Snapshot
Roper Technologies Inc reported $1.94B of revenue in Q2 2025, up 13.2% year over year, with diluted EPS of $3.49 and an operating margin of 28.2%.
- Revenue
- $1.94B
- YoY growth
- +13.2%
- Diluted EPS
- $3.49
- Operating margin
- 28.2%
What management said
- •We'll start with our second quarter highlights, including reviewing the platform acquisition we announced earlier today, Subsplash.
- •Then we'll go through our segment results and our improved outlook for the full year, and then get to your questions.
- •Software bookings grew in the high teens area, and we continued to deliver impressive cash flow with free cash flow margins coming in at 31% for the TTM period.
- •Second, we announced earlier today the acquisition of another great vertical market software provider, Subsplash, which I'll get to in a bit.
- •Then given the strong first half performance and the anticipated completion of the Subsplash acquisition, we're raising our full year total revenue guidance and our full year debt outlook.
- •Finally, we continue to be very well positioned for capital deployment and continue to have more than $5 billion of available firepower over the course of the next 12 months.
- •Importantly, this customer value proposition strengthens further as the company's AI-native capabilities are further deployed across the product stack.
- •We expect Subsplash to deliver $115 million of revenue and $36 million of EBITDA for the 12 months ending Q3 of 2026.
- •This business meets all of our longstanding acquisition criteria: leader in a niche, competes on the basis of customer intimacy, has strong gross margins, and converts high levels of cash flow.
- •As a result, we expect to see Subsplash's organic revenue growth convert to high 20% EBITDA growth over the next three to five years.
- •We will finance this transaction with a revolver and report the results in our network software segment.
- •Revenue of $1.94 billion was up 13% over prior year and well balanced, with 7% organic growth and a 6% increase from acquisitions, with CentralReach results contributing since the April 23rd close date.
What went well
- •Total revenue grew 13% in the second quarter, with 7% organic growth and a 6% contribution from acquisitions including CentralReach since its April 23rd close.
- •Software bookings grew in the high teens, and TTM free cash flow margins reached 31% with free cash flow of $400 million in the quarter, up 10% over prior year.
- •Diluted EPS of $4.87 beat the guidance range of $4.80-$4.84 on strong revenue growth and core operating leverage, with EBITDA of $775 million up 12% at a 39.9% margin.
- •Network software year-over-year growth notably improved from Q1 on more normal MHA comps, better freight match unit economics, and recovery at Foundry.
- •Aderant posted its best bookings quarter in company history, landing one of the largest ground-to-cloud conversions ever, driven by AI-enabled solutions and market share gains.
- •The company announced the $800 million acquisition of Subsplash and raised full-year revenue and EPS guidance, retaining more than $5 billion of M&A firepower.
What went wrong
- •Deltek government contracting remained muted, with the federal contracting market tepid for roughly the past 24 months amid lingering DOGE effects and uncertain timing of re-acceleration.
- •Foundry declined in the quarter as expected, though management noted early market recovery signs and sequential ARR growth for the first time since the actors and writers strikes.
- •Frontline and K-12 education bookings were slower, with uncertainty in the K-12 market having a muted effect on industry bookings activity.
- •Tariff exposure in the tech business remained in the $10 million-$15 million range, which management said was too early to call a non-effect despite mitigation efforts.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Total revenue growth | FY2025 | — | ~13% | Raised given strong Q2 and anticipated Subsplash close |
| Organic revenue growth | FY2025 | 6-7% | 6-7% | Unchanged |
| Adjusted diluted EPS | FY2025 | — | $19.90-$20.05 | Raised; includes ~$0.05 of Subsplash dilution |
| Effective tax rate | FY2025 | — | 21-22% | Maintained |
| Adjusted diluted EPS | Q3 2025 | — | $5.08-$5.12 | Absorbs $0.03 of Subsplash dilution |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Application software segment revenue | +17% total, +6% organic | Strength at Aderant, PowerPlan, Vertafore and CentralReach plus contribution from acquisitions; core margins up 70 bps. |
| Network software segment revenue | +6% total, +5% organic | Improved comps at MHA, better freight match unit economics, and Foundry recovery; EBITDA margins of 54.6%. |
| TEP segment revenue | +10% total, +9% organic | Solid Neptune execution, Verathon single-use strength, and strong NDI results; EBITDA margins of 36.7%. |
| Deltek | Mid-single digits | Strong cloud migration and retention, but federal GovCon demand muted pending Big Beautiful Bill spending. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| AI-enabled products | Discussed prior quarter | ~25 AI-enabled products in market or development; ~30% R&D productivity gains in a larger software business; tens of millions in AI-native ARR today | rising |
| M&A and capital deployment | Active pipeline | Subsplash $800M acquisition announced; over $5 billion firepower; net debt to EBITDA 2.9x (3.1x pro forma) | steady |
| Big Beautiful Bill / GovCon outlook | — | Expected catalyst for federal contracting via higher defense spend and Section 174 R&D repeal; timing to be determined | rising |
| Maturing leader acquisition strategy | Strategy of past 2-3 years | Subsplash fits profile of higher organic growth with margin expansion potential; ProCare lessons applied to integrations | steady |
Q&A summary
Are customers easing decisions amid uncertainty, and how is AI layering in momentum across software segments?
High teens bookings showed end markets are okay; Roper's exposures (education, legal, insurance, healthcare) are generally less macro-sensitive, and AI is driving productivity gains and bookings drag-along, with Aderant a leading example.
How should we think about embedded/layered payments functionality across the suite and TAM expansion?
Payments rights are earned through software at ProCare, Subsplash and Transact/CBORD; recent deals having payments angles is more coincidental than a deliberate theme, and payments add stickiness. Algo is a tech-native factoring solution, a slightly different setup.
When do AI revenue implications show up and how does it affect R&D spend?
Internal productivity gains are real (about 30% in R&D at a larger software business); direct AI-native ARR is tens of millions today with a multiple more in pull-along, expected to compound and gain momentum next year.
Does the Deltek outlook still embed the conservatism cited last quarter, and is it performing ahead of expectations?
Deltek is not ahead of plan; the outlook still embeds conservatism. The Big Beautiful Bill makes management more bullish but mainly for beyond 2025, with possible Q4 perpetual-license upside dependent on order timing.
What gives confidence in improving Subsplash's growth and margin profile given it already grows high teens?
Confidence is in sustaining growth (church digitization, ~50% served $2.5B TAM, second-generation platform) while improving margins; prior owner left a dozen-plus levers, of which Roper underwrote about half toward meaningfully higher margins over 3-5 years.
After ProCare, how do you prevent similar issues at CentralReach and Subsplash?
Key lesson is not to wait when problems appear; diligence and integration telemetry have been strengthened. ProCare's slope (market/competitive) was right but the intercept (operations) was wrong, and Transact and CentralReach are integrating more smoothly.