# Roper Technologies, Inc. (ROP) — Narrative, third quarter of fiscal 2026 Roper's fiscal year is the calendar year. The third quarter of 2026 ended September 30, 2026. Amounts are in US dollars. ## Business *From the 2025 Annual Report on Form 10-K (fiscal year ended December 31, 2025), accession 0000882835-26-000009.* Roper Technologies sells vertical-market software and technology-enabled products. Each of its 29 business units serves a defensible niche market, where Roper believes it is the leader or the main alternative to the leader. Most revenue comes from software sold to professional, healthcare, education, insurance, government-contracting, freight, construction and other specialist customers. It is billed largely as SaaS subscriptions, term licenses and support contracts. A smaller share comes from transaction and payment fees processed through that software, and from medical, water-metering and identification hardware. Net revenues were $7,902.5 million in 2025. Customers outside the U.S. accounted for $1,029.7 million, or 13%, and no customer accounted for 10% or more of any segment or of the company. Roper runs a decentralized model. Business-unit managers make day-to-day decisions, and the corporate center allocates capital, mainly toward acquisitions of high-margin, high-value-added software businesses. Over 2023–2025 the company deployed approximately $8,960 million on acquisitions: - CentralReach (ABA therapy software), about $1,850 million, 2025. - Subsplash (software and giving tools for faith-based organizations), about $800 million, 2025. - Procare (early childhood education), about $1,860 million, 2024. - Transact Campus, about $1,600 million, 2024, combined with CBORD. - Syntellis, about $1,380 million, 2023, combined with Strata. - About $1,470 million of smaller bolt-on deals. Roper also holds a minority equity stake in Indicor, its former industrial businesses. It sold a majority of Indicor to Clayton, Dubilier & Rice (CD&R) in November 2022. The stake is carried at fair value, and gains and losses on it run through non-operating income. The business is reported in three segments (2025 net revenues): - **Application Software — $4,483.0 million (56.7% of revenue).** Mission-critical vertical software: Aderant (law firms), CentralReach (ABA therapy for autism and related care), Clinisys and Data Innovations (laboratory and diagnostic information systems), Deltek (government contractors and project-based firms), Frontline (K-12 school administration), IntelliTrans (bulk-commodity transportation management), PowerPlan (financial and compliance software for asset-intensive companies), Procare (child-care center management and payments), Strata (healthcare and higher-education financial analytics), Transact/CBORD (campus identity, commerce and payments, foodservice technology) and Vertafore (property and casualty insurance agency software). - **Network Software — $1,600.8 million (20.3%).** Software platforms and electronic marketplaces that connect participants in a market: ConstructConnect (pre-construction data and bidding), DAT (U.S. and Canadian truckload freight matching, with Loadlink combined into it in 2025), Foundry (visual-effects and 3D software), iPipeline (life insurance and annuity software), iTradeNetwork (perishable-food supply chain), MHA (alternate-site healthcare group purchasing), SHP (post-acute healthcare benchmarking), SoftWriters (long-term-care pharmacy software) and Subsplash. - **Technology Enabled Products — $1,818.7 million (23.0%).** Engineered products, many of them medical: CIVCO (ultrasound guidance and infection-control accessories), FMI (precision metering pumps), Inovonics (wireless sensor networks), IPA (surgical scrub and linen dispensing), Neptune (water meters with AMR/AMI and utility billing software), Northern Digital (optical and electromagnetic precision measurement), rf IDEAS (RFID credential readers) and Verathon (video laryngoscopes, bronchoscopes and bladder-volume instruments). Visibility is high. Remaining performance obligations were $5,204.2 million at December 31, 2025, of which $3,424.6 million (backlog) was expected to convert to revenue within 12 months. The company increasingly embeds AI features in customer workflows and positions its proprietary data and domain depth as an AI advantage. Roper had about 19,400 employees at year-end 2025, of whom about 13,100 were in the U.S. Medical-device businesses are regulated by the FDA. Data-handling businesses are subject to GDPR, the CCPA, HIPAA and similar rules. ## Risk factors *From Item 1A of the 2025 Form 10-K (accession 0000882835-26-000009), with the cybersecurity risk factor as updated in the Form 10-Q for the quarter ended September 30, 2026 (accession 0000882835-26-000047).* - **Acquisition dependence.** Roper says its future growth rate is "highly dependent" on finding, financing, clearing (including Hart-Scott-Rodino review) and integrating acquisitions. Acquired businesses may miss revenue, profit or cash-flow expectations. Diligence may not uncover all risks, including cybersecurity exposure and susceptibility to disruption from AI. - **Goodwill concentration.** Goodwill was $21,341.2 million at December 31, 2025. That is more than total stockholders' equity of $19,881.5 million and about 62% of total assets of $34,577.0 million. Weaker performance at a business unit, rising discount rates, falling valuations or competing technologies could force a non-cash impairment charge. - **AI competition and dependence.** Competitors, AI companies or other third parties could build AI into their products faster or better, and AI capabilities could become commoditized and erode differentiation. Roper relies on third-party models and platforms from providers such as OpenAI, Anthropic, Google and Microsoft. These providers can change terms, raise prices or discontinue services, and Roper may not be able to pass cost increases on to customers. Flawed or biased AI output could create liability, and intellectual-property protection for AI-generated material is uncertain. - **AI regulation.** The EU AI Act and state laws, including in Colorado and California, may require product redesign, limit how data is used, or force Roper to withdraw AI features in some jurisdictions. - **Cybersecurity and reliance on third-party technology.** Roper's products and operations depend on cloud platforms (Amazon Web Services, Google Cloud, Microsoft Azure, Oracle Cloud), on open-source components and on vendor software. Concentration in a few providers raises exposure to outages and price changes. The third-quarter 2026 update adds two risks. First, the software-development pipeline itself (source repositories, CI/CD systems, build and code-signing processes and AI coding tools) could be compromised, and an attack could spread to customer-facing products before it is detected. Second, attackers increasingly use AI to automate attacks, create deepfakes and accelerate malware development. The update also says the company has "experienced disruptions and litigation relating to the exposure of data". Management has not identified a material impact to date. - **Indebtedness.** Total debt was $9,355.9 million at December 31, 2025, with about $2,644 million undrawn on the revolver. Debt could limit acquisitions, dividends and flexibility. The credit facility carries a financial-ratio covenant. A rating downgrade would raise borrowing costs, because the credit agreement steps up interest rates on a downgrade. - **The Indicor minority stake.** Roper does not control Indicor, which is managed by CD&R and faces industrial-market risks unlike Roper's own. Its fair value depends on significant judgment, and declines are charged to non-operating income. - **Government and large customers.** Several businesses depend on large customers or on government entities, which can end contracts without cause. Changes of administration or government shutdowns can delay or redirect government spending, which the company says has hurt businesses serving government entities and contractors. - **Privacy regulation.** A growing patchwork of U.S. state privacy laws, GDPR (fines of up to 4% of global annual revenue), Quebec's updated law and the EU Data Act could raise compliance costs, restrict cloud offerings or bring fines, especially for healthcare and government-contractor customers. - **Supply, tariffs and geopolitics.** Some components are single-sourced. SaaS offerings depend on a small number of cloud platforms. U.S. tariffs and retaliation (including on China, Canada, Mexico and the UK), sanctions and conflicts in Ukraine and the Middle East could disrupt supply or demand. - **Product liability.** The medical and other hardware businesses face recall, product-liability and enforcement risk that insurance may not fully cover. - **Foreign exchange.** Operations whose functional currency is not the U.S. dollar produced 9% of 2025 revenue, mostly in British pounds, Canadian dollars and euros. ## Management's discussion of fiscal 2025 *From Item 7 of the 2025 Form 10-K, accession 0000882835-26-000009.* Net revenues rose 12.3% to $7,902.5 million in 2025 from $7,039.2 million in 2024. Acquisitions added 6.7 points, foreign exchange 0.2 points, and organic growth was 5.4%. Income from operations rose to $2,235.4 million from $1,996.8 million. Net earnings were $1,536.3 million against $1,549.3 million, and diluted EPS was $14.20 against $14.35. The slight decline came below the operating line: - **Interest expense** rose to $325.0 million from $259.2 million on higher fixed-rate debt balances and rates. - **Equity investment gains** fell to $25.5 million from $234.6 million. The 2024 figure included a $135.6 million gain on the sale of the Certinia stake and a $96.4 million Indicor fair-value increase. In 2025 the Indicor fair-value increase was $24.0 million. - **The effective tax rate** fell to 20.6% from 21.2%, helped by a legal-entity restructuring benefit and lower state taxes. The company guided to an effective tax rate of about 21%–22% for 2026. Segment results for 2025: - **Application Software:** revenue up 15.9% to $4,483.0 million, led by Transact and CentralReach. Organic growth was 5.4%, driven by acute healthcare, property and casualty insurance and legal customers and partly offset by lower non-recurring revenue in government contracting. Operating margin rose to 26.8% from 26.5%, helped by Transact/CBORD integration savings. - **Network Software:** revenue up 8.5% to $1,600.8 million, led by Subsplash, with 4.1% organic growth from freight match, construction and alternate-site healthcare. Media and entertainment software declined. Operating margin fell to 43.5% from 45.2% because the 2025 acquisitions (notably Subsplash's payments revenue) carry lower gross margins and higher amortization. - **Technology Enabled Products:** revenue up 7.3% to $1,818.7 million, with 6.5% organic growth led by medical products (especially precision measurement) and access management. Operating margin rose to 34.5% from 33.9%. Operating cash flow rose 6% to $2,540.3 million. Part of the increase came from a cash tax benefit of about $150 million from the One Big Beautiful Bill Act's repeal of mandatory R&D capitalization under Section 174. The remaining benefit is expected to be used over three to five years. Capital expenditures were $47.4 million and capitalized software $57.3 million, and the company expects the two combined to stay at 1.0%–1.5% of revenue. Net working capital remained negative, at minus $1,389.7 million, which the company presents as evidence of its asset-light model. Investing in 2025 was dominated by the CentralReach, Subsplash, Convoy and Orchard Software acquisitions. To fund them, Roper issued $2,000.0 million of senior notes in August 2025 and borrowed a net $725.0 million on its revolver, while repaying $1,000.0 million of maturing notes. Total debt rose to $9,355.9 million (32.0% of total capital) from $7,669.2 million (28.9%). At year-end, debt comprised $8,500.0 million of fixed-rate senior notes at 1.40%–5.10% and $850.0 million drawn on the revolver. In October 2025 the Board authorized a $3,000.0 million share repurchase program, and Roper bought back 1.121 million shares for $500.0 million in the fourth quarter. ## Current quarter: third quarter of 2026 *From the Form 10-Q for the quarter ended September 30, 2026 (accession 0000882835-26-000047) and the third-quarter earnings release furnished as Exhibit 99.1 to the Form 8-K dated October 22, 2026 (accession 0000882835-26-000042). Earlier 2026 guidance is from the earnings releases furnished with the Forms 8-K dated January 27, 2026 (accession 0000882835-26-000003), April 23, 2026 (accession 0000882835-26-000015) and July 23, 2026 (accession 0000882835-26-000031).* **Results.** Net revenues rose 7.6% to $2,171.8 million from $2,017.5 million. Organic growth was 6.7%, acquisitions added 1.0 point and currency subtracted 0.1 point. Income from operations rose to $623.2 million from $573.0 million. Net earnings rose to $484.7 million from $398.5 million, and diluted EPS rose to $4.88 from $3.68. Two non-operating items lifted GAAP earnings: - A $56.2 million gain on the Indicor stake, driven by valuation assumptions updated for Indicor's planned sale of its flow-control businesses. - A lower tax rate of 15.3%, against 20.0% a year earlier. The decline came mainly from a tax benefit tied to the change in Roper's tax basis in Indicor after the Indicor Instrumentation sale. On the company's adjusted (non-GAAP) basis, which excludes the Indicor impacts and acquisition amortization, adjusted diluted EPS rose 15% to $5.89 and adjusted EBITDA rose 7% to $864 million (39.8% margin). **Segments:** - **Application Software:** revenue up 6.8% to $1,239.7 million, with 6.2% organic growth across the project-based private-sector, higher-education, legal and ABA-therapy markets. Gross margin improved to 69.8% from 69.0%, and operating margin rose to 28.8% from 27.8%. - **Network Software:** revenue up 7.9% to $446.1 million, with 4.9% organic growth from freight match, long-term-care pharmacy and construction. Declines in the alternate-site group purchasing business and in non-recurring revenue at the life insurance and annuities business partly offset that growth. Operating margin slipped to 42.5% from 43.1% as SG&A rose to 42.2% of revenue. Management attributes the higher SG&A to the 2025 acquisitions, including their amortization. - **Technology Enabled Products:** revenue up 9.7% to $486.0 million, with 9.8% organic growth led by precision measurement and airway management. The water-meter business declined. Gross margin eased to 57.4% because of input-cost pressure and meter mix in water metering and a consumables-heavy medical mix. Operating margin fell to 33.1% from 33.9%. Corporate expense rose to $84.7 million on higher stock-based compensation. Net interest expense rose to $106.7 million from $89.7 million on a larger average revolver balance and a higher average coupon on senior notes. Recurring software revenue (SaaS, term licenses and support) was $1,256.7 million in the quarter, against $1,158.9 million a year earlier. Backlog rose 9.4% to $3,471.6 million, and total remaining performance obligations were $5,430.0 million. During the quarter, the Transact Campus and CBORD trade names were rebranded under the Illumia name. The $68.8 million carrying value of those trade names was reclassified as finite-lived and is now amortized over five years. **Nine months.** Revenue rose 9.1% to $6,376.0 million, with 5.8% organic growth. Net earnings rose to $2,162.1 million from $1,107.9 million, and diluted EPS rose to $21.30 from $10.23. The increase is dominated by a $1,058.7 million equity-investment gain recognized ahead of the Indicor Instrumentation closing. Operating cash flow rose 4% to $1,882.2 million. **Indicor monetization.** - **Instrumentation sale (closed).** On August 26, 2026, Indicor completed the sale of its instrumentation businesses to AMETEK, Inc. at an enterprise value of $5,000.0 million. Roper received $1,239.2 million of pre-tax cash at closing and expects about $33 million more on escrow release. It expects to pay about $150 million of cash income taxes on the transaction. Roper's obligation to make quarterly payments to CD&R, in cash or in Indicor equity, ended at closing. - **Flow-controls sale (pending).** On August 10, 2026, Indicor agreed to sell its flow-control businesses, Cornell Pump and Roper Pump, to Xylem Inc. at an enterprise value of about $1,460 million. Closing is expected in the fourth quarter of 2026. Roper expects about $600 million of pre-tax proceeds, or an estimated $480 million after tax. - **Remaining stake.** Roper's interest in Indicor was 43.4% at September 30, 2026, carried at $577.0 million. **Acquisitions.** Roper completed four acquisitions in the first nine months of 2026 for a combined $488.7 million, net of cash acquired. Three of them closed in the third quarter; the earnings release lists them as bolt-ons for the iPipeline, Procare and Strata businesses: - **Origo** (Project Source Bidco Limited), acquired August 26, 2026 for $308.1 million, net of cash acquired and certain liabilities assumed. It is a UK provider of connectivity software that lets pension providers, financial advisers and investment platforms exchange information securely, and it has been folded into iPipeline (Network Software). - **Playground** (Carline Inc.), acquired September 14, 2026 for $140.0 million, net of cash acquired and certain liabilities assumed. It provides AI-enabled child-care management software and is being integrated into Procare (Application Software). - **A bolt-on for Strata**, identified in the earnings release but not named or priced separately in the filing. The fourth acquisition, completed in the first quarter, is not named in the quarterly report. **Capital allocation and balance sheet.** - **Buybacks.** In April 2026 the Board added $3,000.0 million to the repurchase authorization. Over the nine months Roper repurchased 7.865 million shares for $2,724.1 million, an average of $346.34 per share. It bought back no shares in the third quarter, and $2,775.9 million of authorization remained at September 30, 2026. Shares outstanding fell to 99.0 million from 106.6 million at year-end. - **Credit facility.** On March 30, 2026, Roper replaced its credit facility with a new five-year, $3,500.0 million unsecured revolving facility, expandable by up to $1,000.0 million. - **Debt and liquidity.** Net revolver borrowings of $400.0 million brought total debt to $9,719.7 million, including $1,250.0 million drawn on the revolver. Net debt to total net capital rose to 32.9% from 31.2%. Net working capital was minus $1,520.8 million, compared with minus $1,389.7 million at year-end. The change mainly reflects income taxes payable on the Indicor Instrumentation sale. **Guidance.** With the third-quarter release, Roper raised full-year 2026 adjusted diluted EPS guidance to $22.35–$22.40 from $22.15–$22.30. Guidance has risen each quarter, from an initial range of $21.30–$21.55 set in January. Corresponding GAAP diluted EPS guidance is $25.60–$25.65. Fourth-quarter adjusted diluted EPS guidance is $5.95–$6.00. The guidance excludes unannounced acquisitions or divestitures, proceeds from the pending Indicor flow-controls sale, and any further share repurchases. At the second-quarter update the company raised its full-year 2026 outlook to total revenue growth of 8%+ and organic growth of about 6%. The third-quarter release did not restate revenue guidance. Management said Roper had more than $6 billion of capital-deployment capacity. It also highlighted AI product launches at PowerPlan, Strata and Vertafore and a shift toward agentic development processes. ## Subsequent events *From the Form 10-Q for the quarter ended September 30, 2026 (accession 0000882835-26-000047), the Form 8-K dated October 1, 2026 (accession 0000882835-26-000039) and the Form 8-K dated October 22, 2026 (accession 0000882835-26-000042).* The quarterly report, filed November 2, 2026, contains no subsequent-events note. It discloses no acquisition, divestiture, borrowing or note issuance completed after September 30, 2026, and neither do the two October 2026 Forms 8-K. Developments after the quarter end: - **New director.** Abhijit Dubey joined the Board effective October 1, 2026, having been elected on September 29, 2026. He is Chief Executive Officer and Chief AI Officer of NTT DATA, Inc. - **Raised guidance.** On October 22, 2026 the company reported third-quarter results and raised its full-year 2026 adjusted diluted EPS guidance to $22.35–$22.40, as described above. - **Indicor flow-controls sale.** As of the November 2, 2026 quarterly report, the sale of Cornell Pump and Roper Pump to Xylem Inc. had not closed and was still expected to close in the fourth quarter of 2026. Roper expects about $600 million of pre-tax proceeds.