's metering business on track to return to growth in H2. The company noted encouraging signs of stabilization at Deltek, though not yet a confirmed trend.

    04

    SaaS Transitions and Cloud Adoption

    Several larger businesses within the Application Software segment are making meaningful progress on ground-to-cloud conversions and bringing new cloud-native products to market. This trend is expected to be a long-term positive for the segment. Deltek, in particular, is piling the majority of its AI agentic features into its cloud product, aiming to monetize through the uplift of on-premise to cloud transitions and additional pricing for the shift. This strategy is expected to drive increased cloud adoption over the next five years.

    05

    M&A Market Outlook

    Roper anticipates the M&A market to 'break loose' later this year and into 2027, with private valuations beginning to align with public market values. Conversations with sponsors are becoming more constructive, and investment banking pipelines are active. The company aims to prepare its balance sheet to take advantage of these opportunities, expecting to deploy $5 billion or more towards acquisitions over the next 12 to 18 months, focusing on acquiring 'winners' with strong momentum and viable AI product roadmaps.

    AI-generated summary of the company’s earnings call. Not investment advice.