Good morning. The Roper Technologies Conference Call will now begin. Today's call is being recorded and all participants are in a listen-only mode. I would now like to turn the call over to Zack Moxcey, Vice President of Investor Relations. Please go ahead.

Good morning, and thank you all for joining us as we discuss the fourth quarter and full year 2024 financial results for Roper Technologies. Joining me on the call this morning are Neil Hunn, President and Chief Executive Officer; Jason Conley, Executive Vice President and Chief Financial Officer; Brandon Cross, Vice President and Principal Accounting Officer; and Shannon O'Callaghan, Senior Vice President of Finance. Earlier this morning, we issued a press release announcing our financial results. The press release also includes replay information for today's call. We have prepared slides to accompany today's call, which are available through the webcast and on our website. And now, if you please turn to Page 2. We begin with our safe harbor statement. During the course of today's call, we will make forward-looking statements, which are subject to risks and uncertainties as described on this page in our press release and in our SEC filings. You should listen to today's call in the context of that information. And now please turn to Page 3. Today, we will discuss our results primarily on an adjusted non-GAAP and continuing operations basis. For the fourth quarter, the difference between our GAAP results and adjusted results consists of the following items: amortization of acquisition-related intangible assets, transaction-related expenses associated with completed acquisitions, a charge related to the settlement of the PowerPlan 2020 litigation matter, and lastly, financial impacts associated with our minority investments. Reconciliations can be found in our press release and in the appendix of this presentation on our website. Now if you please turn to Page 4, I'll hand the call over to Neil. After our prepared remarks, we'll take questions from our telephone participants. Neil?

Thank you, Zack, and thanks to everyone for joining our call. We're looking forward to sharing our fourth quarter and full year results with you this morning. As we turn to Page 4, you'll see the topics we plan to cover today. We'll start by highlighting our strong fourth quarter and full year 2024 financial and operating performance. We'll then go through results in greater detail, review our balance sheet, including our M&A capacity and discuss our very impressive cash flow growth and performance. Then we'll discuss our segment highlights and introduce our 2025 and Q1 guidance. After closing remarks, we'll open up the call for your questions. So, let's go ahead and get started. Next slide, please. As we turn to Page 5, we want to highlight the three key takeaways for today's call. First, our cash flow growth was strong, once again demonstrating our consistent and durable compounding capability. Second, we entered 2025 with improving momentum. And third, we now have over $5 billion of acquisition firepower at a time when the M&A markets are becoming increasingly more attractive. Now as it relates to our cash flow compounding capability, 2024 was another example of how our model works. We grew revenue 14% in the year, which was nicely balanced between organic and inorganic contributions, and deployed $3.6 billion towards market-leading vertical software businesses, headlined by our acquisitions of Procare and Transact Campus. Of note, our 2024 cohort of acquisitions not only meets all our historical criteria, but also meets our higher growth and higher returns ambitions. As a result, we grew free cash flow 16% for the year, topping $2 billion for the first time in our history with free cash flow margins of 32%, another great year in our long history of cash flow compounding. As we look to 2025, we're excited to talk through the positive momentum we're experiencing. First, we're seeing accelerating demand for our mission-critical solutions broadly across our businesses. Specifically, throughout 2024, our enterprise bookings accelerated, ending in the high-teens growth area in Q4. This bookings momentum combined with consistently high gross and net retention supports the continued growth and expansion in high singles area for a $4.6 billion base of software recurring and reoccurring revenues. Given this, we're initiating our 2025 total revenue guide to be north of 10% with organic revenue growth in the 6% to 7% range with adjusted DEPS between $19.75 and $20. On the capital deployment front, our disciplined approach will greatly benefit our company and our shareholders this year. Specifically, we now have over $5 billion of available M&A firepower. This is particularly important given the backdrop of the current M&A market, one that is poised for high levels of deal activity over the next couple of years and more on this later. Great year team and I look forward to seeing you at our leadership meeting next week. I'd like to ask everyone to turn to Page 6, where we'll discuss our long-term growth algorithm. In March of '23, we concluded our first-ever Investor Day with the components of our long-term mid-teens cash flow growth algorithm as you see here on the left. As you compare our '24 performance on the right-hand sides of this, you'll note we're right in line with our strategy, namely posting 14% revenue growth, 41% core margin leverage, and adding 800 basis points of growth through our capital deployment capability. This all yields 16% cash flow growth. Importantly, 2023's performance was quite similar with 15% revenue growth, solid operating leverage, and consistently good cash flow growth. We execute our algorithm by running a dual-threat offense, namely, first, driving consistent and improving levels of leveraged organic growth and second, deploying the enterprise's capital towards the best ideas that we consistently cultivate and execute upon. Importantly, as we do this, we not only grow, but we improve the underlying quality of our enterprise and our portfolio across several dimensions, including growth, the level of recurring revenue and asset intensity. In short, this is how our model works. 2024 is no exception, a year where our say-do ratio was quite high and importantly, we have strong momentum heading into '25. So, with that, Jason, let me turn the call over to you, so you can walk through our quarterly and full-year results.

Thanks, Neil. Let's turn to page 7. We had an excellent finish to 2024 with Q4 being our highest revenue quarter of the year at 16%, bringing us just under $1.9 billion. Acquisitions contributed a solid 9% as a full quarter of Transact is flowing through, along with sequential gains realized at Procare. Organic revenue grew 7%, with our software segments coming in line with expectations and our tech segment slightly outperforming as I'll discuss shortly. EBITDA of $744 million was 13% over prior year and represented 39.6% of revenue. Core EBITDA margin, which excludes the impact from our 2024 acquisitions, was down 30 basis points compared to prior year. Of note, some of our software businesses, mainly within our AS segment took $9 million of targeted and opportunistic restructuring actions, which they absorbed in the fourth quarter and which will better position these businesses going forward. DEPS of $4.81 was above our guidance range of $4.70 to $4.74 despite the costs associated with the restructuring. So, all in, a very good quarter. Now, we'll flip to Page 8, where I'll briefly cover our Q4 segment performance. Application Software posted 24% revenue growth with an 18% contribution from acquisitions and 6% from organic growth. Importantly, organic recurring and reoccurring revenue grew 8% in the quarter and the year, led by double-digit SaaS growth as customers move from on-premise to the cloud. EBITDA margin of 41.5% includes our 2024 acquisitions that come into Roper at lower margin but provide greater opportunity for margin expansion over time. Core margin is 30 basis points over prior year on a comparative basis. Turning to Network Software, revenue growth of 3% was in line with expectations and an improvement over the last couple of quarters as our freight match business returned to growth. Neil will unpack the dynamics of 2025, but we expect the segment to post mid-single-digit growth in the year with exit velocity above that range. EBITDA margin here was spectacular at 57.4% in the quarter. DEPS finished strong with 12% revenue growth in the quarter. Verathon capped off a terrific year with record revenue, EBITDA and cash flow. Also, Neptune had outstanding operational execution across both mechanical and ultrasonic product lines. And EBITDA margin here was 120 basis points over prior year at 34.8%. All right. Now, we'll turn to Page 9, where we'll look at the full year results. All in all, this was a great year for Roper. We delivered on our long-term growth algorithm with mid-teens revenue and free cash flow growth. This is underpinned by a balanced contribution of acquisition and organic revenue growth, which combined came in at 14% to print at just over $7 billion of revenue, a new milestone for Roper. Our disciplined capital deployment strategy generates consistent and repeatable performance, which has been demonstrated over time and is what our investors can expect going forward. Organic growth is also repeatable and fortified, and we're well positioned for further improvement. As Neil mentioned, we ended the year with $4.6 billion of software recurring and reoccurring revenue that we expect to organically grow in the high single-digit range in 2025. Further, it's a good time to remind everyone that over 85% of our revenue is in the US, which limits currency and potential tariff risk, while capturing domestic opportunities that lie ahead. EBITDA of over $2.8 billion was 13% versus prior year with EBITDA core margin consistent with the prior year. So, clicking into margins and operating leverage a bit. Core segment operating leverage was strong at 49% and including corporate G&A, was 41%. We made significant progress in 2024 to build out expanded capital deployment and growth capabilities. So, we see that continuing in 2025 but then moderating in 2026 and beyond with a return to leverage on corporate G&A. Most importantly, free cash flow was outstanding in 2024, as Neil had mentioned, coming in at nearly $2.3 billion and up 16% or $320 million over prior year with 32% free cash flow margins. We finished the year above expectations, which positions us quite well going into 2025. And just looking back since 2021, our free cash flow has compounded 14% if adjusted for Section 174 that went into effect in 2022. We are really pleased with the steady and consistent growth in cash flow. And as we move forward, we expect free cash flow margins of 30% or more. So, beyond the numbers you see here, we see great things happening within Roper. We have significantly enhanced and expanded our capital deployment team and processes. Additionally, our multi-year focus on talent is really taking shape as we're feeling the best business leaders in our history. And now we're starting to see those leaders hire great leaders. This is resulting in more data-driven strategies and more deeply connected operating plans that give us confidence and long-term acceleration of organic growth. Reflecting on my 18 years with Roper, I can say this is a banner year for both strategic and operating progress. Now, let's turn to Slide 10 to discuss our balance sheet. As I mentioned earlier, Q4 free cash flow was better than expected with 15% growth over prior year. Additionally, we exited our minority position in Certinia this quarter. As a reminder, Certinia is a professional services automation software company. We partnered with a private equity firm to execute on a successful first chapter of a value creation plan. In exiting our position, we received $246 million of proceeds, which is a 2x multiple of our invested capital over a 14-month period. So, a terrific financial outcome and a great learning opportunity to apply as we look at businesses that have higher growth profiles and profitability improvement potential. Thank you to the team at Haveli for the opportunity to partner and learn. At quarter-end, our net leverage was 2.6 times, and as of today, we have nearly full access to our $3.5 billion revolver. So, this plus our strong projected cash flow provides us with over $5 billion that we can deploy toward high-quality acquisition opportunities this year. And just to note, 2024 market activity was a little quieter than we originally expected. Despite this, we were able to deploy $3.6 billion for some great vertical market software businesses, highlighted by Procare and Transact. In 2025, we believe the logjam should break free from our direct conversations with private equity sponsors and what many are stating publicly, there is a pressing need to provide liquidity to limited partners. Therefore, we anticipate being very busy this year on the deal front. So, with that, I'll turn it back over to Neil.

Thanks, Jason. As we turn to Page 12, let's review our Application Software segment. Revenue for the year grew by 21% in total and organic revenue grew by 6%. EBITDA margins were 43% and core margins improved 40 basis points in the year. We like what we're seeing across the businesses and the segment. From a market perspective, we exit '24 in a much improved state and enter '25 with momentum, which is highlighted by our second half organic bookings growing solidly in the double-digit area. In addition, the recurring revenue base and retention levels remain quite healthy here. Another thing we like across this segment is the amount of business and talent building that occurred throughout the year. For example, Deltek made meaningful investments in their cloud tech stack, specifically with GenAI investments and saw meaningful improvement in enterprise bookings during the second half of the year. Importantly, this all occurred during our planned and scheduled CEO succession from Mike Corkery to Bob Hughes. Similarly, Aderant was superb throughout 2024, while furthering their product lead with meaningful GenAI deployments and cloud migration activity. In 2024, Aderant was our leading net retention business, reflecting their strong market position, innovation capabilities and strong customer intimacy. Vertafore was superb in delivering their enterprise capabilities to the largest customers in the market while seeing compelling and steady bookings throughout the year, leading to consistently strong ARR growth. As it relates to PowerPlan, Joe and the team there did an excellent job deploying their first cloud-native product and migrating several critical industry-leading customers to this product. As a result, PowerPlan's ARR growth was the best in its history as the market continues to respond to PowerPlan's innovation. As discussed at the onset of the call, we successfully deployed $3.6 billion towards vertical market software acquisitions with the largest two being Procare and Transact Campus, both rolling up into this segment. Both are off to a solid start and we look forward to their meaningful contributions to the segment and the enterprise in the many years to come. Remaining businesses in this segment posted solid organic gains. Great job by our leaders and teams in this group throughout '24. We're proud of you and your accomplishments. Now turning to the outlook for '25, we expect to see consistent levels of organic growth towards the higher end of the mid-singles range. For the first quarter, we expect margins for this segment to be down year-over-year on a reported basis, similar to Q4 as Transact Campus acquisition revenues come in at a seasonally lower rate. Organic revenue in our Network Software segment increased by 3% for 2024. Throughout the year, we noted that network growth was affected by challenges in our freight matching businesses as well as rider and actor strikes related to Foundry. If we exclude these businesses, the segment experienced growth in the mid-singles range, highlighting the strength of this group. EBITDA margins remained robust at 56.1%. We are pleased with the advancement made across this collection of businesses, akin to our Application Software segment. For instance, despite facing tough freight market conditions, Jeff Clementz, our new leader at DAT, made significant progress in enhancing DAT's technology and market position. Our network has never been more resilient, and we have substantially reduced threats from fraudulent activities. In the fourth quarter, we completed the DAT acquisition of Trucker Tools, which perfectly complements DAT's offerings by providing real-time visibility for DAT network participants. DAT's strategy aims to leverage its market leadership to provide increasing value for both sides of the freight network, thus driving higher retention and better network monetization. Foundry has a similar narrative. Despite a challenging financial year due to strikes, Foundry continued to innovate rapidly, focusing particularly on GenAI and computational AI features. This approach exemplifies the advantages of the Roper operating model. Whenever one of our businesses encounters market issues, we continue to invest, or even boost investment, positioning us to gain significant market share when conditions improve, as we saw with DAT and Foundry in 2024. We are pleased with the overall performance of our companies. Pipeline upgraded their talent aggressively, aligned their organizational structure with customer needs effectively, and achieved solid ARR growth in 2024. ConstructConnect, during its planned succession with Buck Brody to Matt Strazza at Frontline, performed exceptionally well. This organization remains committed to learning, enhancing lead generation quality and conversions, which drove solid revenue and ARR growth. Notably, ConstructConnect is developing potentially transformative products utilizing AI technologies. Additionally, our alternate site healthcare software businesses performed well again this year. Looking ahead, we anticipate revenue growth to improve to the mid-singles range for the full year, supported by DAT’s network value capture and strong performance across other segments. Given the progress made throughout the year, we expect our organic exit run rate for 2025 to exceed the mid-singles range. In the first quarter, organic revenue growth will be somewhat lower than the full-year projection, falling within the low-singles range due to last year's Q1 comp from MHA. Before we delve into our tech segment, let's take a moment to highlight the significant progress we've made with GenAI development and deployment over the past year. Our businesses primarily compete on customer intimacy, which involves a deep understanding of our customers' operations, needs, and workflows. This intimate knowledge is a unique competitive advantage for Roper and our businesses. With advancements in GenAI LLMs becoming more reliable and accessible, we are focused on merging our intimate customer knowledge with our extensive data and these GenAI technologies to create innovative and compelling solutions, making significant progress in this direction in 2024. Notable initiatives include GenAI product assistance at Deltek and Aderant, automated time entries at Aderant, real-time fraud detection at DAT, content creation automation at Foundry, automated construction takeoff at ConstructConnect, and insurance forms automation at Vertafore, along with many more exciting GenAI technology deployments planned for 2025. The future looks promising in this area.

Now, please turn to Page 14 and let's review our tech segment's full-year results. Revenues here grew 9% on a total and organic basis and EBITDA margins came in at 35.2%, just great results here. We'll start with Verathon, which was simply awesome in '24. Verathon's strength is driven by the team's exceptional level of discipline, discernment, and tenacity. Throughout 2024, Verathon just won in the marketplace, becoming the market share leader in the US for single-use bronchoscopes and extending their global market share lead in video laryngoscopy. Obviously, we continue to be bullish about Verathon and their future. For the full year, Neptune was very, very good. They continued to see strong ultrasonic static meter demand and increasing adoption of their meter data management software offerings. And from an operational and market momentum view, they're exiting the year stronger than ever. Great job by the Neptune team. NDI or Northern Digital returned to growth in Q4 following a very challenging year due to the difficult comparison that resulted from a large customer product launch in 2023. Good things in the future for NDI. Finally, CIVCO and IPA ended the year with very good, if not great financial results. Congrats. As we look to 2025, we expect to see high single-digit revenue growth for this segment. So, with that, please turn with us to Page 16. Let's turn to our Q1 and full year 2025 guidance. Based on what we previously discussed in the segment overviews, we're initiating our 2025 financial guidance to grow total revenue north of 10%, which excludes any future capital deployment benefits. Embedded in this guide is organic revenue growth in the 6% to 7% range. Finally, we expect full-year adjusted DEPS to be in the range of $19.75 and $20. Our guide continues to assume a full-year effective tax rate in the 21% to 22% area. For the first quarter, we expect adjusted DEPS to be between $4.70 and $4.74 as we absorb lower acquired margins in Application Software and a tougher comp in our Network segment.

Now, please turn with us to Page 17 and then we'll open it up for your questions. We'll conclude with the same three key takeaways with which we started. First, our cash flow growth was strong, once again demonstrating our consistent and durable compounding capability. Second, we entered 2025 with improving momentum. And third, we now have over $5 billion of acquisition firepower at a time when the M&A markets are becoming increasingly more attractive. As it relates to our cash flow compounding model, we grew free cash flow 16% on the back of 14% total revenue and 6% organic revenue growth. Our M&A capability deployed $3.6 billion towards vertical market leaders, which helped drive our compounding flywheel but also improved the quality of our portfolio. Importantly, our fundamentals are strong and we exit the year with quite positive momentum. We saw a reacceleration of our fourth quarter organic revenue growth to 7%, also on a full-year basis, we grew our enterprise software bookings in the double-digit area, better in the second half, and continue to see high single-digit growth in our $4.6 billion recurring and reoccurring revenue base. Importantly, our enterprise continues to get better as we grow. In 2024, we upgraded key leadership talent, a few of which we highlighted earlier, we expanded our capital deployment capabilities and capacity, advanced our operating model and made meaningful strides developing and deploying GenAI-based solutions. Finally, we are very well positioned with more than $5 billion of available M&A firepower to deploy capital towards leading vertical market software businesses. The M&A markets are very active and appear to be accelerating pace given the increasing pressure limited partners are placing on their private equity GPs for liquidity. Our M&A team is very busy cultivating and building our robust pipeline of attractive acquisition opportunities. As usual, we're excited to pursue these opportunities with our unbiased and disciplined approach. Now as we turn to your questions and if you could flip to the final slide, our strategic compounding flywheel, we'd like to remind everyone that what we do at Roper is simple. We compound cash flow over a long arc of time by executing a low-risk strategy and running our dual threat offense. First, we have a proven powerful business model that begins with operating a portfolio of market-leading, application-specific, and vertically oriented businesses. Once the company is part of Roper, we operate a decentralized environment so our businesses can compete and win based on customer intimacy. We coach our businesses on how to structurally improve their long-term and sustainable organic growth rates and underlying business quality. Second, we run a centralized process-driven capital deployment strategy that focuses in a deliberate and disciplined manner on cultivating, curating, and acquiring the next great vertical market-leading businesses to add to our cash flow compounding flywheel. Taken together, we compound our cash flow over the long arc of time in the mid-teens area, meaning we double our cash flow every five years or so. So, with that, we'd like to thank you for your continued interest and support and open the floor to your questions.

And our first question comes from Ken Wong of Oppenheimer. Your line is now open.

Fantastic. Thank you for taking my question. I just wanted to ask about that 6% to 7% organic growth outlook. How clean is that number? Are there any notable one-off headwinds, tailwinds that we should be thinking about that's impacting that from getting to the steady state?

Hey Ken, this is Jason. Thanks for your question. There's nothing one-time in nature. In the first quarter of our NS segment, we mentioned last quarter that our MHA business had a one-time event that affected us. This led to slightly lower organic growth in the first quarter for AS and NS. However, that will start to improve as we’ve discussed having high single-digit recurring revenue in Q2 through Q4. So, as you consider Procare's organic contributions in the second quarter, along with some of the bookings we mentioned for the second half converting to revenue more strongly in late Q1 or early Q2, you'll start to see that increase. There’s nothing particularly unusual in our tech segment, and we still anticipate strong growth across the enterprise. We’ve mentioned before that 2024 should be our cleanest baseline year since 2019, given all the COVID and supply chain disruptions we faced. We feel optimistic about our setup for this year.

Okay, fantastic, Jason. And then just a quick follow-up. As far as unclogging the M&A logjam in '25, as you look at the pipeline of potential deals, any preference for growth bolt-ons or looking more standalone category leader types?

Yeah, Ken, it's Neil. I'll take that one. So, our team and we talked on the prepared remarks, we added a fair amount of capacity and capability in our M&A group this past year and they've done a lot of state work, building a lot of relationships with sponsors, with companies directly, both on the platform side and on the bolt-on side. Now when you got $5 billion to deploy, we'll be able to do everything that makes sense from a bolt-on point of view and then hopefully find one or two platforms. Sort of, is very situation-dependent, but yeah, it will be a balance between the two.

Perfect. Thanks a lot.

Hey guys, good morning.

Good morning, Joe.

So like coincidentally, the water company at my house literally right now putting in a new Neptune meter. So I hope that's factored into the next quarter guidance there for you guys.

Static or mechanical?

That’s right.

I'll see what it looks like when she's gone. Great. So it was good to hear some of the AI tools you guys are deploying here. I was wondering if there's a way to quantify either in terms of ability to price differently and charge for new capabilities and what it's done there or what it's done internally for you guys in terms of margins and making your businesses more profitable and more efficient.

In 2024, we experienced significant learning and early momentum, having introduced several products to the market. The momentum is clearly building, and we have seen some encouraging breakthroughs, especially given the recent global focus, which has made our models cheaper and more accessible. This allows for deployment in a wider range of specific use cases at lower costs. Our teams, including our CTOs, are actively discussing these developments, which is very promising for the future. However, it's challenging to directly attribute specific mathematical outcomes for 2024, such as revenue figures or cost savings. Nevertheless, we have observed a positive halo effect, with increased bookings at companies like Amazon and Aderant, as they lead in this area. Deltek has also seen a rise in bookings thanks to their Dela assistant. On the productivity front, we are witnessing real advancements in customer support and starting to see improvements in R&D. Our primary focus is not on reducing costs within the enterprise but rather on enhancing customer service efficiency and expanding our roadmap, aiming to leverage productivity in an offensive manner.

Yeah, that all makes sense. And then follow-up, the one business that I guess people are a little concerned there might be some sort of headwinds just from a US policy standpoint could be like the GovCon piece of Deltek. Just curious what you've seen there and if that's a valid concern or if it is like how does that play out?

Yeah. So, Deltek and their customers, which are federal government contractors, US contractors and DOGE and all the policy, it's super early to know really how it's going to shake out. And I'll tell you, the guiding principles of DOGE, a couple that are important are the accountability for contractors are going to increase. Pricing models may change to be more performance-based; they may have to modernize their systems. All that plays into the strengths of Deltek because with more accountability, it's going to be more audits compliance. We just acquired a wonderful company called ProPricer, which is about how do you manage more performance-based pricing. So that feels pretty good. But it's very early to know at the end of the day how this will flow. Importantly, bookings and government contracting in Q3 and Q4 and activity through the first part of Q1, at Deltek, government contracting have been quite robust. So the customers speaking with their wallets at least through this have seemed relatively bullish about the opportunity.

Okay. Thanks, guys. Appreciate the color.

Thanks.

Great. Hi, everyone. Thanks for taking my questions. Neil, just following up on your AI comments, so we've heard recently from some of the large enterprise vendors, horizontal vendors that this ends up being quite positive thinking about what we've seen from small language models, you commoditize the model, you're able to differentiate at the business process later. I would say in Roper's case, you're typically dealing with, I would say, more unique and regulatory burdensome business processes. Does AI make it easier for others to come in and tackle those or do you think because you're the incumbent, you have the starting product focus, you have the distribution that you would expect you end up deepening your moats because of the progress that's happening in the model space?

We are very cautious about this issue and have engaged with our companies throughout 2024, during the AOP process and the strategy discussions, specifically focusing on this topic. We believe we are well-positioned to emerge as the leader. I mentioned this in my prepared remarks for a few reasons. Firstly, we have a deep understanding of our customers. For example, using the Aderant scenario, we focus on how a specific law firm can craft a precise bill for a particular client that meets that client's billing requirements. This is a very detailed and specific matter, and when we talk about our close relationships, this is exactly what we mean. With our strong customer relationships, the data we possess, and our new enabling tools, we feel uniquely positioned to address challenges that couldn't be resolved with previous technologies. Additionally, it’s important to highlight that in all our verticals, we are the market share leader. We have a significant market share advantage, sometimes 1.2 times larger, and in other cases, 2 or 2.5 times the size of our nearest competitor. This scale allows us to invest in these niche markets effectively. We are confident in our direction, but we will remain vigilant and proactive, urging our companies to invest at a reasonable pace to compete and succeed.

Okay. That's great color. On the outlook for next year, I would imagine you are run rating high-teens bookings going forward, but the last few quarters now have been pretty impressive. I think if you just run rate double-digits, it probably gets to something better than a mid-single-digit outcome for AS organic. I guess, are you starting the year baking in any sort of hedge? I know you just addressed Deltek, but maybe any risk points that are a consideration and if the risks aren't borne out, you maybe get raises later on.

Yeah, Joe, it's Jason. I think we finished 2024 at 5.6% to be exact on AS. And I think we had strong gross revenue retention in the year; we had good bookings in the second half of the year. So that's all part of the growth equation. So, we think we're going to be better than that. And I think it's just we're going to want to see how the first half plays out. I mean, obviously, I think if you think about the year, again, Procare is going to roll organic in the second quarter, so that will help the growth rate. But yeah, I think if we continue to see the momentum we saw in the second half, there could be some chance for upside. But how that converts to revenue is a little slower than just immediate impact unless it's perpetual. The one upside I would say in the year is if GovCon Enterprise remains strong and there's a bias to perpetual, which candidly, we hope there isn't just over a long term. But if there is, then we could have some upside there for the year.

It's great to see this dual threat offense in action. My first question is about the strength in enterprise software bookings. Can you rank the factors contributing to this, especially in terms of any macro trends that may be providing support or if it's more due to execution? Sometimes leadership changes and go-to-market optimization play a role, as well as the shift to SaaS. Could you elaborate on the key drivers behind the recent strength in enterprise software bookings? I have a follow-up after that.

Okay. Terry, I will address all the points you raised. From a macro perspective, compared to last year, we feel the outlook is more stable now, which is definitely positive. As mentioned in the prepared remarks, we believe a significant part of our success is due to having better leaders and implementing more refined, strategy-driven execution models. We are seeing significant benefits where we've matured these methods over time. Although building an enduring and sustainable organic growth rate takes time, we are consistently making progress. Examples of success include companies like Deltek, Aderant, PowerPlan, DAT, and ConstructConnect, among others. Each company is improving, and we've noticed notable momentum in organic growth. Regarding SaaS conversions, we view that as a long-term growth driver. We are currently transitioning over $900 million of on-premise maintenance to the cloud at more than twice the annual recurring revenue growth rate. This is a strong tailwind for us. The volume of perpetual licenses has decreased, and if there is a J-curve effect, it has already been reflected in our results over the last few years, providing a favorable long-term tailwind.

Thank you for that. Jason, regarding DAT, I have a question that may be challenging. When will we start seeing the impact of pricing, packaging, and monetization related to some initiatives? Thank you.

Sure. Yeah. So I think in the fourth quarter, they had an action on half of the market or half of the side of the network and then there'll be another one sometime in the first half of this year probably, and then a little bit more at the end of this year as well. So, and it all relates to what Neil talked about, which is just increasing the sort of the safety and the reliability of the trading partners on the network, just what we're doing from a fraud perspective and performance perspective on the load board. So just continuing to innovate. There's more innovations coming. A lot of releases they're going to have this year. So we're really excited about what's happening at DAT.

While we're just on DAT, I'll put a plug in for this small bolt-on we did in the quarter, Trucker Tools. We think this one has the potential to just be a terrific adder to the network, real-time visibility to all the network participants. We have the concept of having the customer base we have on the carrier and the broker side and then delivering more value to both sides in which of the network with Trucker Tool does and being able to monetize it from there, really exciting potential with this bolt-on.

Thank you.

Good morning. Neil, when you consider AI, it seems like there's a distraction among some software buyers as they try to figure out how to approach it. Are you noticing any of this distraction in your sales engagements, or are your verticals more insulated and focused on business value, with the AI aspect taking a back seat? What are you observing regarding CIO behaviors?

We've been considering that question frequently and haven't noticed any distractions recently. Perhaps in the first half of last year, when everything was new, people were trying to understand what was happening amidst the macro factors like interest rates and economic inflation. However, lately, we haven't seen any of that. I believe the main reason is that we serve as the primary system for most of our customers' operations, and they are looking to us to integrate GenAI technology into very specific applications. They don't have a competing large system alongside us; we are the essential system they rely on to manage their networks, lead generation, and other functions. No, we're always have been and we'll continue to be like wildly focused on what it is that we do, right? So for platforms, it is small market, vertical market leaders that have enduring competitive advantage. You can understand and observe the competitive forces that is the leader that has growth that is compelling to us where we can and potentially add more capital to bolt-ons. I mean, that is what we do and we will continue to be business pickers first and foremost and not sort of be thematic vertical investors like we want to put X dollars into this theme, we're just going to always be business pickers. Now where that ultimately takes us, it's to be determined based on how the deals manifest over the course of the next year or two.

Hey, good morning, guys.

Good morning, Scott.

Hi, you've become increasingly positive about M&A in recent quarters and have been active over the past year. Given the unique situation in '25, would you consider issuing equity if there were enough opportunities to make it worthwhile?

So, obviously, the first source of capital is going to be the $5 billion in our balance sheet and our debt capacity. If the market then at that point continue to present very compelling deals to us, then certainly we would consider the use of equity, but the bar is higher, the return bar is higher, the asset quality is even higher because the cost of capital is higher. So that all goes into the decision-making process. But let's be clear, we will be delighted to be able to deploy the $5 billion that we have. That drives the compounding machine for us. I mean even in difficult years, let's just make this clear for the record. I mean, in the years where there wasn't a lot going on in the last couple of years, we got our work done as well. So that's where our relationship sort of always being in the market sort of benefits us maybe even the most is when the times are not as good. And so we'll just be steady deployers of capital through good times and bad.

That's right. And I'd also just say that the metabolism of all these assets in private equity is not going to be immediate. It's going to take more than a year for that to happen. So, I don't think it's going to be all at once.

This will not clear in '25. It will be a '25 and '26 clearing for sure.

Okay. There's no need for panic on the other side. I understand. You have been discussing talent upgrades for over a year, but when it comes to filling positions, how do you view the balance between internal and external candidates? Do you feel you are developing enough internal talent? You mentioned that winners hire winners, which I believe. Do you consider how the internal versus external hire ratio should be, or if there is an optimal level given your business mix? I'm interested in how you approach this.

No, for the past five or six years, we have been actively implementing what we refer to as our talent offense, which focuses on selecting and developing talent, as well as engaging them. We have consistently discussed the key behavioral traits that our field leaders should possess, such as being competitive, curious learners who can think long-term and turn that long-term vision into actionable steps today, while also being enthusiastic about building the essential capabilities of the business. We initiated this process by looking outside initially, but the development aspect of this talent strategy shows early signs of success. For example, Strasa has transitioned to frontline leadership, and Brody is now leading ConstructConnect. Brody started in the Roper office as the CFO for Antibiotics and DAT before moving to ConstructConnect and ultimately becoming its CEO. It wouldn’t surprise me if there were further leadership changes within the portfolio as our talent pool becomes deeper, broader, and stronger; that will always be our priority. From a risk management perspective, when we needed to enhance the talent at Frontline, we successfully shifted Stras to that role, promoted Brody to CEO of ConstructConnect, moved the Head of FP&A to CFO, and then sought an FP&A leader in the market rather than looking for a CEO for one of our larger businesses. In terms of risk management, this approach is effective across the board.

Hey, good morning.

Hey, good morning, Steve. It's nice to hear from you.

Really strong cash in the quarter. Obviously, 32% is above 30%, but it's meaningfully above 30%. Are you at some point going to change that algorithm or is there something about the 32% that was a bit overdriven in the fourth quarter? And then how do we think about that? Should we think about that as kind of normal seasonality this year for you guys as we move into the first and the second quarter on cash?

This was a very successful renewal season for us. If I had to highlight specific companies, Deltek and Aderant achieved record Days Sales Outstanding, and Strata successfully completed its integration with Syntellis, finishing the year on a high note. Verathon and Neptune also performed exceptionally well. Overall, our performance exceeded expectations, and while there may be a slight pullout from Q1, nothing out of the ordinary has occurred. On the non-operating side, we issued a couple billion in new bonds, with our first coupon payments scheduled for February and April of this year, which is more of a 2025 issue than a 2024 one. Overall, it was just a fantastic year.

Yeah. One last question for you, Neil. You are clearly making progress on integrating AI. In your reviews, you've probably asked these questions, but are there any businesses where you see potential threats? Are you monitoring any incremental competition or disruptions from this? What signs are you seeing, and how are you responding through your investments? Specifically, what do you observe for businesses that have traditionally performed well and maintained high market shares?

Yeah. So I would say, we spent a lot of time at the portfolio level worrying if there is an existential threat at the portfolio level. And last year, there was one company that we had on the watch list, did the work, and they moved them off the watch list from a threats point of view. Actually think it's medium to long-term a tailwind now that we understand the landscape and the IP ownership landscape better than a year ago in that end market. And then I would say, hey, in certain of our verticals, are there teeny-tiny start-ups that are doing very bespoke small AI things, yes. But all the customers are actually want to consolidate vendors, not proliferate vendors. And so it just gives us an opportunity to sort of be the benefactor of the winner because of that trend.

Hi, good morning. Maybe just wanted to start with any color on the EBITDA margin outlook. There's been a lot of revenue related questions, but in 2024, I think the core margin firmwide was flat, headline including acquisition down a touch. So as we're thinking about 2025, should we think about sort of core margins maybe up slightly and then the headline margin flat and that sort of back-half loaded with first half margin down year-on-year and then up in the back half? Is that the way to kind of think out EBITDA margins?

Yeah, I think you summarized it well. Core margins will be up a little bit. I talked, especially at the segment level, be up nicely and then acquisitions, especially like you said, especially in the first half with Transact coming. Transact's largest margin quarter is the third quarter or about 50% of their EBITDA comes in that quarter, so lower in the first, a little bit lower in the second. So, yeah, I think the way you've described it is spot on.

That's great. And then my follow-up just on the TEP segment. We haven't had many questions on that yet. So, trying to understand, as you're thinking about kind of the revenue outlook here, maybe home in a little bit on what you're expecting for Neptune. I think there's some noise around various kind of meters businesses and sort of customer inventory reduction. So how are you thinking about Neptune for 2025 revenue? And also maybe any color on how did the TEP backlog perform in Q4? I think it was down about 30-ish percent year-on-year in Q3, but off a very elevated base. So just kind of how have orders or book-to-bill moved there? Sure, I'll address the first part and let Jason respond to the second part regarding the backlog. There is strength in the segment, and Neptune constitutes about 40% of it. We expect them to perform well this year based on our guidance in the high single digits area. Additionally, there was some noise in the comparisons from the previous year, but we have discussed NDI and our products, which are now behind us. This gives us a solid base to grow from, and we are seeing consistent growth across the group.

Yeah. I mean, just on backlog, I think we've talked ad nauseam about the supply chain lead times and things that happened over the last few years and that's normalized out. We still have a little bit higher backlog there than, say, pre-COVID. So that's positive. And I would just say early signs in this year are that a lot of the distributors are restocking significantly and the sales kickoff that Don and his team had a few weeks ago indicates just continued strength in the market this year. So, it will kind of get us back to where we were pre-COVID, which is fine, right, which is that we work off a one to two-month backlog and just continue to see growth without working on off of a backlog.

Thank you, everyone, for joining the call today. We look forward to speaking with you during our next earnings call.

Thank you, presenters, and thank you, ladies and gentlemen. The conference has now concluded. Thank you for attending and you may now disconnect. Have a great day.