ROPER TECHNOLOGIES INC

Previous wording

•difficulty making acquisitions and successfully integrating acquired businesses;

Current wording

•difficulty making acquisitions, including receiving the necessary regulatory approvals (including clearance under the Hart-Scott-Rodino Act in the U.S. and similar antitrust regulations in foreign countries), and successfully integrating acquired businesses;

Previous wording

•changes in the supply of, or price for, labor, energy, raw materials, parts, and components, including as a result of impacts from the current inflationary environment, or supply chain constraints;

Current wording

•changes in the supply of, or price for, labor, energy, raw materials, parts, and components, including as a result of inflation or potential supply chain constraints;

Previous wording

•economic disruption caused by armed conflicts (such as the war in Ukraine and the conflict in the Middle East), terrorist attacks, health crises (such as the COVID-19 pandemic), or other unforeseen geopolitical events; and

Current wording

•economic disruption caused by armed conflicts (such as the war in Ukraine and the conflict in the Middle East), terrorist attacks, health crises, or other unforeseen geopolitical events; and

Previous wording

Roper is a diversified technology company. Roper has a proven, long-term, successful track record of compounding cash flow and shareholder value. We operate market leading businesses that design and develop vertical software and technology enabled products for a variety of defensible niche markets.

Current wording

Roper is a diversified technology company. Roper has a proven, long-term, successful track record of compounding cash flow and increasing shareholder value. We operate market leading businesses that design and develop vertical software and technology enabled products for a variety of defensible niche markets.

Previous wording

We pursue consistent and sustainable growth in revenue, earnings, and cash flow by enabling continuous improvement in the operating performance of our businesses and by acquiring other businesses that offer high value-added software, services, technology-enabled products, and solutions that we believe are capable of achieving growth and maintaining high margins.

Current wording

We pursue consistent and sustainable growth in revenue, earnings, and cash flow by enabling continuous improvement in the operating performance of our businesses and by acquiring other businesses that offer high value-added software, services, technology-enabled products, and solutions that we believe are capable of realizing growth while maintaining high margins.

Previous wording

There were no material changes during the nine months ended September 30, 2024 to the items that we disclosed as our critical accounting policies and estimates in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

Current wording

There were no material changes during the three months ended March 31, 2025 to the items that we disclosed as our critical accounting policies and estimates in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

Previous wording

Net revenues for the three months ended September 30, 2024 were $1,764.6 as compared to $1,563.4 for the three months ended September 30, 2023, an increase of 12.9%. The components of revenue growth for the three months ended September 30, 2024 were as follows:

Current wording

Net revenues for the three months ended March 31, 2025 were $1,882.8 as compared to $1,680.7 for the three months ended March 31, 2024, an increase of 12.0%. The components of revenue growth for the three months ended March 31, 2025 were as follows:

Previous wording

In our Application Software segment, net revenues in the third quarter of 2024 were $984.4 as compared to $803.4 in the third quarter of 2023. The growth of 5.5% in organic revenues was broad-based across the segment led by our businesses serving the acute healthcare, legal, and government contracting markets. Gross margin decreased to 68.3% in the third quarter of 2024 as compared to 69.4% in the third quarter of 2023 due primarily to a lower gross margin profile associated with the higher payments revenue mix at Procare and Transact, our 2024 acquisitions, partially offset by operating leverage on higher organic revenues. Selling, general and administrative (“SG&A”) expenses as a percentage of net revenues decreased to 42.0% in the third quarter of 2024 as compared to 43.7% in the third quarter of 2023, due primarily to cost synergies resulting from the integration of Syntellis, and a lower SG&A profile associated with the higher payments revenue mix at Transact and Procare. The resulting operating margin was 26.4% in the third quarter of 2024 as compared to 25.8% in the third quarter of 2023.

Current wording

In our Application Software segment, net revenues in the first quarter of 2025 grew 19.3% to $1,068.2 as compared to $895.2 in the first quarter of 2024, led by acquisition contribution from Transact and Procare. The growth of 5.9% in organic revenues was broad-based across the segment, led by our businesses serving the acute healthcare, project-based business/government contracting, and property and casualty insurance markets. Gross margin decreased to 67.5% in the first quarter of 2025 as compared to 69.9% in the first quarter of 2024 due primarily to a lower gross margin profile associated with the higher payments revenue mix at Transact and Procare. SG&A expenses as a percentage of net revenues decreased to 41.6% in the first quarter of 2025 as compared to 43.1% in the first quarter of 2024, due primarily to operating leverage on higher organic revenues and a lower SG&A profile associated with the higher payments revenue mix at Transact and Procare. The resulting operating margin was 25.9% in the first quarter of 2025 as compared to 26.8% in the first quarter of 2024.

Previous wording

In our Network Software segment, net revenues in the third quarter of 2024 were $367.1 as compared to $364.1 in the third quarter of 2023. The growth of 0.8% in organic revenues was led by our network software businesses serving the construction and alternate site healthcare markets, partially offset by a decline in our businesses serving the freight match and media and entertainment markets. Gross margin decreased to 84.9% in the third quarter of 2024 as compared to 85.3% in the third quarter of 2023 due primarily to revenue mix. SG&A expenses as a percentage of net revenues decreased to 39.7% in the third quarter of 2024 as compared to 40.2% in the third quarter of 2023 due primarily to expense reductions resulting from cost structure rationalization at our businesses serving the freight match market and operating leverage on higher organic revenues. As a result, operating margin was 45.2% in both the third quarter of 2024 and 2023.

Current wording

In our Network Software segment, net revenues in the first quarter of 2025 grew 1.4% to $375.9 as compared to $370.8 in the first quarter of 2024. The growth of 0.7% in organic revenues was led by our network software businesses serving the construction and freight match markets. These increases were partially offset by a decline in our alternate site group purchasing business, and a decline in our media and entertainment software business primarily related to end-market conditions. Gross margin decreased to 84.0% in the first quarter of 2025 as compared to 85.3% in the first quarter of 2024 due primarily to new product investment and reduced leverage. SG&A expenses as a percentage of net revenues decreased to 39.6% in the first quarter of 2025 as compared to 40.3% in the first quarter of 2024 due primarily to improved operating leverage. As a result, operating margin was 44.3% in the first quarter of 2025 as compared to 45.0% in the first quarter of 2024.

Previous wording

In our Technology Enabled Products segment, net revenues in the third quarter of 2024 were $413.1 as compared to $395.9 in the third quarter of 2023. The growth of 4.4% in organic revenues was led by our medical products businesses, excluding our precision measurement business, and growth in our water meter technology business. These increases were partially offset by declines in our access management businesses, primarily attributable to the easing of supply chain issues in the third quarter of 2023, and our precision measurement business due to customer program timing. Gross margin decreased to 57.4% in the third quarter of 2024 as compared to 57.6% in the third quarter of 2023 due primarily to revenue mix and reduced operating leverage associated with our precision measurement business’s reduced third quarter 2024 revenues. SG&A expenses as a percentage of net revenues increased to 23.2% in the third quarter of 2024 as compared to 22.9% in the third quarter of 2023 due primarily to revenue mix. The resulting operating margin was 34.2% in the third quarter of 2024 as compared to 34.6% in the third quarter of 2023.

Current wording

In our Technology Enabled Products segment, net revenues in the first quarter of 2025 grew 5.8% to $438.7 as compared to $414.7 in the first quarter of 2024. The growth of 6.0% in organic revenues was led by certain of our medical products businesses, highlighted by our precision measurement business, as well as growth in our water meter technology business. Gross margin increased to 58.7% in the first quarter of 2025 as compared to 57.6% in the first quarter of 2024 due primarily to improved leverage on higher organic revenues and revenue mix. SG&A expenses as a percentage of net revenues decreased to 23.6% in the first quarter of 2025 as compared to 24.8% in the first quarter of 2024 due primarily to operating leverage on higher organic revenues. The resulting operating margin was 35.0% in the first quarter of 2025 as compared to 32.8% in the first quarter of 2024.

Previous wording

Corporate expenses increased to $70.3, or 4.0% of net revenues, in the third quarter of 2024 as compared to $62.3, or 4.0% of net revenues, in the third quarter of 2023. The dollar increase was due primarily to higher stock-based compensation expense.

Current wording

Corporate expenses increased to $71.3, or 3.8% of net revenues, in the first quarter of 2025 as compared to $61.5, or 3.7% of net revenues, in the first quarter of 2024. The dollar increase was due primarily to higher compensation expense, predominantly driven by increased stock-based compensation expense.

Previous wording

Interest expense, net, increased to $188.4 for the nine months ended September 30, 2024 as compared to $114.6 for the nine months ended September 30, 2023 due to higher borrowings on our unsecured credit facility and less interest income earned on our cash and cash equivalents, partially offset by lower weighted average fixed-rate debt balances.

Current wording

Interest expense, net, increased to $62.9 for the first quarter of 2025 as compared to $53.2 for the first quarter of 2024 due primarily to a higher weighted-average fixed-rate debt balance and interest rate, partially offset by a lower weighted-average revolving credit facility balance.

Previous wording

Equity investments gain, net, was $93.6 in the nine months ended September 30, 2024 due primarily to a $92.7 increase in the fair value of our equity investment in Indicor and $9.5 of dividend distributions received from Indicor, partially offset by our proportionate share of net loss associated with our investment in Certinia of $9.8 in accordance with the equity method of accounting. Equity investments gain, net, was $98.7 in the nine months ended September 30, 2023 due primarily to a $76.4 increase in the fair value of our equity investment in Indicor and $25.3 of dividend distributions received from Indicor.

Current wording

Equity investments (gain) loss, net, was a loss of $44.4 in the first quarter of 2025 due primarily to a $44.1 decrease in the fair value of our equity investment in Indicor. Equity investments (gain) loss, net, was a gain of $57.0 in the first quarter of 2024 due primarily to a $64.4 increase in the fair value of our equity investment in Indicor, partially offset by our proportionate share of net loss associated with the investment in Certinia of $7.6 in accordance with the equity method of accounting. Changes in the fair value of our Indicor investment are primarily due to fluctuations in the equity values of comparable guideline public companies.

Previous wording

Income taxes as a percentage of pretax earnings decreased to 21.3% for the third quarter of 2024 as compared to 21.9% for the third quarter of 2023. The 2024 rate was favorably impacted by the recognition of a net tax benefit associated with international legal entity restructuring.

Current wording

Income taxes as a percentage of pretax earnings decreased to 20.8% for the first quarter of 2025 as compared to 21.1% for the first quarter of 2024. The 2025 rate was favorably impacted by increased stock-based compensation tax benefits.

Previous wording

Backlog is equal to our remaining performance obligations expected to be recognized as revenue within the next 12 months as discussed in Note 13 of the Notes to Condensed Consolidated Financial Statements. Backlog increased 3.9% to $3,026.1 at September 30, 2024 as compared to $2,913.7 at September 30, 2023 due primarily to organic growth and acquisitions in our Application Software segment, partially offset by a decrease in our Technology Enabled Products segment.

Current wording

Backlog is equal to our remaining performance obligations expected to be recognized as revenue within the next 12 months as discussed in Note 11 of the Notes to Condensed Consolidated Financial Statements. Backlog increased 3.5% to $3,033.8 at March 31, 2025 as compared to $2,932.4 at March 31, 2024 due primarily to organic growth in our Application Software and Network Software segments as well as acquisitions in our Application Software segment, partially offset by a decrease in our Technology Enabled Products segment associated with the normalization of supply chain ordering patterns.

Previous wording

Selected cash flows for the nine months ended September 30, 2024 and 2023 were as follows:

Current wording

Selected cash flows for the three months ended March 31, 2025 and 2024 were as follows:

Previous wording

Operating activities – Net cash provided by operating activities from continuing operations increased by 18% to $1,671.0 in the nine months ended September 30, 2024 as compared to $1,415.7 in the nine months ended September 30, 2023 primarily due to higher net earnings from continuing operations net of non-cash expenses, increased collections on accounts receivable, and the cash payment of $45.0 in 2023 related to the settlement of a patent litigation matter, partially offset by higher cash taxes paid.

Current wording

Operating activities – Net cash provided by operating activities decreased by 1% to $528.7 in the three months ended March 31, 2025 as compared to $531.5 in the three months ended March 31, 2024 primarily due to the cash payment of $24.0 related to settled litigation, payments associated with incentive compensation, and higher cash taxes paid, partially offset by higher net earnings net of non-cash expenses.

Previous wording

Investing activities – Cash used in investing activities from continuing operations during the nine months ended September 30, 2024 was primarily for the acquisitions of Procare and Transact. Cash used in investing activities from continuing operations during the nine months ended September 30, 2023 was primarily for business acquisitions, most notably Syntellis and Replicon.

Current wording

Investing activities – Cash used in investing activities during the three months ended March 31, 2025 was primarily for the acquisition of Muni-Link. Cash used in investing activities during the three months ended March 31, 2024 was primarily for the acquisition of Procare.

Previous wording

Financing activities – Cash provided by financing activities during the nine months ended September 30, 2024 was primarily from the issuance of $2,000.0 of senior notes and net borrowings under our unsecured credit facility, partially offset by $500.0 of senior notes repaid at maturity and dividend payments. Cash provided by financing activities during the nine months ended September 30, 2023 was primarily from net borrowings under our unsecured credit facility and net proceeds from stock-based compensation, partially offset by $700.0 of senior notes repaid at maturity and dividend payments.

Current wording

Financing activities – Cash used in financing activities during the three months ended March 31, 2025 was primarily for net repayments on our unsecured revolving credit facility and dividend payments. Cash provided by financing activities during the three months ended March 31, 2024 was primarily from net borrowings under our unsecured revolving credit facility to fund the acquisition of Procare, partially offset by dividend payments.

Previous wording

The interest rate on borrowings under the $3,500.0 unsecured credit facility is calculated based upon various recognized indices plus a margin as defined in the credit agreement. At September 30, 2024, we had $925.0 of borrowings outstanding under our unsecured credit facility and $6.8 of outstanding letters of credit.

Current wording

The interest rate on borrowings under the $3,500.0 unsecured revolving credit facility is calculated based upon various recognized indices plus a margin as defined in the credit agreement. At March 31, 2025, we had no borrowings outstanding under our unsecured revolving credit facility and $6.8 of outstanding letters of credit. Subsequently, our acquisition of CentralReach on April 23, 2025 was funded using borrowings under our unsecured revolving credit facility.

Previous wording

In relation to our total cash and cash equivalents, amounts held at our foreign subsidiaries represented 51.3% or $138.3 at September 30, 2024 as compared to 69.2% or $148.3 at December 31, 2023. The decrease in foreign cash was due primarily to repatriation of $223.2, partially offset by the cash generated at our foreign subsidiaries during the nine months ended September 30, 2024. We intend to repatriate substantially all historical and future earnings.

Current wording

In relation to our total cash and cash equivalents, amounts held at our foreign subsidiaries represented 51.5% or $191.9 at March 31, 2025 as compared to 69.5% or $130.8 at December 31, 2024. The increase in foreign cash was due primarily to the cash generated at our foreign subsidiaries during the three months ended March 31, 2025, partially offset by cash repatriation of $10.0. We intend to repatriate substantially all historical and future earnings.

Previous wording

We were in compliance with all debt covenants related to our unsecured credit facility throughout the nine months ended September 30, 2024.

Current wording

We were in compliance with all debt covenants related to our unsecured credit facility throughout the three months ended March 31, 2025.

Previous wording

Net working capital (total current assets, excluding cash, less total current liabilities, excluding debt) was negative $1,268.0 at September 30, 2024 as compared to negative $1,196.6 at December 31, 2023 primarily driven by the increase in deferred revenue predominantly due to the timing of SaaS renewals associated with Frontline as well as the acquisition of Transact. Total debt, net of deferred financing costs was $8,376.6 at September 30, 2024 as compared to $6,330.1 at December 31, 2023. Our leverage on a continuing operations basis is presented in the following table:

Current wording

Net working capital (total current assets, excluding cash, less total current liabilities, excluding debt) was negative $1,356.8 at March 31, 2025 as compared to negative $1,434.6 at December 31, 2024. The change in net working capital was primarily driven by the timing of payments associated with incentive compensation, the reduction in deferred revenue predominantly due to the timing of SaaS renewals associated with Frontline, the payment for settled litigation, and payment timing associated with prepaid expenses, partially offset by an increase in income taxes payable and a decrease in accounts receivable. Total debt, net of deferred financing costs was $7,456.4 at March 31, 2025 as compared to $7,623.0 at December 31, 2024. Our leverage is presented in the following table:

Previous wording

Capital expenditures were $39.2 for the nine months ended September 30, 2024 as compared to $37.8 for the nine months ended September 30, 2023. Capitalized software expenditures were $33.4 for the nine months ended September 30, 2024 as compared to $28.7 for the nine months ended September 30, 2023. We expect the aggregate of capital expenditures and capitalized software expenditures for 2024 to be comparable to prior years as a percentage of net revenues.

Current wording

Capital expenditures were $9.5 for the three months ended March 31, 2025 as compared to $9.3 for the three months ended March 31, 2024. Capitalized software expenditures were $12.4 for the three months ended March 31, 2025 as compared to $9.6 for the three months ended March 31, 2024. We expect the aggregate of capital expenditures and capitalized software expenditures for 2025 to be comparable to prior years as a percentage of net revenues.

Previous wording

Current geopolitical and economic uncertainties, including the current inflationary environment, supply chain disruptions, and labor shortages, could adversely affect our business prospects. An armed conflict (such as the ongoing war in Ukraine, as well as the conflict in the Middle East), significant terrorist attack, other global conflict, widespread cybersecurity event or information technology failure, or public health crisis could cause changes in world economies that would adversely affect us. It is impossible to isolate each of these potential factor’s future effects on current economic conditions or any of our businesses. It is also impossible to predict with any reasonable degree of certainty what or when any additional events may occur that also would similarly disrupt the economy and have an adverse impact on our businesses.

Current wording

Current geopolitical and economic uncertainties, including inflation, tariffs and changes in trade policy, supply chain disruptions, and labor shortages, could adversely affect our business prospects. An armed conflict (such as the ongoing war in Ukraine, as well as the conflict in the Middle East), significant terrorist attack, other global conflict, widespread cybersecurity event or information technology failure, or public health crisis could cause changes in world economies that would adversely affect us. It is impossible to isolate each of these potential factor’s future effects on current economic conditions or any of our businesses. It is also impossible to predict with any reasonable degree of certainty what or when any additional events may occur that also would similarly disrupt the economy and have an adverse impact on our businesses.

Previous wording

We anticipate that our businesses will generate positive cash flows from operating activities, and that these cash flows will permit the reduction of currently outstanding debt in accordance with the repayment schedule. However, the rate at which we can reduce our debt (and reduce the associated interest expense) will be affected by, among other things, the financing and operating requirements of any new acquisitions, the financial performance of our existing companies, and the impact of the aforementioned geopolitical and economic uncertainties and the financial markets generally. None of these factors can be predicted with certainty.

Current wording

We anticipate that our businesses will generate positive cash flows from operating activities, and that these cash flows will permit the reduction of currently outstanding debt in accordance with the repayment schedule. However, the rate at which we can reduce our debt (and reduce the associated interest expense) will be affected by, among other things, the financing and operating requirements of any new acquisitions, the financial performance of our existing companies, the impact of the aforementioned geopolitical and economic uncertainties, and the financial markets generally. None of these factors can be predicted with certainty.