Business & Strategy Questions

Deltek GovCon Recovery Timeline: Management has said Roper is "still waiting for the GovCon inflection" even after the One Big Beautiful Bill passed. What specific leading indicators — contract awards, agency re-staffing, enterprise pipeline conversion — would signal that perpetual license activity is genuinely recovering, and how long does that chain typically take to flow through to Deltek's P&L?

Context: Deltek's GovCon enterprise segment has been a drag for three consecutive years, with two large deals slipping out of Q4 2025 and still in the queue. The 2026 guide assumes zero improvement. Understanding the precise transmission mechanism and lag time from appropriations to Deltek revenue helps investors assess when upside could materialize and whether management's conservatism is calibrated correctly.

AI Monetization Inflection: CentralReach has ~75% of new bookings attributed to AI-enabled products and Aderant is posting record bookings. What would need to be true for Roper to see AI contribute meaningfully to consolidated organic growth in 2027 rather than remaining in the "tens of millions" range?

Context: Management has explicitly guided that 2026 is a "commercialization learning year" and that meaningful AI revenue impact is a 2027 story. The gap between compelling early proof points (CentralReach, Aderant, Vertafore) and consolidated revenue contribution is significant. Understanding the bottlenecks — whether monetization model design, customer adoption friction, or portfolio-wide rollout pace — clarifies how credible the 2027 inflection thesis is.

DAT Automated Marketplace Scaling: The Convoy technology works in production today, but scaling requires native TMS integrations on the broker side. How many TMS partnerships are live versus in negotiation, and what does the broker-side adoption curve need to look like for the automated marketplace to become financially meaningful?

Context: DAT's transformation from a subscription load board to an automated freight marketplace is the largest long-term TAM expansion in the portfolio, with management citing $100–$200 in task labor savings per automated load versus roughly $40 on the platform. But Convoy is currently unprofitable and the scaling path depends on TMS integration depth. This question helps investors gauge whether the marketplace is a 2027–2028 financial story or further out.

AI Accelerator Team Prioritization: The Roper AI accelerator team has now expanded from one engagement (Vertafore) to six businesses simultaneously. How is the team prioritizing across the 21 software companies, and what criteria determine which businesses get direct development partnership versus coaching-only support?

Context: Management described the team's first engagement with Vertafore as delivering 10x development velocity, enabling six AI agents launched at their customer conference. The team's capacity is finite, and the sequencing of which businesses get hands-on support will shape where AI bookings momentum builds first. This question helps investors understand whether the AI acceleration is concentrated in a few businesses or genuinely broadening across the portfolio.

ProCare Recovery Confidence: ProCare required replacing the CEO, CFO, CRO, and CTO in its first year. Management says implementation bottlenecks are the primary remaining issue and the business should return to mid-teens growth in the second half of 2025. Is ProCare tracking to that recovery trajectory, and what does the implementation pipeline look like today?

Context: ProCare grew roughly 10% in FY25 versus a mid-teens expectation, and implementation speed remains the key constraint to converting competitive wins into payments revenue. As a maturing leader acquisition, ProCare's recovery is both a near-term revenue contributor and a proof point for the broader acquisition strategy. Management's confidence level on the fix being complete is a key variable.

Maturing Leader Acquisition Criteria: After ProCare's stumble, how has Roper changed its diligence process for maturing leader acquisitions — specifically around management team assessment and operational infrastructure — and what new telemetry is being applied post-close?

Context: ProCare was described as a case where Roper got the "slope" (market growth, competitive position) right but the "intercept" (management execution) wrong. Management has said the lessons are being applied to CentralReach and Subsplash. Understanding the specific changes in diligence and post-close governance helps investors assess whether the playbook has genuinely improved or whether the risk of similar stumbles remains.

Organic Growth Ceiling: Management has a long-term organic growth aspiration of 8%+ for the portfolio. Given that Deltek and DAT together have been a persistent drag and the "maturing leader" acquisitions are still ramping, what is the realistic timeline for the portfolio to sustain organic growth in the 7–8% range, and what are the two or three most important prerequisites?

Context: Roper has grown organically at 5–6% in FY24 and FY25, below its stated 7–8% through-cycle aspiration. The gap is primarily attributable to Deltek and DAT, but even excluding those two, the rest of the portfolio needs to sustain above-average growth for the consolidated rate to inflect. This question helps investors calibrate the timeline for the thesis to fully play out.

Shareholder Spin-Off Proposal: A shareholder has proposed a strategic review for a tax-free spin-off of the Application and Network Software segments. What is the Board's view on the merits of that proposal, and how does management think about whether the conglomerate structure creates or destroys value relative to standalone alternatives?

Context: The spin-off proposal reflects a view that Roper's sum-of-parts value may not be fully captured in the current structure. Management's response will clarify whether the Board has seriously engaged with the argument and how Roper thinks about the ongoing strategic rationale for keeping Application Software, Network Software, and TEP under one roof.

Financial Questions

Organic Growth Cadence: Roper maintained the 5–6% full-year 2026 organic growth guide after a 6% Q1 result, citing Q2 nonrecurring headwinds and TEP comps. How should investors model the quarterly organic growth progression through Q2–Q4, and what are the specific nonrecurring timing items affecting Q2 Application Software?

Context: Management guided to mid-single-digit-plus organic growth for Application Software for the balance of the year, with Q2 softer due to nonrecurring timing and improvement in the back half as CentralReach and Subsplash turn organic. The specific nonrecurring items driving Q2 softness have not been fully quantified, and understanding the cadence is important for setting quarterly expectations.

Cloud Migration Revenue Contribution: Management said the ~$1B on-premise maintenance base contributes 50–100 bps of organic growth per year and that AI-only cloud features could compress the migration timeline from 8–10 years to 4–6 years. Which businesses are driving the majority of that 50–100 bps contribution today, and is the acceleration already visible in the FY2026 guide?

Context: Aderant is described as furthest along (third or fourth inning), with PowerPlan and Deltek in earlier innings. The conversion reprices at 2–2.5x prior maintenance fees. Isolating which businesses are contributing the most to this tailwind and whether the AI-pull acceleration is already embedded in guidance helps investors model the durability and potential upside of this organic growth lever.

Network Software Margin Drag: Network Software EBITDA margins were 50.7% in Q1 2026, down 460 bps year-over-year, with management attributing the gap to Subsplash's lower margin profile and ongoing Convoy investment. How long does the Convoy drag persist, and what is the expected margin trajectory for the Network Software segment over the next two to three years as Convoy scales toward profitability?

Context: Network Software historically ran at 54–55% EBITDA margins. The Convoy investment is explicitly unprofitable, a rare situation for Roper. Investors need to understand whether the segment margin trough is in 2026 or whether it persists into 2027, and what the path back toward historical margins looks like as Convoy scales and Subsplash margins improve.

TEP Gross Margin Pressure: TEP EBITDA margins declined 260 bps year-over-year in Q1 2026, driven by Neptune input cost inflation (bronze ingot) and a mix shift toward consumables at NDI and Verathon. How much of this margin pressure is structural versus transitory, and when does Neptune's regular-way pricing cycle catch up to the elevated input cost base?

Context: Management guided that raw material pressure at Neptune would continue in Q2 2026 before improving in the back half as pricing works through backlog. The consumables mix shift at NDI and Verathon is a structural trend that improves revenue durability but compresses gross margin percentages. Clarifying the timing and magnitude of margin recovery helps investors model TEP EBITDA for the full year.

Free Cash Flow Margin Sustainability: Free cash flow was ~31% of revenue in FY25 and Q1 2026, with management targeting above 30% for the full year. As Convoy scales (currently unprofitable), Subsplash margins expand, and AI investment ramps, what is the structural free cash flow margin trajectory over the next two to three years?

Context: Roper's ~30%+ free cash flow conversion is a core pillar of the investment thesis. The portfolio now includes more early-stage, lower-margin businesses (Convoy, Subsplash at ~31% EBITDA margins) than historically. Understanding whether incremental margins on new businesses are dilutive or accretive to the 30%+ FCF margin target is important for modeling long-term cash generation.

Capital Allocation Tension: Roper repurchased $2.2B of shares in the six months ending April 2026, bringing net leverage to 3.1x exiting Q1 2026. With $3.8B of remaining buyback authorization and a pipeline described as "record levels," how does management think about the leverage ceiling, and at what point does M&A opportunity size or quality force a pause in buyback activity?

Context: The $3B buyback program was introduced as "opportunistic," but $2.2B in six months is a sustained commitment. Total debt stands at $9.4B as of year-end 2025, and goodwill is $21.3B (~62% of total assets). The interplay between leverage capacity, buyback pace, and M&A pipeline deployment is the central capital allocation question for 2026 and beyond.