Good morning. The Roper Technologies conference call will now begin. Today's call is being recorded. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star zero. I would now like to turn the call over to Zach Moxie, 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 2025 financial results for Roper Technologies. Joining me on the call this morning are Neil Hund, 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 are also available on our website. And now if you please turn to page two. 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 three. 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 item. amortization of acquisition-related intangible assets, and financial impacts associated with our minority investment in INDICOR. Reconciliations can be found in our press release and in the appendix of this presentation on our website. And now, if you'll please turn to page four, I'll hand the call over to Neil. After our prepared remarks, we will take questions from

our telephone participants. Neil? Thank you, Zach, and thanks to everyone for joining our call. As we turn to page four, you'll see the topics we plan to cover today. We'll start by highlighting our Q4 and full-year performance, then Jason will walk through our enterprise financials, our Q4 segment performance, our balance sheet, and capital limit capacity. Next, we'll discuss our segment highlights and introduce our 2026 guidance, and then we'll close with a few summary thoughts before opening the call for questions. So let's go ahead and get started. Next slide, please. As we turn to page five, I want to highlight three takeaways for today's call. First, we delivered solid execution in 2025. Revenue was up 12%, EBITDA was up 11%, and free cash flow was up 8%. Importantly, enterprise software bookings grew in the low double-digit range for the year, providing strength as we head into 2026. We continue to invest for our long-term and sustainable growth. Last year was below our expectations in 2025, and we own that. Our organizational focus and resolve are even stronger coming into this year. We've upscaled talent, sharpened strategy, and improved execution across the portfolio, and that work is showing up for the enterprise. Application software businesses, say for Dell Tech, improved organic growth in the 70 basis point area, demonstrating broad-based growth improvements occurring within the segment. Importantly, we're not starting the year assuming organic growth will inflect in 2026, despite the traction we believe we're starting to achieve. We're going to execute, and we'll reflect any improvement or organic growth in our guidance as it materializes throughout the year. We'll have much more to say on this later in the call. We continue to be excited about the AI product opportunity because our businesses sit directly inside mission-critical, high-frequency workflows where we already have deep domain knowledge, proprietary data, and trusted distribution. The way that I can move from productivity to on-stack embedded automation that improves outcomes for our customers and is highly monetizable. Importantly, our decentralized model lets each business deploy AI with the appropriate domain specificity across their various end markets. I'm Luke and Eddie Raphael to lead the Roper AI Accelerator team. They will coach and partner directly with the development strike team and leverage reasonable elements and best practices across the portfolio. so we can deploy AI with increasing speed and market-specific precision while scaling what works. Exciting stuff for sure. And our third key takeaway centers on capital allocation. During 2025, we materially advanced our portfolio and foundation through capital deployment, deploying $3.3 billion towards high-quality vertical software acquisitions during the year, highlighted by central reach, subsplash, and several tuck-in acquisitions. Also, unimportantly, we leaned into opportunistic repurchases, buying back 1.1 million shares for $500 million in Q4. As we look to 2026, we have north of $6 billion of capacity for potential M&A and share repurchases. We are very encouraged by the size and quality of our acquisition pipeline, and we expect to remain active while staying highly disciplined on price and business quality, and in parallel, we'll continue to use buybacks opportunistically when they represent the most attractive risk-adjusted path to durable cash flow per share compounding. 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, and good morning, everyone. We'll start off here with the fourth quarter results. To summarize, we finished ahead of expectations on depths driven by very strong margin performance. $2.06 billion was up 10% over prior year, with acquisitions contributing 5% and organic growth of 4%, which was below our expectations. I'll expand on this shortly. EBITDA of $818 million was also up 10% over prior year. Notably, our core EBITDA margin expanded 60 basis points in the quarter, representing 54% incremental margin. Depths of $5.21 was above our guidance range of $5.11 to $5.16 and up $0.40 over the prior year. Shares were reduced by $1.1 million in the quarter for repurchases, which you see partially showing up here in our diluted share count on a year-over-year basis. However, the repurchase did not impact debts in the quarter versus our guidance, given the partial quarter share count benefit and higher interest expense. Now, if you turn it with me to slide 7, I'll walk through the Q4 segment performance. Application software revenue grew 10% with organic growth of 4%, and margins were solid, expanding 70 basis points to 42.2%. It's important to outline some details on organic revenue. Recurring revenue grew 6% in the quarter. However, non-recurring revenue was down 8% in the quarter and was the primary driver to the lower end of our mid-single-digit outlook. We talked about Dell Tech being the big swing factor in the quarter. With a prolonged government shutdown, large GovCon commercial activity and perpetual license revenue was meaningfully impacted, leading to DelTec being up at the lower end of mid-single digits for the year as compared to the solid mid-single-digit plus grower it's been over the decade that we've owned the business. That said, we are cautiously optimistic about a 2026 improvement for DelTec, given both the 2025 disruptions caused by Doge and the shutdown and the forward benefit of the OBB appropriations coming into the market. As improvements occur, we will reflect this in our outlook. For network software, revenue grew 14% with organic growth of 5%. Margins were lower at 52.8% due to the recent bolt-ons for DAT that are currently scaling into profitability. On organic revenue, recurring growth here was also 6%. The recurring performance was consistent with patterns over the last two quarters with mid-single-digit growth at DAT despite a muted market backdrop and steady improvement. However, non-recurring revenue was down 3% on lower services revenue and some customers electing to move from perpetual to SaaS, which negatively impacts the quarter but benefits long-term growth and customer lifetime value. For our test segment, revenue grew 6%, or 5% organically, while margins held flat to prior year at 34.8%. NDI outperformed in the quarter, given strong demand for solutions in the cardiac ablation space, while Neptune was down slightly, as expected, as we comped against a stronger prior fourth quarter and worked through the final surcharge negotiations. Let's turn to slide 8, where I'll summarize our 2025 full-year results. 2025 was a solid year in terms of cash flow and depth performance despite lower than expected organic revenue posted at 7.9 billion or up 12% over prior year. Acquisitions contributed nearly 7% growth. Of note, we acquired two great platform businesses in Central Reach and SubSplash that will be accretive to 2026 second half organic growth. We also made three strategic bolt-ons for DAT that significantly automate workflow in the spot freight market and will gain adoption in the years to come, which will ultimately inflect the growth rate for DAT. Organic growth was nearly 5.5%, which Neal will discuss in the segment detail. EBITDA reached 3.1 billion, or 39.8% margin, and was up 11% over prior year. Of note, core margin improved 30 basis points and represented 47% incremental margin, which is in line with our long-term growth algorithm. Depths of $20 was up 9% over prior year and reflects the top end of our 2025 guidance range provided in January, despite lower organic revenue and in-year dilution from recent acquisitions. Free cash flow of nearly $2.5 billion was up 8% and represented 31% of revenue, which is in line with our initial free cash flow margin framing for the year. This represents an 18% CAGR since 2022, or excluding the impact from Section 174 in both periods. As we look forward to 2026, we expect higher growth than in 2025 through benefits from working capital and cash tax improvement. This will put us safely over 30% of revenue next year. However, Q1 will be a bit lower given timing of coupon payments for new bonds issued in the third quarter of 2025. This, of course, does not contemplate future capital deployment towards either M&A or share repurchases. This brings us to our balance sheet discussion on slide 9. We're entering 2026 in a strong financial position with net leverage ratio of 2.9 times and ample near-term liquidity with about $300 million of cash and nearly $2.7 billion available on our revolver. With this position and strong forward cash generation, we have over $6 billion in capacity for capital employment this year. Regarding M&A opportunities, we've been proactive and successful in executing high-quality acquisitions for the last couple of years despite a weak M&A market. Most anticipate the market to pick up in 2026, which we view as a net positive given Roper is a home of choice for many acquisition target CEOs. Additionally, we have the attractive optionality of a share repurchase program, which was authorized and commenced in the fourth quarter. As Neil mentioned, we deployed $500 million to acquire 1.1 million shares in the quarter at an average price of just under $446. This leaves us $2.5 billion remaining on our current $3 billion authorization. We will remain agile in deploying capital to the best return for shareholders. Given the current valuation dislocation, we are now very pleased to have the buyback option available. With that, I'll turn it back over to Neil to discuss the segment performance and outlook.

As we return to page 11, let's review our application software segment. Revenue for the year grew by 16% total, and organic revenue grew by 5%. EBITDA margins were 42.5%, and core margins improved 80 basis points in the year. For the segment, we saw recurring and reoccurring revenue grow on an organic basis 7% for the year, and total organic revenue improve about 70 basis points saved for the Dell Tech-related market weakness, both of which provide evidence of underlying strength for the businesses in this group. Adderick continues to execute from a position of strength. FY25 revenue grew in the mid-teens area with strong bookings throughout the year. Importantly, they're leaning into their right long-term work, accelerating SaaS and AI-led innovation while modernizing their tech platform and data lake. Dell Tech was the primary weaker part of the story for this segment and has been straightforward all year, with GovCon remaining a challenging market throughout most of 2025. That said, we view the passage of the OBBB as a positive development for the market. It should drive upside over time, but we've not included any benefit in our 2026 guidance and will monitor customer activity as the year progresses. Bird4 has another solid year with growth driven by strong recurring revenue performance and continued execution on product and customer outcomes. Looking ahead, the team is leaning into a focused set of priorities, scaling automation, particularly AI-enabled workflow improvements, while continuing to deliver steady innovation to the agency and carrier ecosystem. Deliberate another strong year with healthy recurring growth and steady progress on product modernization and cloud migration. They continue to invest in product innovation, customer experience, and internal operating capabilities, improving their long-term organic growth profile. Shout out to Rafi for carrying the leadership mantle forward at PowerPlan and great job managing the transition from Joe. Illumia, formerly known as Seaboard and Transact, continues to execute well and is progressing in its integration and platform roadmap while maintaining solid commercial momentum. And we're excited to welcome Greg Brown, our new CEO at Illumia, who brings a long and successful history of leading scaled software businesses. Congrats and thanks to Laura, Rachel, Teran, and Rob for executing the VCP, driving the business combination, and achieving the year one target. The portfolio businesses we've acquired over the last couple years, Centellus, Transact, Subsplash, Central Reach, and ProCare, we feel very good about the quality and long-term growth potential of this group. However, ProCare did not perform to our expectations in 2025, although we do feel good about the business building that occurred last year. Specifically, we improved payments execution, upgraded the entire leadership team and continued to win competitively in the market where ProCare remains a category leader. The biggest constraint was implementation timing across both software and payments with delayed customer time to value and weight on payments volumes. Improving implementation speed and delighting the customer base are the top priorities and ProCare's leader, Joe Gomes, has executed this playbook before at PowerPlus. This reaches off to an outstanding start and ahead of our deal model. The business is scaling well with strong recurring software momentum and expanding profitability, and they're building a broader growth engine through cross-sell and a steady cadence of new product releases, including AI-enabled offerings. Turning to our outlook for 2026, we expect organic growth to be in the higher end of the mid-singles range. We also expect a modest back half weighting as central REITs turns organic and non-recurring comparables ease in the second half. As mentioned previously, we're maintaining a conservative posture in GovCon at Dell Tech until we've seen sustained improvement in commercial activity. So overall, application software remains a durable growth engine supported by recurring revenue momentum and continued product execution across this portfolio. Please turn with us to page 12. Growth in our network segment was 8%, and organic revenue grew 4% for 2025. Even a margin just came in at 54.1%. DAT continues to execute well on what they can control, broker integrations, value capture, and trust in the network, all leading to RPO expansion. As this session persisted throughout 2025, DAT is continuing its evolution from a traditional load board into a more automated marketplace where brokers and carriers can match loads with greater trust efficiency and increasingly transact within a platform, and as this happens, DAT's TAM and monetization opportunities grow. To this end, DAT is advancing its AI-first operating model with concrete use cases across carrier onboarding, fraud detection, and freight matching automation. This is a pattern we like. AI that improves customer outcomes, lowers transaction friction, expands our TAM, where we have a very high rate of recurring revenue growth, and the team made material technical advances with their AI-based takeoff solution boosts with year-over-year growth and ARR as the market continues to recover. We continue to be excited about the AI product development at Foundry because it fits naturally in the creative workflows where small improvements can materially improve artist throughput. Importantly, these are high-frequency, high-value tasks that Foundry already sits inside, so AI is being delivered as embedded features that customers should adopt quickly given the clear and integrated efficiency gains offered. MHA, SoftRiders, and SHP continue to execute well, supported by stable in-market demand and strong reoccurring revenue models. Each team is advancing its roadmap with targeted investments in functionality, workflow efficiency, and service levels to deepen customer value and retention. Splash is off to a great start in a portfolio with strong execution and solid momentum across the business. We're encouraged by the durability of the revenue model and the opportunity to continue expanding value delivered to customers over time. As we turn to the Alec for the year, we expect network software organic growth to be in the higher end of the mid-singles range, representing a modest improvement versus 2025. We expect a stronger Q4 driven by Subsplash turning organic in the quarter. Of note, we remain conservative on DAT by assuming no meaningful improvement in the freight market. Now, please turn to page 13 and let's review our TEP segment's full-year results. Through 7% on a total and 6% on an organic basis, EBITDA margins remain strong at 35.7%. We'll start with NDI, whose growth is being backing solutions supported by strong OEM demand and program ramps. Importantly, OEM order activity has remained strong, and the business is converting that demand into higher revenue scale and operating leverage. Great job by Dave and the entire team at NDI. Varathon continues to perform growth across its GlideScope and B-Flex franchises. Importantly, Varathon is the U.S. market share leader in single-use market scopes, which reflects several years of consistent execution and reinforces the durability of a model as the business continues to take share in an attractive procedural workflow area. Looking to 2026, we're optimistic about several new product launches planned throughout the year. For the full year, Neptune grew modestly, notwithstanding the year-long backlog normalization supported by demand for its static ultrasonic meters and its cloud-based software solutions. Although the second half commercial challenge is tied to our tariff surcharging program eased late in the year, we remain cautious and are not underwriting your recovery in our 2026 guidance. Finally, the balance of the businesses in this segment, Civco, FMI, and Evonix, IPA, and RFIDs were really strong throughout 2025 and are meaningful contributors to the segment's Segment organic growth in the mid-single-digit range, with first half being more in the low singles area as Neptune's backlog continues to normalize. Given the more limited visibility at Neptune, we're taking a cautious approach as we monitor underlying demand over the next couple quarters. Please turn us to page 15. Turn to our Q1 and full-year 2026 guidance. We're initiating our 2026 financial guidance to grow full-year revenue in the 8% area, organic revenue growth between 5% and 6%, and adjusted depths of 2130 to 2155. Our guide assumes a full-year effective tax rate in the 21% area and more in the 22% area for Q1. To reiterate from earlier, our four-year guidance does not bake in improvement at Deltec's GovCon business or in DAT's freight market and assumes modest top-line weakness at Neptune versus 2025. As discussed, we expect stronger second-half organic growth driven largely by central reach and sub-slash turning organic and easing non-recurring comparables. Our guidance does not assume a meaningful revenue uplift from our AI development work either. We view AI as incremental upside as we scale commercialization across the portfolio. We remain positioned to be active and opportunistic on capital deployment. We continue to have a robust M&A funnel, a meaningful remaining share repurchase authorization, and substantial financial flexibility, and we will remain disciplined and unbiased between acquisitions and buybacks based on what drives the highest and most durable cash flow per share compounding. For the first quarter, we expect adjusted debts to be in the range of $4.95 to $5, reflecting the dynamics previously discussed. Now, please turn us to page 16, and we'll open up for your questions. These are the same three takeaways with which we started. First, in 2025, we delivered both double-digit revenue and EBITDA growth in solid free cash Enterprise software bookings grew in the low double-digit range, which positioned us well entering 2026. We're investing for long-term, sustainable growth improvements while staying disciplined in our expectations. Throughout 2025, we upskilled talent, sharpened strategy, and improved execution across the portfolio, and we are accelerating AI product development. We're not baking in an organic inflection in 2026, and our guidance will reflect improvement as it materializes. We advanced our portfolio through capital employment. We deployed $3.3 billion into high-quality vertical software acquisitions, executed opportunistic repurchases, and maintain more than $6 billion of forward capacity. Rope remains an advantage and preferred buyer for both management teams and private equity sellers, and we believe the M&A backdrop remains constructive as private equity firms face increasing pressure to generate liquidity for limited partners. Our pipeline is robust, and our team is deeply engaged, and we will remain disciplined and unbiased on valuation and business quality. In parallel, we'll continue to balance acquisitions with opportunistic buybacks, allocating capital to whichever path drives the best risk-adjusted and long-term cash flow per share compounding. As we turn to your questions, please flip to the final slide, our strategic compounding flywheel. What we do at Roper is simple. We compound cash flow over the long arc of time through a discipline strategy anchored on three things, leading vertical-focused businesses, application-specific, deeply embedded and mission critical. These are durable franchises with highly recurring revenue and organic cash flow growth that can improve over time. Second, we run a decentralized operating model so our teams stay exceptionally close to customers and their workflows so we can consistently compete and win. That customer intimacy is a core competitive advantage and it's also how we win in AI. It isn't a generic overlay. It has to be grounded in a real workflow context, tuned to domain-specific ed cases, and deploy through trusted embedded relationships so our AI delivers measurable value and better customer results. Third, we pair that with disciplined central ed capital deployment, focus on high-quality M&A and opportunistic share repurchases, allocating capital objectively to maximize durable cash flow per share compounding. Niche-leading businesses, decentralized operations close to customers, and disciplined capital deployment. That's our long-term compounding flywheel. We're excited to compete and win and continue delivering long-term and improving cash flow compounding per share. So with that, thank you for your continued interest and support. Let's open it up to your question.

We will now go to our question and answer portion of the call. We request that our callers limit their questions to one main question and one follow-up. If you would like to ask a question, you may do so by pressing the star key followed by the digit 1 on your touchtone telephone if you are using a speakerphone please pick up your handset before pressing the keys to withdraw your question please press star then the digit two again we request that callers limit their questions to one main question and one follow-up your first question comes from brent

field with jeffries your line is now open uh good morning neil um regarding deltech i'm curious if could just give everyone a sense of what you're baking into the 26 guide and how you're protecting against another potential government shutdown. Yeah, go ahead, Jason. Yeah, so good morning,

Ryan. Yeah, I think we are not assuming an improvement this year. You know, the fourth quarter was depressed by the perpetual license revenue, as I talked about. Most of GovCon Enterprise still buys perpetual licenses. So that's what drove our lower organic in AS in the fourth quarter. So we don't think that's going to repeat next year. So we do have a comp benefit, but otherwise we're not really assuming improvement in that market until we see it.

Okay. And on ProCare, Neil, what do you think needs to happen to get that back

meeting expectations? Yeah, I think it's just to go through a little bit of what we talked about in the in the prepared remarks and then add a little bit more to it so hey the business is the leader in the marketplace it is the clear leader we've done a lot of good things there we sort of cleaned up and fixed the payments cost infrastructure and processing capability be fixed and improve the go to market so we're competing and winning the marketplace we're winning a majority of the jump balls versus the primary competitor and so the problem now is just pushed to the right so now we're winning these opportunities and we're We're slow to implement the software, which means we're slow to implement the payments, and that's the next sort of objective in front of the team there. So once we get that done, we feel much better about that. It's a completely fixable problem. It's one of the problems that you don't like to have problems generally, but when you do have ones that are eminently fixable, which this one is, the larger problem would be if we had a competitive situation or something like that, which we do not have.

Great.

You bet.

Your next question comes from Clark Jeffries with Piper Sandler. Your line is now open.

Thank you for taking the question. I wondered if, specifically on the GovCon business, you could maybe give a rank order of the kind of appropriation bills, what would have the most impact or within Deltex exposure, what segments of the government getting those appropriation bills passed would be most significant?

Yeah, so I'll just draw back to the O-Triple-B. And this is, as you know, we're not – Deltek doesn't have direct exposure to the government. It's our customers that are the federal – that have the direct exposure to the government, just to remind everybody. The O-Triple-B is heavy on defense, Department of War, Department of Defense, and DHS funding and spending. Those categories tend to have larger percentage of contractor spend. It could be north of 50% of the whole category. It can be contractor spend, so that's definitely a tailwind. The civilian programs tend to have lower percentage, so it's not necessarily a bad thing for DeltaX customers, but it's certainly better on the current appropriations of the OBBB.

Perfect. And then, you know, the last two years, hovered around $3 billion deployed towards acquisitions. Wondering if you could talk about expectations for how much you might deploy in 26, what scenario might push you towards, you know, a number closer to $4 billion or a number closer to $2 billion? So what are you factoring into, you know, the deployment outlook for 26? Thank you.

As we mentioned, there's about, you know, about $6 billion sort of is what the forward capacity is over the next 12 months. We have the two levers available to us on the capital, the M&A and the buyback. On the M&A side, you know, the thing for us, I mean, I've been here 15 years, Jason's been here 20. You know, when you're building a business that has an M&A lever, we never view the amount of capital in the next 12 months of the budget, or we've got to spend it because we're building a business that's going to own businesses into perpetuity. So you have to buy very high-quality businesses at an appropriate price. And so that discipline guides us. So it's hard to set an expectation that says we're going to get X dollars deployed against the $6 billion, excuse me, in M&A or buyback. but we like having both levers available to us, and we're just going to do what's best objectively to compound cash flow per share at the best rate we can.

I will say that we think this coming into this year, you know, I think the market is ripe for more assets to become available. I mean, we've been very proactive the last couple of years with it in a very muted market. So as I mentioned, I think it's a net positive for us, but we'll just stay disciplined and focused.

Don't mistake anything I'm saying. Like I was just saying, Jason said, The opportunity, the number of deals, the number, the amount of LP pressure on the GPs and private equity just continues to mount. There's going to be, there's an aging portfolio, very high quality assets. The number of those assets that we're, have relationship with and are meeting with management teams and becoming the preferred owner, all that is very, very ripe for opportunity. But we're going to remain, as we always do, disciplined. Finally, on that three years, two and a half or three years, we've really leaned in and built capacity for tuck-ins and bolt-ons. That's a more predictable pace. I think we did seven or maybe eight small tuck-in acquisitions last year. That would be more sort of predictable because it's a lower dollar per transaction, but more of them.

Thank you very much.

Your next question comes from Joseph Vruink with Baird. Your line is now open.

Great. Thank you for taking my questions. On AI, when would you expect to get to the point of quantifying what AI means for Roper at maybe a more precise level? I think it's evident in certain areas already. The Adderant call out, you know, their mid-teens growth, their 10 points above the segment. I would imagine customers want the cloud as part of their AI initiatives. And so there's an inherent uplift and positive correlation between Roper and AI for the legal space. Can you do that more holistically and attribute some of the organic improvement ex-Deltec you're already seeing and say that's directly or indirectly related to AI investment?

Yeah, so I appreciate the question. We spend a fair amount of time talking about that internally. Just a couple guiding principles that we have internally is, one, One, we're not going to AI wash or allocate revenue like other companies have done or We're not going to say X dollars are these, therefore Y dollars of revenue is AI related. So we're not going to AI wash our revenue stream. That said, we do aspire to be able to report a number AI revenue SKU related is X or Y. Unfortunately, if we do that, I mean, we're going to monetize AI in more ways than just AI SKUs. It's going to be cloud uplift. It's going to be in packaging. There's going to be lots of ways that we monetize this. So this is actually, you know, it says simple. It does pretty hard from how we're going to be able to sort of report this where it's credible. At the end of the day, Joe, you highlight the most important thing, which is we believe this is a TAM, meaningful TAM expander for us, which means it should be a growth driver for us. And you'll see it show up initially in bookings and eventually into the recurring or reoccurring base. We see that adder, see it at central reach. We'd expect to see it across several of our businesses starting this year. More broadly, as we sort of write the chapters on Roper, in 2025 the chapter on AI would be how we learned to develop the initial set of products across our software businesses. Essentially, every one of our software businesses either has or is right on the precipice of having AI-related product to deliver to our customers. 26th, I think the chapter is going to be how we commercialize. How do you sell, deploy, drive implementation, and ultimately sort of monetize all of the product. And so that's going to be the journey of learning for us across the portfolio organization. We'll look forward to providing updates on that as we get through the year.

Great. That's helpful. On your approach to guidance this year, I think it's very clear that you're going to let the upside come to you and future changes are going to happen as you see it. Can you maybe put some guardrails in magnitude of what that could ultimately mean? And I'm thinking in the past, you've talked about how your current portfolio could be capable of seven, and in a best case scenario, eight to nine, that's more of a long-term framework within FY26. If things go right and you get some redirection and where the pressures within the portfolio have been, what sort of upside possibility could there be?

Yeah, so the long-term, to first point, the destination, if you will, the longer term, certainly not a 26 comment, the longer-term entitled growth in a portfolio, we still have conviction, is north of 8%. You know, we go company by company about what their entitled realistically achievable growth can be, and so that number, sort of the target destination, has not changed. We are definitely, as you've heard from our commentary, taking a much more appropriate and balanced view for the initial guide here. You know, no improvement at Dell Tech on the government contracting side. No DAT market recovery, actually underwriting a slight decline at Neptune. And so, you know, if you sort of thumb each one of those, I don't want to get into order magnitude of what it could look like, but I would say it definitely tilts more conservative than...

Thank you.

Your next question comes from Dylan Baker with William Blair. Your line is now open.

Hey, gentlemen. I appreciate it. Maybe kind of following up on one of Joe's questions too, I think the Dell Tech Perpetual piece makes sense, but you also called out some softness on non-recurring due to some of those cloud migrations, and maybe that's just kind of rev-rec up front for Rattable. I guess, as you think about kind of AI's opportunity to accelerate this modernization and cloud journey, given kind of the heavy maintenance base you still have there, how do you think about kind of that tradeoff in those long-term economics? It seems favorable. I think it's kind of evident in the subscription bookings in that low double-digit framework, but maybe kind of walk through some of the nuance between those as well, too, if you can.

Yeah, I certainly appreciate the question. I think, you know, we've seen some of this just in our AS segment over the last years, you know, non-recurring revenue has been sort of flattish up a little bit here and there because, you know, some of our businesses have moved more to the cloud, be it Adderant or in recent years PowerPlan. And we see that at Dell Tech is going to be a significant opportunity. So that's a part of our thinking in 26. Dell Tech's really put a lot of AI functionality into their cloud product. And so some of these large government contract customers are contemplating going to the cloud, and they have a big push for that. So you're right. That will obviously increase customer lifetime value, but it will have a more muted impact in year. So we thought through a little bit of those dynamics this year. And I think that's probably the biggest area where we will see that because a lot of the rest of our businesses are sort of on their cloud journey. But they will continue, to your point, to include only AI features in the cloud, and so that will just increase adoption as we go forward.

Yeah, and just to add to what Jason said, you know, we don't expect a pronounced J-curve because we have a very large install base that's on-premise. That's going to lift. That is lifting and shifting at 2 to 3x recurring. So the J-curve is less pronounced because you're converting an existing recurring base at a higher level, and as you sort of, if you will, trade or convert net new perpetual to recurring. So they offset one another, and we think we have that harnessed in our guidance.

Okay, great. And then maybe, Neil, for you two, on the kind of topic between platform and Volt-On M&A, I guess, could you kind of give us a sense if you see any opportunity, maybe as a part of AI, maybe not, but given kind of the current backdrop to accelerate kind of the initiatives in one effort? I know we've built out kind of the bolt-on team. There's a little bit more visibility into those platform valuations maybe have come down to a particular level as well. But just kind of think about kind of the mix between capital deployments, between bolt-on and platform if you can.

Always hard to predict mix. I can tell you that if there is a – generally speaking, if there's a rank order, bolt-ons or tuck-ins are going to be first order because they are advancing sort of the organic growth and strategic direction of one of our platform businesses. At the same time, you always have a little bit of back-office G&A synergy, which is able to sort of buy down the initial purchase price pretty quickly, and then you get to the growth orientation. So that continues and will always be a focus of ours. What we see, by the way, on that front is it takes a little bit of time as we've added the resources. They get to know the company. They build a relationship with our companies. They build a relationship with sponsors and targets and founders. I think something like 60% of our pipeline for Boltons is either proprietary or founder-driven. That's a completely new motion for us. That would not have been the case three years ago. So I think that bodes well, but these things do take time to matriculate through the system and mature to where they can become actionable. On the platform side, the number of opportunities and the quality of assets is very interesting. The question on the table is going to be what happens relative to valuation. We've never been a short-term, next 12-month multiple arbitrageur, so we're not going to do that. But we definitely have to sort of – we have to look at buybacks versus bolt-ons versus platforms on what is the best long-term compounding in terms of value creation opportunities for us.

Great. Thank you, guys.

Your next question comes from Brad Reback with Spiefel. Your line is now open.

Great. Thanks very much. I know you guys gave the software bookings for the entire year. Can you give us what it was in 4Q?

Yeah, it was up high single digits, and that is with Deltec being down, you know, in the low double-digit area. Actually, Deltec's SaaS was strong, but like I mentioned, Perpetual was down meaningfully. Yeah, the rest of the portfolio performed pretty well. Vertifor had a strong quarter off of a really tough comp last year, so they're continuing to just have success in 2025, and that should be good for them for 26. And then, as I mentioned last quarter, health care has been really strong for us, and that was the same in the fourth quarter.

Great. Thanks. Neil, this is the second quarter in a row you've missed expectations, and you're guiding to a back half acceleration in 26. So maybe take a moment and help us understand where the incremental conservatism is in the 26 guide versus the last couple of quarters. Thank you.

So we did say, and we're certainly disappointed with the last couple quarters, but we did say this time last quarter we had a wider range of outcome, fan of outcome, especially because of the uncertainty at Deltec. And so while disappointing, we try to be sort of very straightforward in that regard. I think for this year, I said it before, I'll say it again, when you look at where we're exiting this year, look at 25 compared to 26, and you just go, and let me even back up. When you look at 25, the initial guide versus where we ended up, it really reconciles to three things we've talked about. It's Deltec because of GovCon, it's Neptune because of the dynamics we talked about, and it's ProCare. That almost fully reconciles the difference between the initial guide and where we ended up. You then have that in mind. You carry it forward. We're assuming in 2026 there's no improvement in Deltec. There is no acceleration at DAT. there's actually, we're underwriting a modest decline at Neptune versus 25, and the only thing that sort of, then you get the accretion to organic growth from subsplash and centuries that turn organic this year, and then we have this easing second half, sort of non-recurring. So, optically, it looks like an acceleration through the year, but when you look at the pieces, it's actually pretty steady, save for the things that we just said.

But, yeah, just to remind you, all the central reach and subsplash becomes organic second half, so it's got to create some of that ramp. And I would just call out, too, just, again, just a small comp, a couple of comp issues. Foundry gets a little bit better this year, and I know it's small dollars, but in network it matters. And then we had the first quarter of 25, a pretty depressed network number because we were comping against a bigger number in 24, so that comp goes away. So there's some math, too, you know, just going from 25 to 26. You bet.

Your next question comes from Terry Tillman with Truist Securities. Your line is now open.

Hey, Neil, Jason, and Zach, thanks for taking my questions. The first one is going to be on Dell Tech. The second one, the follow-up is going to be on DAT. But on Dell Tech, and I know these months or these part of the quarters are probably less seasonally strong, But did you actually see any improvement in order volumes for Perpetual in December or January? And also with Deltec, are the effects of Doge kind of lessening, or is that still impactful? And then that follow-up.

Yeah, so, Terry, this is Jason. I think the, you know, December is always stronger than the other months, and that's just the natural kind of inertia of how orders flow in Deltec. I will say we had two large government contractor deals that slipped. So it was like right at the end. And so we think they'll both land in the first half of next year, but we've also sort of hedged that just in case. So usually we get some big deals, and they were right at the finish line, and they didn't close, but they're still in the queue, and we still think we're going to close the rest of this year. Yeah, exactly.

terry as well just to add the while the signatures on paper are slower because of the shutdown the commercial activity the pipeline build has actually been encouraging it's been encouraging throughout it's because you know all the this is a environment unfortunately that our customers live in and they sort of they're they're they're subject to the vagarities of what's happening in the government but they have a business to run and they have contracts they're likely going to get awarded and they have to sort of manage sort of our software in that regard and so there's no competitive issue here at all let's take I mean it hasn't been asked but zero competitive issue here it's just deals that are building that are pushed to the right a little bit given the uncertainty doge I would say is to your question is is lingering impact but it's not the topic that anybody's talking about the way it was in the first third the first half of the year got it

I appreciate that. And just the follow-up is on DAT. Do you see ARPU lift continuing to play out through the year, and are you on track for that autonomous kind of load-matching technology innovation to play out in 27?

Yeah, so we do expect ARPU to continue improving and growing in 2026. There's a couple reasons for that. One is you just have like-for-like pricing opportunity. That will sort of get cascaded in during the year as it normally does. But the second reason is we have more value to sort of sell to both sides of the network. And so you're going to get, you know, in the past it was just load board. So it was load board in pricing. Now it's load board in automation. It's load board in data. It's load board in a number of things on both the carrier and the broker side. In terms of the automated matching, it's early days, but we're encouraged by the progress. Unambiguously, the technology does the job. Let's just be clear. It is the ability for a broker to tender to the DAT1 platform and automatically match a load and have a carrier pick it up and complete the commerce with payment sort of overlay across all that. It works, and it's working every day in the marketplace. The number one focus of that business is to build both sides of a network. That starts on the broker side by getting native integrations with their TMS systems. And you have seen and will continue to see during 2026 a cascade of announcements about the various TMSs that we're integrating with. That allows the brokering and the tendering to our platform to be native and to work for the brokers. And then we continue to build the carrier side of the network. It's got to be a high-trust, no-fraud environment. That's part of the core technology that we have and we're integrating. So early days, but we like the tendering percentage. You like the completion percentages. We like the factoring percentages, and we'll want to see that business scale as Jason and Shannon and Satish, the team at DAT, look at this on a monthly basis.

Thank you.

Your next question comes from Ken Wong with Oppenheimer. Your line is now open.

Fantastic. Thanks for taking my question. You guys are guiding the 5% to 6% organic for 26. You know, as we think about, you know, 1Q first half, you know, with a lot of faster growth businesses coming in second half 4Q and no Dell Tech tailwinds, like, is there the possibility that you could be below that 5% low end? Any context there so we could properly level set our numbers?

Yeah, no, I don't think so. We're kind of thinking for AS we'll be sort of in the mid-single-digit range with non-recurring being flash and the recurring reoccurring being like mid-single-digit plus, which is consistent with Q4 levels. I mean, we're not going to have the same non-recurring decline like we did in the fourth quarter. And then, as you mentioned, the second half gets better on the central reach turning organic, and we've got the non-recurring, as I just mentioned, we get a better comp in the fourth quarter. So not a lot of, I would just say, not a lot of go-get in that second half number. And then on NS, you know, I think sort of the, you know, recurring revenue will be just sort of continue to be mid-central digit plus out of the gate. And then as we go throughout the year, sub-slash actually comes in in the fourth quarter, so that'll be helpful. And so I think that's sort of how it sets up. Nothing outside of that to call out.

Got it. Really appreciate the color there. And then perhaps just any additional context you could provide in terms of what the new business activity pipeline conversion look like versus maybe the renewal business, you know, turn, expansion, contraction, and any details would be helpful.

Ken, is that a broad portfolio question or specific to a business? Broad, broad question?

Yeah, just like a – yeah, correct. It's more of a broad kind of software selling kind of trend that you guys are noticing across the group.

Yeah, fair enough. I understand the question. Yeah, I would say we're broadly encouraged by what we saw in the finishing of the year. It was the bookings and retention statistics were quite good. you know, as you know, our enterprise, our gross retentions in the mid-90s for our enterprise businesses, that's steady to ticked up a little bit during 2025. And then in terms of the bookings activity, hey, you know, while there's a little, we expect there to be volatility quarter to quarter, low double digit bookings growth in the year, and being pretty broad based with sort of weakness at Deltec, I think is all you need to see. You know, we, and so it's been, it's been pretty good.

Fantastic. Thanks a lot, guys.

Your next question comes from George Kurosawa with Citi. Your line is now open.

Great. Thanks for taking the questions. You guys brought in some new AI leadership, Shane and Edward. We'd love to hear a little bit about the team they're building out, what you have them focused on, and if there's any kind of low-hanging fruit that, you know, learnings they can apply across the portfolio.

Yeah, so we're excited to have Shane and Eddie join and the team they're starting to build out. I'll tell you three things they're generally focused on. First is it's all in pursuit of accelerating the top-line goals, accelerating sort of our pace of AI product development and ultimately, you know, shipping, selling, monetization. That's where the focus is. So three subcomponents of that. It's coaching and teaching, right? Our businesses did a meaningfully above-average, above-expectation job in 2025, late 24 or 25, learning, making mistakes, learning, making mistakes, learning around AI development, what works, what doesn't, and getting products into the hands of customers. That was great to see. But some of these, a lot of these AI tasks are quite complicated, complex from a technical point of view, and also unlike regular way software development, there's some art in this AI development. And so Shane and Eddie and the team they're bringing really bring just a history. These are people that studied machine learning and AI in university quite a while ago and spent their entire careers. They've seen a lot of pattern recognitions. They're going to coach and teach our leadership teams, our technical leaders, our product teams on all things AI, ML related. Number two, they are going to build an AI sort of development strike team or accelerator team to where when there are, you know, a company might have more than it can do from its internal resources and we'll supplement those teams to accelerate in some pockets. And then third, there is in their first, you know, quarter with the business and they met with most of our software businesses, there is clear opportunity for some reuse inside the portfolio, certain AI-based sort of capabilities we can sort of produce and sort of have, if a Roper open source model where we can reuse some components and componentry. And so they're going to focus there. In early days, it's been just our culture. Our teams have really engaged them, and they're just looking forward to scaling the team and getting to the work.

Okay, great. I did also want to touch on the margin side. You know, core gross margins were up over a point in the quarter. Maybe just talk through the tailwinds there. How should we think about any sustainability to improvements?

Yeah, I mean, I think we've always said in our long-term incremental margins at the EBITDA lines, around 45% did a little bit better this year. I think as we go into next year, you know, I think AS might be up a little bit. Network's going to be down just because we've got the full year of Convoy and our ALCO rolling through, and so that'll accrete up over time, but a little bit of a drag in 26. And then, you know, I think our TEP segment will be, for the full year, sort of flat-ish. We've got more consumables rolling through next year than normal, which has a little bit lower margin, and that's really more pronounced in the first half, so maybe down a little bit in TEP in the first half, and then it'll improve throughout the year.

Your next question comes from Josh Tilton with Wolf Research. Your line is now open.

Hey, guys. Thanks for sneaking me in here. And maybe just first kind of a simple high-level one on the guide for next year. I appreciate all the color that you gave on Dell Tech and DAT and Neptune. But if you were to take those three businesses aside and treat the rest of the organic business as one, like what would be the one-line color on the rest of the organic business? Does the guidance assume that everything X, DAT, Neptune, and Dell Tech gets better, stays the same, gets worse? like how would you characterize what the rest of the business has to do that's baked into the

guidance does that make sense i would say broadly and you know it's it gets a little when you think about we finished around 5.4 percent the deals are a tailwind foundry does get a little bit better uh and so you know maybe 10 basis points or so to the to the enterprise um and then really the the swing factors uh i talked about the confident s and q1 of 25 it doesn't repeat um then you just talk about like the swing factors it's all within neptune um and that's what our low low single digit to mid single digit um guy guide and that's what kind of bridges you to the from the and then

maybe just a quick follow-up uh i understand that some businesses go organic in the second half um is there any i don't conservatism is the right word but is there any conservatism is there any learnings that you saw following uh like kind of the what that the the little hiccups that you saw on Procore that you're kind of applying or embedding or assuming will happen as some of these inorganic businesses convert to organic in the second half of next year?

Yeah, Josh, Neil, I'll take that one. So the short answer is, heck yes, there's a lot of learning from our ProCare governance, what worked, what didn't work, and how we're governing both Subsplash and Century Reach. And we can spend more time talking about offline, but in essence, When we see a small variance in a monthly reporting package relative to one of the key levers in value curation plan, in ProCare, we observed that variance for a longer time before we decided to take action to correct it. Now, we immediately jump to a corrective action and countermeasure, and we don't let small variances turn into large variances. And as a result, you have central read stats ahead of the underwrite model and subsplashes on the underwrite model. for the outlooks for those businesses. We can get in much more detail when we have more time offline, but that's the essence of it.

And I would just say that for Central Region Size Flash, feel good about the contribution in the second half, the path that we're on, bookings momentum, the recurring, the gross retention, just the path to get to that accretion in the second half. We feel very good about that.

Super helpful.

Your next question comes from Dean Dre with RMAC Capital Markets. Your line is now open. Thank you.

Good morning, everyone.

Good morning, Dean.

Hey, this has come up several times today about the M&A bias and looking for durable cash flow compounding. I'd be interested in hearing your thoughts about how do you rank looking at absolute dislocations in some asset prices today versus what you perceive as where there might be a wider moat against AI in these assets. So how are you weighing those?

I'm going to reframe, Dean, the question to make sure that we answer the right question, if not, if you correct us. And so the question is, you know, looking at both private and public companies that have evaluation dislocation, are we looking at that? And then how does the AI moat influence our thinking? Can you just reframe that? I want to make sure we answer the right question.

Yes. So, you know, I wasn't specifically talking about public valuations, but that would be great to hear that as well, because you've done those in the past, versus thinking more strategically about where there might be wider moats.

Yeah, so I agree we won't ding you on one of your questions if, again, I answer the wrong question. We're always, for the long history of Roper, we're always investing in these vertical market application-specific businesses with deep moats, right? And so that does not change. We believe in the AI world, you know, the modes where you're intimate with the customer, you have unique and proprietary data, you're embedded in high-frequency workflows, where Onsum is easier to implement, easier to monetize, and ultimately translates to the automation of tasks, which is this TAM expansion. We really like and are leaning in. We're seeing it playing across our 21 software business today, so we'll continue to lean into that thesis from a capital employment point of view.

That's really helpful. That's what I was looking for there. And just a quick one on Neptune. You know, we've talked about the order delays. Is there – how much of an impact is the spike in copper played? Is there a sticker shock? Does that need to be kind of rippled through the market to reprice? It's just, you know, what's the impact there?

I would say that what we talked about last quarter, largely in the bucket of tariffs, but it's tariffs, it's copper pricing, generally the shock to the cost structure of a water meter when we started in really July of last year pushing a surcharge to accommodate for that increase in cost of goods, it was definitely a shock in the system in Q3, and it really evaded during Q4. So I think our base case assumption is that is really in the rearview mirror and set to the side. And moving forward, it's just about the normalization of volumes in the market sort of on the very tail end of the COVID spike in volumes, and now we're on the backside of that spike into a more normalizing range of volumes. Thank you.

Your next question comes from Joe Giordano with TD Cowan. Your line is now open.

Hey, guys. Hey, I'm just curious how you're now weighing, like, in terms of capital deployment, like, different, like, timing horizons here, right? Like, you have stock today is, I don't know, 15% below the average price of the buyback in the fourth quarter. You're trading at, like, almost a high single-digit free cash flow yield now. and it's a portfolio that you're intimately close to relative to something that you might buy that drives top line that is something that inherently has more risk because you don't know it as well. How are you weighing something that – like the certainty of what you know versus the risk-reward of something you don't know at the price that you're paying?

So I'll take a first pass of that. I'm sure Jason will have some color he may want to add. So, again, just to – we've said it. It's on repeat. We'll say it again. And the objective of M&A versus buybacks, sort of levers available to us, is what's the best risk-adjusted path to long-term cash flow pressure compounding, period, full stop. We're totally objective and dispassionate about the allocation of the two. There's $6 billion available, so a big sort of large amount of capacity. On the buyback, the valuation dislocation is just silly, and so we leaned into it in Q4, and we find it, obviously, more attractive today. and it's a great opportunity to drive a long-term cash flow company that way. On top of that, we're very excited and confident about our future, right? I mean, the growth, the eye, the leadership, the strategy, the execution, prowess, I mean, all of it feels very, very good to us and what we see internally. At the same time, you know, M&A is a real lever. I mean, there's not – somewhat to my surprise, you know, we introduced the buyback last quarter. there's commentary about, oh my gosh, is the M&A thesis not intact? That is one of those absurd things I've heard in my 15 years at Roper. We are a preferred buyer of vertical market software leaders. We're absolutely preferred from a management point of view. We're preferred from a seller point of view. The pipeline's enormous. The LP pressure is legit. The number of assets in private equity portfolio have to get liquidity at levels we've not seen. So that thesis just needs to be eliminated from the talk track because it's not real and so for us it's balancing those two you know buybacks are great in the short run M&A generally is going to beat in the long run and we like having to balance between the two options in front of us yeah I would just add that they're

around the confidence and we've had just these unusual things happen with three of our businesses but like the underlying quality is getting better so there's that and I would just say the AI or you know, we have 21 different businesses working through AI right now. We had our annual operating plan reviews and came out with an increased level of conviction that we're going to win relative to AI. We're just, we're so, our customer intimacy is really proving to be a competitive advantage and we've got the tools and resources to get after the AI just as fast as anyone else. So we feel really good about that. And so buying ourselves in that scenario where there's this dislocation makes all the sense in the world, but it's also going to be an incredibly active year on M&A, so we're just really, we've just got an abundance of opportunity in front of us this

year. Now that you brought in this AI talent on the Accelerator team, were there any instances where, like negative instances where these guys coming in as experts kind of identified that maybe parts of your business where you thought you had more of an opportunity is going to be harder to drive? I'm sure they're identifying places that you have opportunities, but was there any on the negative side where something was like, well, maybe this isn't as attractive as I thought

in a particular part of the company? Yeah, so I would say on balance, the opportunity market-wise, technical-wise, the prowess of the teams that we have in place, but we also, and we had them sort of do a short readout to our board last week, and then there was a few bullet points of things that that were on the constructive ledger. None of it was market opportunity, lack of market opportunity or lack of opportunity to win. Again, these are more technical resources. So they might not have, like, the best, you know, acumen in, like, these vertical market spaces to judge that anyway. But it was like, hey, as you'd expect, maybe there's – we definitely need to improve the quantity of AI talent in the businesses. I mean, that's a little bit of why we're adding the central team to sort of spark some acceleration. And it's just going to take some time because we've got to build these people. You know, it's not something that we're going to be able to hire en masse. We've got to build these people. And we did a good job last year. We'll continue to scale that and compound the learning on that this year. Yeah, I think the ideas have been well-received.

They understand the specificity of what we're trying to solve at the individual sort of vertical level. And they view that as very unique, right, coming from a horizontal player. So I think they see the opportunity just like our businesses do.

Thank you, guys.

This concludes our question and answer session. We will now return back to Zach Moxley for any closing remarks.

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

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.