Snapshot
Roper Technologies Inc reported $2.06B of revenue in Q4 2025, up 9.7% year over year, with diluted EPS of $3.97 and an operating margin of 28.6%.
- Revenue
- $2.06B
- YoY growth
- +9.7%
- Diluted EPS
- $3.97
- Operating margin
- 28.6%
What management said
- •For the fourth quarter, the difference between our GAAP results and adjusted results consists of the following items: amortization of acquisition-related intangible assets and financial impacts associated with our minority investment in Indicor.
- •Then Jason will walk through our enterprise financials, our Q4 segment performance, our balance sheet, and capital allocation capacity.
- •Next, we'll discuss our segment highlights and introduce our 2026 guidance, and then we'll close with a few summary thoughts before opening the call for questions.
- •Revenue was up 12%, EBITDA was up 11%, and free cash flow was up 8%.
- •Importantly, enterprise software bookings grew in the low double-digit range for the year, providing strength as we head into 2026.
- •That said, organic growth this past year was below our expectations in 2025, and we own that.
- •To this end, our application software business is safe for Deltek, improved organic growth in the 70 basis points area, demonstrating broad-based growth improvements occurring within the segment.
- •Importantly, we're not starting the year assuming organic growth will inflect in 2026, despite the traction we believe we're starting to achieve.
- •We're going to execute, and we'll reflect any improvement in organic growth in our guidance as it materializes throughout the year.
- •Importantly, our decentralized model lets each business deploy AI with the appropriate domain specificity across our various end markets.
- •During 2025, we materially advanced our portfolio and foundation through capital deployment, deploying $3.3 billion towards high-quality vertical software acquisitions during the year, highlighted by CentralReach, Subsplash, and several tuck-in acquisitions.
- •We're very encouraged by the size and quality of our acquisition pipeline, and we expect to remain active while staying highly disciplined on price and business quality.
What went well
- •Full year 2025 revenue grew 12%, EBITDA grew 11%, and free cash flow grew 8%, with free cash flow of nearly $2.5 billion representing 31% of revenue.
- •Enterprise software bookings grew in the low double-digit range for the year, providing momentum heading into 2026.
- •Fourth quarter DEPS of $5.21 came in above the guidance range of $5.11-$5.16 and up $0.40 over prior year, driven by very strong margin performance with core EBITDA margin expanding 60 basis points at 54% incremental margin.
- •Deployed $3.3 billion toward high-quality vertical software acquisitions during 2025, highlighted by platform deals CentralReach and Subsplash plus several tuck-ins, with CentralReach off to an outstanding start ahead of its deal model.
- •Repurchased 1.1 million shares for $500 million in Q4 at an average price just under $446, leaving $2.5 billion on the $3 billion authorization, and enters 2026 with over $6 billion of capacity for capital deployment.
- •Aderant grew mid-teens with strong bookings, Verathon remained the U.S. market share leader in single-use bronchoscopes, and NDI outperformed on strong demand in the cardiac ablation space.
What went wrong
- •Organic growth in 2025 was below management's expectations, which management explicitly owned; Q4 organic growth of 4% was below expectations.
- •Deltek was the primary weak spot, with the prolonged government shutdown, DOGE disruption, and weak large GovCon and perpetual license activity dragging it to the low end of mid-single-digit growth versus its historical mid-single-digit-plus track record; two large government contractor deals slipped at quarter-end.
- •Procare did not perform to expectations in 2025, primarily due to slow implementation timing across software and payments that delayed customer time to value and weighed on payments volumes.
- •Q4 non-recurring revenue was down (application software down 8%, network down 3%), the primary driver of the lower end of the mid-single-digit outlook.
- •Neptune was down slightly in Q4 as it comped a stronger prior-year quarter and worked through tariff surcharge negotiations, with backlog still normalizing.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Total revenue growth | FY2026 | — | ~8% | Initiated |
| Organic revenue growth | FY2026 | ~5.5% (2025 actual) | 5%-6% | Initiated |
| Adjusted DEPS | FY2026 | $20 (2025 actual) | $21.30-$21.55 | Initiated |
| Adjusted DEPS | Q1 2026 | — | $4.95-$5.05 | Initiated |
| Effective tax rate | FY2026 | — | ~21% (full year), ~22% in Q1 | Initiated |
| Free cash flow margin | FY2026 | 31% of revenue (2025) | Safely over 30% of revenue | Initiated |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Q4 total revenue ($2.06B) | +10% | Acquisitions contributed 5% and organic growth 4%, with organic below expectations on weak non-recurring revenue. |
| Q4 application software revenue | +10% | Organic growth of 4%; recurring revenue up 6% but non-recurring down 8%, driven by Deltek perpetual license weakness from the government shutdown. |
| Q4 network software revenue | +14% | Organic growth of 5%; recurring up 6% but non-recurring down 3% on lower services and customers shifting from perpetual to SaaS; margins lower at 52.8% as recent DAT bolt-ons scale to profitability. |
| Q4 TEP segment revenue | +6% | 5% organic; NDI outperformed on cardiac ablation demand while Neptune was down slightly on tougher comp and surcharge negotiations. |
| FY2025 revenue ($7.9B) | +12% | Acquisitions contributed nearly 7%; organic growth nearly 5.5%. |
| FY2025 EBITDA ($3.1B) | +11% | 39.8% margin with core margin up 30 basis points at 47% incremental margin. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| AI product opportunity | Early product development in 2025 | Hired Shane Luke and Eddy Raphael to lead a Roper AI Accelerator team; 2026 framed as the commercialization chapter; viewed as TAM expander and incremental upside not baked into guidance | rising |
| Deltek / GovCon weakness | Flagged as the big swing factor last quarter | Remained challenged through 2025; no improvement assumed in 2026 guidance despite Omnibus appropriations seen as a tailwind over time | steady |
| Capital allocation discipline | Active M&A in a muted market; buyback authorized and commenced in Q4 | Over $6 billion of capacity; remaining unbiased between M&A and buybacks based on durable cash flow per share compounding | rising |
| M&A pipeline strength | Proactive execution despite weak market | Encouraged by size and quality of pipeline; expects market to pick up in 2026 with rising LP pressure on private equity sellers | rising |
| Procare turnaround | — | Underperformed on implementation timing; leadership upgraded and payments fixed; learnings applied to CentralReach and Subsplash governance | steady |
| DAT marketplace evolution | Continued execution amid freight recession | Advancing AI-first automated matching, broker TMS integrations, and fraud detection; no freight-market recovery assumed in 2026 guidance | steady |
Q&A summary
What is baked into the 2026 guide for Deltek and how are you protecting against another government shutdown?
No improvement is assumed; Q4 was depressed by perpetual license revenue (most GovCon enterprise still buys perpetual), which is not expected to repeat, providing a comp benefit, but no market improvement is underwritten until it is seen.
What needs to happen for Procare to meet expectations again?
Procare is the clear market leader with payments infrastructure and go-to-market fixed; the remaining issue is slow software and payments implementation, which is eminently fixable and the team's top priority, with no competitive problem.
When can you quantify what AI means for Roper, and can you attribute organic improvement to AI?
Management will not 'AI wash' revenue; monetization will come via SKUs, cloud uplift, and packaging, making clean reporting hard. AI is viewed as a meaningful TAM expander showing up first in bookings then recurring base; 2025 was the product-development chapter, 2026 the commercialization chapter.
This is the second quarter in a row missing expectations while guiding to a back-half acceleration; where is the incremental conservatism in 2026?
The 2025 shortfall reconciles to Deltek, Neptune, and Procare; 2026 assumes no Deltek improvement, no DAT recovery, and a modest Neptune decline, with the optical acceleration driven by CentralReach and Subsplash turning organic and easing non-recurring comps.
With faster-growth businesses arriving in the second half and no Deltek tailwind, could organic fall below the 5% low end in the first half?
Management does not think so; application software is expected at mid-single digits with recurring at mid-single-digit-plus consistent with Q4, no repeat of the Q4 non-recurring decline, and network recurring at mid-single-digit-plus, improving as Subsplash turns organic in Q4.
How are you weighing the buyback given the stock is roughly 15% below the Q4 buyback price versus M&A risk?
The objective is the best risk-adjusted path to long-term cash flow per share compounding; the valuation dislocation makes buybacks attractive in the short run, but M&A generally beats in the long run, and management expects an incredibly active M&A year given abundant pipeline opportunity.