What Management Said

Read the full Q2 2026 transcript ↗

First, we delivered solid results and are raising our outlook for the year. Third, we continue to execute our capital allocation opportunities with our long-standing discipline. Total revenue grew 9%, organic revenue grew 5%, EBITDA grew 5%, and free cash flow grew 11%. On that foundation, enterprise software bookings remained solid with core bookings up mid-single digit plus on a TTM basis.

On the back of this quarter's performance, we're raising our full-year DEPS guidance for the second time this year to a range of $22.15-$22.30. In addition, we're raising our full-year revenue growth outlook, with total revenue now expected to be north of 8% and organic growth expected to be in the 6% range. CentralReach deployed its next generation of AI solutions focused on clinical documentation quality and audit readiness. Our right to win is grounded in the same advantages that have always made our vertical software businesses strong: deep domain expertise, embedded customer workflows, unique data assets, high-trust customer relationships, and scale distribution.

Demand is strong, but these products are interactive, and in many cases, they change how customers do their work, so the pace of adoption is still developing. As adoption expands, the products get better, knowledge graphs compound, and the value to customers increase. Third, we continue to execute with the same consistent, disciplined capital allocation approach that has defined Roper for years. We finished above the high end of our DEPS guidance range, and organic growth was slightly above expectations.

What went well
  • Roper delivered solid second-quarter results ahead of expectations, with total revenue up 9% (Fiscal ~8.5%), organic revenue up 5%, EBITDA up 5% and free cash flow up 11% to $447 million.
  • Adjusted DEPS of $5.38 came in above the guided $5.25-$5.30 range and up 10% year over year, driven by solid organic growth plus $0.03 of buyback accretion.
  • The company raised full-year adjusted DEPS guidance for a second time to $22.15-$22.30 (up $0.30 at the midpoint and $0.80 versus the original January guide) and lifted revenue growth to north of 8% total / ~6% organic.
  • AI/agentic product velocity accelerated across the portfolio — Deltek, Vertafore (AI Velocity with six agentic SKUs), Strata, Aderant, Procare (RoomRunner), CentralReach, DAT and others all shipped new capabilities, with very strong early customer engagement.
  • Enterprise gross retention stayed in the mid-90s and organic recurring revenue across the software segments grew 7%, consistent with Q1 and expected to inflect higher in the second half.
  • Capital allocation stayed disciplined: 3.6 million shares repurchased for $1.2 billion (~$341 average), ~8% of shares bought in eight months, with ~$1.2 billion after-tax proceeds expected from Indicor's instrumentation sale to AMETEK and more than $5 billion of annualized deployment capacity.
What went wrong
  • Core EBITDA margin declined 70 basis points, driven mainly by the TEP segment (bronze/copper ingot input-cost inflation at Neptune and a mix shift toward lower-margin consumables at NDI and Verathon).
  • Management is not ready to call a turn in the GovCon market despite an encouraging Deltek quarter — it wants the sales pipeline to convert consistently over the next few quarters before upgrading the outlook.
  • AI/agentic products are not yet material revenue in 2026, with the pace of customer adoption still the key unknown as products change how customers work; monetization is a 2027 story.
  • Network software organic recurring growth (high singles) was partly offset by weaker reoccurring and non-recurring revenue at MHA and iPipeline; TEP EBITDA margin fell 220 basis points and network EBITDA margin fell 370 basis points (Subsplash and DAT/Convoy investment).
  • Net debt to EBITDA rose to 3.4x (from 3.1x) on buyback activity, and the freight recovery at DAT still needs load volumes to improve before management turns fully bullish.

Guidance Changes

MetricPeriodCurrent guidance
Adjusted DEPSFY2026$22.15-$22.30 (up $0.30 at midpoint; +$0.80 vs original January guide)
Total revenue growthFY2026North of 8%
Organic revenue growthFY2026~6% area
Application Software organic growthH2 2026Mid-single-digit-plus
Network Software organic growthH2 2026Mid-single-digit-plus (up versus first half)
TEP organic growthH2 2026High-single-digit range (stronger in Q3), with Neptune margin improvement and easier comps
Q3 adjusted DEPSQ3 2026Guidance provided (Q2 came in above the $5.25-$5.30 Q2 range)
Capital deployment capacityforward>$5B annualized; ~$1.2B after-tax Indicor instrumentation proceeds expected H2; M&A expected to 'break loose' late 2026 into 2027

Performance Breakdown

MetricYoYNote
Total revenue +9% (~8.5% Fiscal) to $2.11B Organic growth of 5% plus ~3 points from acquisitions.
GAAP diluted EPS $11.62 GAAP figure well above adjusted DEPS, reflecting financial impacts of the minority Indicor investment and other non-GAAP adjustments (adjusted DEPS was $5.38).
Adjusted DEPS $5.38 (+10%) Solid organic growth plus $0.03 of buyback accretion; above the guided range.
Operating margin (GAAP) 27.7% Reflects heavy acquisition-related amortization; enterprise EBITDA margin was 38.6% (core down 70 bps on TEP dynamics).
Free cash flow $447M (+11%) Strong cash conversion; TTM free cash flow of $2.6B, compounding ~18% over three years; FCF per share up 19%.
Application Software +8% total / +5% organic; 42.8% EBITDA margin SaaS ground-to-cloud transitions advancing and building AI momentum; recurring/reoccurring (~85% of segment) up mid-single-digit-plus.
Network Software +12% total / +4% organic; 50.9% EBITDA margin Strong organic recurring (high singles) offset by weaker MHA/iPipeline reoccurring; margin reflects Subsplash mix and DAT/Convoy investment.
TEP segment +7% organic; 34.5% EBITDA margin Better-than-expected Neptune, NDI and Verathon; margin down 220 bps on ingot inflation and consumables mix.

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
AI/agentic product flywheelEarly AI investmentProduct release cadence accelerated across nearly the whole portfolio; Roper's 'right to win' rests on domain expertise, embedded workflows, unique data, trust and distribution, with an AI accelerator team scaling reusable patterns — adoption improves products (compounding knowledge graphs) creating a value-adoption flywheel, though still early on the commercialization curve.—
Labor-spend monetization / TAM expansionSoftware-spend focusAgentic products automate meaningful workflow (e.g., Vertafore reconciliation and submission agents cutting hours to minutes; SoftWriters order entry from 90 to 18 seconds, an 80% reduction), expanding Roper's opportunity from software spend into the far larger labor-spend pool — Vertafore alone sees a potential doubling of its addressable market.—
Capital allocation: buybacks vs M&AM&A-favoredDepressed public software valuations made buybacks unusually attractive (9M shares / $3.2B since the program began, back to the 2013 share count); management expects private values to converge toward public and M&A math to turn more attractive, preparing the balance sheet (>$5B capacity plus Indicor proceeds) for a deal pipeline 'breaking loose' late 2026 into 2027.—
GovCon / DeltekSoft GovConDeltek was solid on private-sector strength with a large license deal and encouraging GovCon signs (a big Costpoint cloud migration ahead), but Roper wants consistent pipeline conversion over several quarters — supported by OBBB tailwinds — before calling an inflection.—
Freight market recovery / DATMulti-year downturnFor the first time in years, freight indicators are improving (rising carrier additions, spot pricing strengthening vs contract, higher rejection rates); the 2026 benefit is tracking modestly ahead, and the Montgomery SCOTUS broker-liability ruling is viewed as a positive that emphasizes carrier vetting where Convoy/DAT excel — largely a 2027 growth story.—
SaaS ground-to-cloud transitionsOngoingCloud conversions are accelerating at Aderant (moving into larger firms), PowerPlan (tax then core accounting) and Deltek (end-of-life on older Costpoint driving a multi-year cloud lift), a positive long-term revenue trend for Application Software.—
AI cost governance—Internal AI spend is up ~3x annualized since January and expected to rise further; Roper governs it via gateways, auto-routing, reporting controls and local business ownership, using lower-tier (not frontier) models and codified rules where possible to balance speed with cost.—

Q&A Summary

Deane Dray (RBC) asked how Roper weighs buybacks versus an accretive M&A equivalent on a risk-adjusted basis, and about the deal pipeline.
Hunn said Roper optimizes long-run (5-7 year) cash-flow-per-share compounding; M&A historically won the math until the last eight months when depressed share prices made buybacks far more attractive, but as private values converge toward public, M&A math turns more compelling — always judged with a risk premium on external deals. He and Conley said sponsor conversations have turned decidedly more constructive with banker/consultant pipelines full.
Terry Tillman (Truist) asked how Vertafore's ARR growth compares to the segment and the sizing of the six-agent uplift, plus when large agentic production workloads take hold.
Conley said Vertafore ARR is a bit above the segment; Hunn said Bain-informed work suggests roughly a doubling of Vertafore's TAM from agentic across five areas, with the six SKUs a small early portion — the platform scaffolding is the bigger release, accelerating future SKUs — and material revenue will not come in the second half of this year, with adoption pace the key unknown.
Brent Thill (Jefferies) asked what underpins confidence in an M&A thaw and how much capital was deployed in the first half.
Hunn said sponsor conversations are now real (multi-industry sponsors adjusting faster than software specialists), consultants and bankers are busy, so the signal is positive but distant; outside buybacks, first-half M&A was two small bolt-ons aggregating under $50 million. Conley added Deltek had a good Q2 on a large license deal with strong pipelines, but conversion needs to become a trend before calling GovCon.
Joe Giordano (Cowen) asked about the internal 'hit rate' of AI ideas reaching production and Roper's willingness to underwrite inflections in M&A.
Hunn said the hit rate is high as Roper shifted to a faster, higher-risk-but-lower-cost AI development pace, citing extraordinary early engagement (Procare 20% of customers within four hours; uncapped Vertafore betas); on M&A, Roper has never been a 'buyer and fixer' and will keep buying winners with momentum, made easier to discern in the AI era.
Clarke Jeffries (Piper Sandler) asked about the quarter-to-quarter TEP input-cost/mix dynamics and the AI-team investment cadence.
Conley said the 70 bps core-margin decline was concentrated in TEP (Neptune ingot/copper costs plus NDI/Verathon consumables mix) with second-half offsets from pricing, more static-meter shipments and easier comps; the AI-team investment is roughly halfway on headcount (higher on spend, front-loaded at senior levels) and largely already in the Q2 base.
Brian Peterson (Raymond James) asked which end markets show the earliest AI demand and where sponsors stand on AI investment.
Hunn said adoption pace is driven by the level of human change rather than industry — CentralReach (autism therapy, demand far exceeding supply) adopts fast, while DAT freight brokering requires more workflow change management; on sponsors, a few played AI offense early like Roper, but most focused on cost first and are now catching up on product roadmaps to sell at premium prices.
Daniel Jester (BMO) asked to distinguish direct AI monetization from quality-of-life features and about ground-to-cloud conversion improvement.
Hunn said most agentic SKUs will be sold via a subscription agent/orchestration layer with stair-step consumption tiers, with transactional pricing at DAT/SoftWriters and cloud-uplift monetization at Deltek — but near-term magnitude depends on adoption pace; Conley attributed accelerating cloud conversions to Aderant, PowerPlan and Deltek's Costpoint end-of-life driving a multi-year lift.
Dylan Becker (William Blair) asked how the vertical approach validates ROI/attach and why customers buy Roper's agents over others.
Hunn said ROIs are clear and demonstrable (hours to minutes), and Roper wins because of its system-of-record position, workflow depth with low latency, network/flywheel effects from usage feedback, regulated-market trust (18 of 21 businesses), and scaled distribution to an eager installed base.
Joe Vruwink (Baird) asked how recurring-down and non-recurring-down lines compared to expectations and any license-timing demand signals.
Conley said non-recurring was down a bit but better than feared (Deltek large license not baked in), network recurring softness was at MHA (large customers, lower unit economics) and iPipeline service timing (delivery not bookings), with bookings still up mid-single-digit-plus on a TTM basis and pipelines strong.
George Kurosawa (Citi) asked about rising AI token costs and Aderant's positioning amid legal-tech disruption.
Conley said internal AI spend is up ~3x annualized since January (rising further), governed via gateways, auto-routing, controls and lower-tier models; Hunn said Aderant serves the business of law (not practice of law), grew share from ~35% to ~65% under Roper with tripled growth, and added Virtual Pricing Director to help firms evolve billing models.

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Q2 2026 call
Reported 2026-07-23 · figures from the Roper Technologies Inc Q2 2026 earnings call.

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