Snapshot
Roper Technologies Inc reported $2.02B of revenue in Q3 2025, up 14.3% year over year, with diluted EPS of $3.68 and an operating margin of 28.4%.
- Revenue
- $2.02B
- YoY growth
- +14.3%
- Diluted EPS
- $3.68
- Operating margin
- 28.4%
What management said
- •Next, we'll review our segment performance, our AI progress and momentum, and our most recent set of bolt-on acquisitions.
- •I'll get into our guidance details and, of course, wrap up with your questions.
- •Total revenue grew 14%, organic revenue grew 6%, software bookings grew in the high singles area.
- •We continued to deliver impressive free cash flow, with free cash flow growing 17%.
- •Of note, free cash flow margins posted at 32% for the TTM period.
- •Lastly, we continue to execute on our M&A strategy of acquiring faster growth platforms and bolt-on or tuck-in acquisitions at a high fidelity rate.
- •In the quarter, we deployed $1.3 billion, $800 million for Subsplash, which we detailed this time last quarter, and $500 million on a series of tuck-in acquisitions.
- •Also, more on this later, but worth highlighting here, we are very encouraged by this recent capital deployment execution and the future growth potential that's being layered into our enterprise.
- •Importantly, we remain very well positioned for the continued execution of our M&A strategy and continue to have north of $5 billion of capital deployment capacity available over the next 12 months or so.
- •Turning to page six, Q3 and TTM results reflect the long-term financial profile of Roper, which is to compound cash flow in the mid-teens area.
- •We'll start with revenue, which was 14% over prior year and surpassed the $2 billion mark.
- •Acquisitions contributed 8%, led by the final quarter of Transact before it turns organic, and CentralReach, which we acquired in April of this year.
What went well
- •Total revenue grew 14% and surpassed $2 billion, with organic revenue growing 6% consolidated and across each of the three segments.
- •Free cash flow was outstanding at $842 million, up 17% over prior year and representing 32% of revenue on a trailing-twelve-month basis.
- •DEPS of $5.14 was 11% over prior year and $0.02 above the high end of the guidance range, despite absorbing $0.05 of dilution from Q3 acquisitions not in prior guidance.
- •The board authorized the company's first-ever share repurchase program of $3 billion with open-ended timing to opportunistically complement M&A.
- •AI momentum produced tangible proof points, with CentralReach attributing roughly 75% of bookings to AI-enabled products and Deltek releasing over 40 AI features driving cloud conversion.
- •The company deployed $1.3 billion in the quarter ($800 million for Subsplash and $500 million on tuck-ins) and retains north of $5 billion of capital deployment capacity over the next 12 months.
What went wrong
- •Deltek's GovCon business experienced softness in September as agencies paused activity ahead of the pending government shutdown, prompting a reduced application software outlook for Q4.
- •The TEP segment came in a bit below expectations due to near-term timing at Neptune, where a tariff-driven surcharge required recontracting open orders and pushed deliveries to the right.
- •Software bookings decelerated sequentially from the mid-teens to high single digits, driven mainly by Deltek and a little by Frontline.
- •Convoy, acquired as a strategic tuck-in for DAT, is currently not profitable, an unusual money-losing acquisition for the company.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Application software organic revenue growth | Q4 2025 | — | Mid-single-digit (range from low to high end depending on shutdown duration) | Reduced/uncertain due to government shutdown impact on Deltek |
| Network segment organic revenue growth | Q4 2025 | — | Higher end of mid-single-digit area | New |
| TEP segment organic revenue growth | Q4 2025 | High single digit (back half) | Low single digit | Lowered, driven by Neptune tariff timing |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Total revenue | +14% | Acquisitions contributed 8% (led by final quarter of Transact and CentralReach acquired in April) plus 6% organic growth. |
| EBITDA | +13% | EBITDA of $810 million at 40.2% margin; segment core margins expanded 30 basis points led by software segments. |
| Free cash flow | +17% | Strong software renewals and great working capital performance across the board. |
| Application software revenue | +18% total, +6% organic | Strength at Aderant, Deltek private sector, Vertafore, PowerPlan and CentralReach; core margins improved 40 basis points. |
| Network segment revenue | +13% total, +6% organic | Solid DAT and ConstructConnect results plus strong healthcare businesses; core margins improved 60 basis points. |
| TEP segment revenue | +7% total, +6% organic | Below expectations due to near-term timing at Neptune from tariff surcharge recontracting; EBITDA margin 35.2%. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| AI as a durable growth driver | 25 AI products disclosed last quarter | Expanding to AI SKUs across 20+ software companies, with meaningful organic impact expected in 2027 after commercialization | rising |
| Government shutdown impact on Deltek GovCon | — | September agency pause delaying commercial activity; framed as a timing not demand issue, with OB3 spending a future tailwind | rising |
| DAT freight automation strategy | Pricing and packaging unlock discussed prior quarters | Building end-to-end automation via Trucker Tools, Outgo and Convoy tuck-ins, targeting $100-$200 per load savings | rising |
| M&A capital deployment | — | $1.3 billion deployed in quarter; pipeline building as PE assets mature; $15-20 billion deployable over three years | steady |
| Neptune order normalization | Elevated COVID-era backlog buildup | Lead times normalizing toward pre-COVID levels; tariff surcharge pushing orders to the right, not lost | declining |
Q&A summary
What gives confidence in a re-acceleration of organic growth heading into 2026? (George Kurosawa, Citi)
Management cited consistent application trends, expected GovCon improvement from OB3 spending, consistent network results despite freight headwinds with DAT business building, and Neptune lead times normalizing; full clarity awaits the Q4 planning process.
Why initiate a first-ever buyback rather than leaning harder into M&A? (Brent Thill, Jefferies)
The $3 billion open-ended, opportunistic program does not change strategy; with $15-20 billion deployable over three years, M&A remains the majority of capital allocation and the buyback reflects conviction in the company's strategy and execution.
Was the sequential software bookings deceleration driven by Deltek? (Brad Reback, Stifel)
Mainly Deltek with a little Frontline (from DOE/K-12 funding); bookings are lumpy quarter to quarter but up low double digits on a TTM basis, with healthcare (Strata, Clinisys) particularly strong.
Are the Neptune delays a loss of orders or just timing? (Deane Dray, RBC)
100% pushed to the right, not lost; Neptune is assessing a tariff surcharge requiring recontracting of open orders, and Neptune actually gained a little market share in the quarter.
When does AI become a meaningful organic growth driver? (Brad Reback, Stifel)
Management agreed it is more of a 2027-and-beyond driver; bookings momentum will build through 2026 as AI SKUs roll out and are commercialized across 20-plus software companies first.
What is the catalyst to move application software organic growth above the ~6% range? (Joe Giordano, TD Cowen)
Deltek returning to normalized growth, CentralReach turning organic, Frontline reaccelerating as COVID/DOE funding normalizes, and the legacy Sunquest/Clinisys U.S. lab business turning to mid-single-digit growth.