Awesome. So let's get started. Thank you everyone for joining us this morning. Kicking off day three of the Morris Stanley TMT conference for me. Very pleased to be hosting for Roper Technologies, Neil Hunt, President and CEO, and Jason Conley, EVP and CFO. So gentlemen, thank you so much for joining. So maybe just as sort of to open up the conversation for some people in the room who may be not as familiar with Roper Technologies, A little bit of a kind of 101. This is a little bit of a different story from a lot of the software companies you talk to. What is the Roper story all about?
Yeah, thanks for having us. It's always great to be here, Keith. So, yeah, those that are newer to our story, Roper is this year roughly $8.5 billion business, 40% even on margins, 30-plus percent free cash flow margins, and we're a durable, steady vertical market software compounder. I think that's what's unique about sort of our model versus others. So really a dual threat offense, sort of steady organic cash flow generation, and then we take all the cash flow generation and deploy it offensively. Most of the time, historically through M&A, more recently through buyback, when you put it together, sort of we think about how durably and consistently can we compound our free cash flow per share. That's been in the mid-teens area, and we have the strategies and operational rigor in place to try to push that to be in the high-teens area. In terms of the portfolio construct itself, it's vertical markets, right? So it's all of our businesses are leaders in small markets. We're super vertical-oriented, application-specific, high retention, high gross margins, high cash flow dynamics attached. We'll get into all that, but that's a flyby of Roper, durable, compounding, a vertical market business.
You guys often talk about edge markets as kind of where you're looking for those either market leaders or emerging market leaders. How do you define edge market? And within that, what are the key kind of KPIs? What are the key attributes you're looking for in terms of an emerging leader or a leader in that market?
So just a double click on the high level. So we love owning businesses that are leaders in small markets. So small market, we mean small. Like the largest TAM that we have in the portfolio of 29 businesses is about $4 billion plus or minus. Like a lot of our TAMs are a billion plus or minus. So that is the first thing is it's a very small TAM. So these are TAM like software for early childhood education centers, software for autism therapy clinics, software for large law firms, software for tax accounting for publicly owned utilities. I mean, these are niches within niches and very, very sort of specialized. And we like these small markets for two reasons. One is they are protective. So very rarely do we have a new entrance because the size of the prize is quite small and they're well served by us. But also, I think more importantly, it means we compete on this notion of customer intimacy. Like we are just ingrained in the operations of what our customer does. Across the totality of the portfolio, our customers can't do what they do without us, right? So we are sort of the backbone of their business, system of record or whatever network that they operate within. So that's what we mean, niche and sort of edge markets. That's what it is, small markets where we have a clear leadership position.
I'm going to skip around. And question, Liz, because I think that brings up a really interesting point. And let's just get straight into what has been sort of the major debate point of the TMT confidence, really, within the software industry for the last two years, is how insulated certain markets are or how well-positioned certain markets are for AI. So when you're talking about these smaller markets, it feels more protected. Do you guys see that as a more insulated kind of market from an emerging competition from a large language model lab? So that's the basic question.
So our empirical evidence to date is absolutely, right? So, again, we have 29 businesses in the portfolio, 21 are vertical market software businesses. the balance are sort of application-specific product businesses. So real to the 21, we're not aware of a model company or an AI-native startup that's attacking the core of what we do. I think there's logic behind that, by the way, which is if you're an investor and you're starting a company, do you want to really sort of attack, if you will, a system of record and a billion-dollar TAM that's well-served? Your rate of growth is going to be sort of rate-limited by dislodging a strong incumbent that has all the incumbent advantages. And so we haven't seen any of that across the portfolio in any capacity. So it proves to be quite insular in that regard. I think more importantly, though, and I'm sure in this reading, your recap notes for the past couple of days, I don't think what we're about to say is unique from what other companies are seeing. Incumbency has real tangible advantages as we're trying to develop AI tools at whatever term you want to use, the agentic layer, the task augmentation layer. right so at the highest level i've said this for a couple years we've said this for a couple years it's a combination of two things and everybody focuses on the first one which is like do you have the data the knowledge graph the context to sort of take a sort of a predictive model make it deterministic because that's what has to happen when you're augmenting replacing work but i think what also is for often forgotten about is you have to know where to point that capability to and what problem to solve and these are like very esoteric quote-unquote boring tasks that are repetitive but it's truly like magic to our customers like how do you automate account reconciliations that take 17 minutes into a minute or how do you auto verify order entry for pharmaceuticals which is done by a pharmacist today a high dollar pharmacist or how do you how do you take 10 phone calls out of matching a freight load in the spot market and do it with no calls and so these are like it's truly magic but you have to have the capability the knowledge, the data, the context, but the problem to point it to. And in these little niches that we sort of tend to own, and that we're the number one player again in each of them, that's the magic of what's happening, right? So lots of opportunity there.
And back to deterministic, I mean, there's a regulatory compliance overlay in almost all of our vertical market businesses, and that's very hard to replicate. That's a year, decades and decades of getting compliance. So our customers don't want to violate, you know, sort of violate any sort of regulatory hurdles, and it's harder to get in. It just increases our mode.
Yeah. And then that was exactly what kind of triggered me to jump down to AI is when you're talking about intimately knowing your customers, software is all about solving your customers' problems and solving the sort of the business problems and making those businesses more efficiently. And you're right. Everybody just focuses on the data. And there's a little bit of inconsistency in that argument because ultimately it's the customer's data, right? You're managing it for them. You have visibility into it. But what you have is that domain expertise. You understand these domains. And from my perspective, Genre of AI, the real opportunity is not to displace existing transactional systems. It's to automate workflows around those systems. And you need to know the problems to be automated. And you need to know the business process to be automated. So the question in all of that is, I like it that you think about the world in the same way I do. But how do you push that down into this distributed portfolio of companies?
Yeah, so very important context setting. So let me just take a minute to sort of talk about our org structure and why we operate the way we do. And then in this regard, I'll say it's better to be sort of lucky than good in the context of what we have to do with AI and the org structure. So because of the portfolio we have, like I mentioned, we're the largest player across all 29 of our markets, which means this is over a long arc of time. This has been since, you know, I've been at the company 15 years, Jason, 20. We've been in the modern-day Roper for, you know, going on 25 years. And so all of our competitors, by definition, are smaller, which means probably they're generally a little bit more nimble. So our entire organizational structure from the dawn of the modern-day Roper has been super decentralized, right, to optimize on two things, a speed coefficient and proximity to customer, right? So 20,000 people in the company, 130 in the corporate center. So every other resource in the organization is closest to the customer, organized around speed. Like that's been the design principle for 25 years. So that's why I say it's better to be lucky than good. If we happen to have been organized for like cost of development or more centralized resources and not around customer sensitivity and speed based on our heritage, I think we'd have a real problem in the AI era, but we're not. And so as soon as the sort of light bulb goes on inside of our organizations, then this speed coefficient sort of builds on itself. And so going on now two years ago, we said to our organization, all 29 of our leaders, like this AI thing is not a trendy paradigm. It's the next tech wave. We have to lean into it. And we've had each business now a year and a half ago re-underrate their entire business model to be AI native to get the thinking going. We've had them sort of change the way they do development. So smaller teams closer to the customer, you know, collapsing product and development, sort of minimizing design, making that part of product, all the things that you do across all 21 of the software businesses. And so we really sort of have this increasing sort of flywheel speed happening at the point of impact. Now, what we also identified is this is in the last maybe year, and we just started hiring the team about six months ago. We're hiring sort of an AI accelerator tech team at the center. We've been small to start, 20 or so people. We're fortunate enough to have two exceptional leaders come from another large application software business to sort of lead the team for us. And what we found is as our businesses were experimenting and learning how to develop an AI, it's a very different development pattern pathway than traditional development, where traditionally you can have sort of an architecture and sort of deterministically work your way through. There's a little bit of art in AI development. And so we very much wanted to sort of have a team that has sort of, you know, grew up in machine learning, trained in machine learning, trained in AI, had done this at scale in the application layer. And so their mandate in the organization is to accelerate the technical teachings to speed things along even further, but also have a build team. Like there are going to be a small sort of, if you will, quote, unquote, 10X build team that partners with our companies. And then finally, there's going to be a shared Roper repo. You know, when you have common functions, like whether it is document retrieval or document sort of parsing, that's a common AI sort of runtime routine. There will be a central repo of that, so we don't have to multiply that times 21 times across the organization. So sort of this sort of perfect storm of our legacy close to customer, have speed built into the organization, and accelerating it with a center team.
Right. It almost reminds me of a lot of companies that we're talking to have really brought forward the concept of four deployed engineers, right? You need people who are really skilled in the AI to be able to help the businesses, right? And usually it's a customer concept to understand how to utilize these technologies that really don't work very much in the same way that traditional technologies work. You guys do it within your portfolio companies. You guys have talked about approximately 25 Gen AI initiatives underway within the broader organization. Any early wins, any initiatives that are seeing significant or early traction? And on the other side of the equation, where do you guys see the white space? What looks most interesting in terms of new areas to go out and automate?
So when I talked about that, we talked about those 25. That was probably six months ago. It was the culmination of the early product development work we've done in the organization. So this is product-oriented, playing offense, sort of monetizing in the tech stack. That number is basically not discernible now. It explodes, so we're not going to talk of the 25 and then 40 to 50 to 100, but it's much more than that now. Going back to a couple years ago, we made the early decision that between using AI to play offense and put it into product stack and grow and expand versus use AI for productivity, we're tilting demonstrably more towards playing offense. And so everything that we've talked about today has been about that. So that's where the principal amount of our focus is. Obviously, we're working like every company on coding sort of efficiency and customer service and sales. But we have 40% margins. Like we're not about, we will improve margins over time, take that productivity, put it into the product roadmap. But the principal, our focus is playing offense. So a couple examples where we've seen real success there, I'll give you maybe two or three if it's okay to make it sort of tangible. I'd start with the best story, which is our autism therapy business is called Central Reach. This is the backbone that autism therapists sort of run their practice on. To set the context here, there's something like 800 million therapy hours demanded a year in the U.S. and 300 million therapy hours supplied. So a huge supply, demand, and balance, wait lists, sort of people, these families waiting for access to care. And also inside of the care, the people that deliver the care, they turn over 85% a year. So it's a very difficult problem. And so the tools, the AI tools that Central Reach has developed and deployed into the market is a scheduling tool. It's a very complicated schedule. When you have a demand and your people are turning over all the time, you can't have a blank in schedule. By the way, these learners are in between two and eight hours a day for six months. So if you have one person leaving, it's a huge block in the schedule, and it's a problem. Also, all the note-taking and sort of medical records and then all the revenue cycle back in, the billing and collections. The punchline of this is the business has increased its growth rate from the low 20s to the high 20s. Its win rate in the second half of last year from the primary competitor went from 75% to 100%. And fortunately for our customers, the attrition rate for the therapist has gone from 85% down to 40% because it takes a lot of the bad part of the job out. So it's like this win-win-win sort of in terms of customer, the market, the learners, the families, and sort of our business. Another example I would share is earlier days, but we're very excited about it. We have a business that is the technology and the network that organizes the spot freight market in the U.S. So if you're a broker or a trucker, you subscribe to our network to find out where your load is. And today, traditionally, it takes about 10 phone calls for a load to be brokered. Are you available? Can you pick it up at three? What do you do at this rate? Oh, I need you there at four. Can you deliver it by Tuesday at three? They take those phone calls. And on average, that's about $100 or $200 of labor to broker a load at the broker level. We now have in place the technology to do that without a human in the loop. We charge a fraction of that cost of the labor cost, and that's happening in the real world. It's a magic button that sort of takes that inefficient sort of human connectivity out of the loop to sort of accelerate the brokerage, the brokering of loads, which we think, by the way, it's great for a broker, it's great for a trucker, but it actually makes the whole spot market a more fluid market. So we actually think there could be more volume that actually comes into the spot market. The spot market won't be the market of last resort. It could be the market of sort of middle resort because it's a more fluid, transactionally sort of dynamic market because now this by the way is very expensive technology it's a lot of machine learning it has to be absolutely deterministic you have to have the volume of rate data because part of this is how do you price a lane we have happen to have in our network because of the scale of it like seven extra relative market share to our largest competitor we know what the rates are per lane per day by truck type and if you don't have that you can't do the match right so it's this combination of technology and data i'm gonna give you other examples, but those are two that
we're quite excited about. I think what's exciting is the companies that are farthest along in AI are growing the fastest in our portfolio. So just to give you a sense of, like, we have this incumbency right to win, and so it gets our other businesses really excited when they see that, and it's fostered a lot of learning across the portfolio. Got it.
Have you guys had to adjust the pricing models? There's another big debate in software is kind of what happens with pricing models, but have you guys come up with new pricing models, more outcome-based, more consumptive base to align to the newer technologies?
I mean, we're certainly doing a lot of voice of the customer work on this right now and in some of our businesses and just looking at where the puck is going and how you should be thinking, especially in the businesses where we have the highest right to sort of win that game and increase the productivity of our customers where you could see degradation over time. And so I think what we're seeing is that, you know, there's just pointing it at another direction. Like maybe it's number of customers, maybe it's number of whatever the driver is of that business, maybe number of policies, that sort of thing. And our voice of the customer work so far has said that as long as we are, you know, capturing value for them, we get our fair share of that value. Our position on this, by the way, is to get the customers, you know, really excited about the product and really using the product before we sort of capture our share of value again, just to continue to protect our mode and then play the long game in terms of AI monetization.
The only thing I'd add on top of that, certainly on the system of work or agentic layer, our clients are telling us very clearly, like, yes, we'll pay you for the value, but we're not that particular excited about an open-ended pay-as-you-go. So it's probably going to be some sort of subscription with overage or something, so they have some certainty of what they're going to spend. Some tears, exactly.
I think it's a part of the equation. A lot of investors have over-rotated on the idea that everything needs to move to a consumption model. Because when you talk to customers, customers don't love – They don't want to – Because they look at it as a variable cost model. They'd much rather have certainty in terms of how their budgets work. And also enable them to get leverage on the technology.
And our current cost as a percent of their revenue on average for enterprise software businesses is about 50 to 100 basis points. We're not a huge part of their cost part today. So we have latitude if we're demonstrating value to capture that value over time in a fixed way if it turns out that way.
And just to double-click or just to round out the answer on the subscription plus, we are fully confident we'll be able to capture the power users that are just driving token consumption. We're very comfortable with the margin profile of the subscription and then sort of have like an old-school cell phone plan. You get this many units of work, and if you go over, then you're going to pay. But there's some predictability for the customer. Got it. Got it.
I want to switch gears and talk about sort of recent results and how the company has been operating. um we've been having this conversation for a couple years running now and i know the the center of the roper story is consistency in results consistency in sort of the yields that you guys are able to bring to the marketplace so let's talk about 2025 revenue growth came in at 12 percent uh 7.9 billion dollars in revenues adjusted ebitda grew 11 percent uh to 3.14 billion dollars can you talk us through what worked well in 2025 and maybe what are some of the areas for improvement into 2026
Yeah, I can cover that. So, you know, I think as we, you know, obviously had some great business building in the year, but our growth wasn't really where we thought it was going to be at the beginning of the year. And there's a few reasons behind that. One is Dell Tech. It's our biggest business. It's exposed to government contractors. And that, as you know, when Doge hit and then there was nobody to deal with at the agencies, with our customers not being able to talk to anybody at the agencies, and then the shutdown, that business was severely impacted in 2025. So, you know, you look at a business that has been a steady mid-single-digit-plus grower, and it was in the low single digits in 2025. So a big part of our business and a big segment. And then, you know, so if you look at our application software segment, it actually organic revenue improved 70 basis points year over year if you sort of exclude that. Of course, you've got to own all of Roper, but just to give you some context of the impact of that, ProCare was a little off to a lower start. We'll talk about that a little bit later. I think then we'll touch on that. That's a business we acquired a couple years ago, but we feel confident in the ability to inflect the growth rate there. And then Neptune, which is in our TEP segment, our product segment, second half just impacted by tariffs and just skyrocketing input costs. And so we had to sort of process that with our customers in the second half of last year. And so, again, we own it. We know we're going to do better going forward, but just a lot of things happened last year. As we look forward to 2026, we're guiding organic growth 5% to 6%. Taking a view that, you know, at least coming out of the gate, things aren't going to get demonstrably better. But we will have, like an application software, we've got a mid-single-digit plus. We're going to have a better comp just on Neptune alone, or not on Neptune, on Dell Tech alone. So we're not expecting a lot of improvement, just a little bit better comp there. And importantly, our central reach business becomes organic in the second half, so that will add 80 basis points or so to that segment. Network software will be mid-single-digit plus. Feel very good about that. That's just our foundry business, which was dealing with writers and actor strikes to media and entertainment. That will get better this year. And then our subsplash business will also become organic in the fourth quarter. And then our tap segment, that's sort of a little bit wider range of outcomes as we sit today. We have guided low to mid-single digits with the first half being a little bit lower. We have Neptune down for the year, but we'll see how that plays out. Neptune, they're a water meter business, and we're waiting to see when the COVID super cycle sort of normalizes out. So that's sort of the one watch out that could provide some upside. But as we said today, that's the approach we're taking.
That's the same conservative. Double-click on the Deltek side of the equation. A lot of executives that I've talked to about sort of the federal disruptions in 2025 see an opposite side of the coin of that. On the other side of the disruptions of Doge is also the idea that we've got to run the government more efficiently, and software is going to be a big part of the solution. Do you see an upside scenario in Deltek of that you guys become a bigger part of the solution in terms of how to garner efficiencies in the government?
I mean, I think the value prop for Deltek has been compliance, right, if you're doing highly regulated projects, but also efficiency. How do you run a really tight project and increase margins? So I think we're always on the side of the angels, no matter which way you look at that. For us, though, I think, and this is the big sort of what's going to happen, is the O-Triple-B spending, and when that ultimately cascades down to the contractors. We're starting to see some maybe signs of life, not at Deltec, but just in the marketplace in general. And that should accrue very nicely to that business.
And just so we're all clear, our Deltec customers are the contractors who serve the federal government, not the government itself. And so O-Triple-B is an unmitigated tailwind for the industry. is just when is the government going to be functional enough to basically award the budgeted dollars or allocated dollars, and then they'll trickle into our customers, which will sort of benefit us. But the timing is what the question mark is there.
Got it, got it. And then on the capital deployment credit equation, $3.3 billion in M&A in 2025. Can we start to get into the high-level conversation about how you guys are deploying that capital, the shifting mix of acquired assets? You guys have been talking about acquiring assets a little earlier in the life cycle. So why the shift? Why the shift towards earlier stage? And should investors be concerned about having to pay a higher multiple for earlier stage companies for that slightly higher growth?
So hold Jason and I accountable to all parts of that question. We're not avoiding if we forget to round it out. So to focus to everybody, so I started by saying our cash flow compounding algorithm is sort of mid-teens, and we aspire to be high teens. That's our mantra. That's our rally cry. That's where we're focused on building a sustainable business. There's two levers to make that happen. The first is to improve the organic growth rate of the business by a little, 100, 150 basis points, which you go to work every day to do on a sustainable basis. The second is to, if you will, recapture more value or higher returns from the capital we have to deploy. We do those two things. We can get to a high teen. So we look at how to capture more value, have higher returns on the amount of capital we have to deploy it comes in in two flavors one is more tuck-ins so that is a you know historically tuck-in was kind of like a four-letter word inside a rope or going back to my predecessor they're actually the best deals we've been able to do as you can imagine they we get back in sort of back office gna synergies and our judy king factor for a bolt-on is we only want to do a bolt on them it's going to improve the organic growth rate of the company we're tucking it into so they become growthy and they're they're highly valued because of generally the gna synergies that happen. So that's going to be, we think when you do the time and motion study, the size of the portfolio, the digestibility of our companies, we think that could be about a third of our capital ployed over a long arc of time. The balance of the two thirds will be platforms. And as we look at the array of platform opportunities, whether it's called a business as usual, pre-2022 Roper style deal, call it five to 7% organic growth business, optimized margins that you pay a certain price for or you buy that same business just one owner earlier where you have or you're catching it with a higher growth rate and you still have margin opportunity yes on t0 it's a higher multiple but on t5 it's substantially lower like 30 to 50 percent lower because you have the value creation of both the growth and the margin improvement that happens and so that's how we get the the compounding flywheel to happen and sort of accelerate the compounding on the capital
deployment front. Got it, got it. Not necessarily, maybe a little bit of near-term pain, but long-term gain, because you guys get to apply more of your expertise in terms of improving these businesses, and as long as you have patients in that capital deployment, the yield should be higher. So maybe let's apply that framework to some of the recent M&A. I'll start with Central Reach. You talked about that as one of the kind of AI use cases of where you guys could add a lot of value by optimizing what is a really tough supply and demand and balance. Can you talk to us about sort of those two vectors in terms of how do you guys improve kind of the revenue growth profile there and sort of what are the main levers for margin improvement?
This is a business that is a mid-20% growth business for us. Its margins are, Kent will be optimized, but this is more about how they scale their margins versus they're being inefficiently run sort of out of the gate. For us, it's about when you own a business forever, right? Every business we bought has come from private equity, and they own a business for, you know, three to five years, and they have to invest in a sine wave, invest for two or three years, harvest, invest two or three years, or harvest, and center reach and the others are no different. In our case, we get to have sort of horizon one, two, and three sort of investments, and in this particular case, we have great near-term, like next five to seven-year dynamics in supply and demand of the learners and the caregivers of the market position that we talked about before. So the next, you know, intermediate period of time feels pretty solid. But as the market dynamics in this business shift and supply and demand become more in balance, then all of a sudden what will happen, like it happens to every class of trade in health care, is people will start discerning on quality of care, not just can you get access to care. So in the first year of ownership, we bought two assets, two small little assets, that are leading the industry in how you discern quality of care. And so not only will the – so the vision there is essentially each customer won't just be sort of access to care, but they'll be the highest quality sort of caregivers, and that will sort of drive sort of the extended revenue growth there, for instance, is a way to do that. Again, that's a Horizon 3 investment, but that's where you have a long-term ownership will pay dividends over time.
The next big deal with Subsplash, it sounds like that's more in the vein of the maturing leaders. That's just the traditional roper strategy.
So this is the new strategy. So we consider Central Reach and Subsplash very much the sort of one owner earlier. Subsplash is the software that churches run on. So it's the church management system. It's the engagement, both online and offline. It's the giving platform. It's all that integrated. It's beautifully designed software across all of this. This is a business that has 20,000 or 25,000 churches as customers. There's several million churches in the world. and it's a wildly under-penetrated category from a technology point of view. So the top-line growth is all about the go-to-market motion and just dialing in the unit economics of that, then pouring gas on it. This is also one where we underwrote pretty substantial improvement in margins. So this was run by the prior owner to not optimize margins or even sort of, I'd say, modestly optimize margins. It was like a high 20% margin business. We think in the duration of this business it can be high 30s to low 40s, and some of the very first value creation levers we pulled were to move margins higher, especially in the payments apparatus. And we've had to great success in that regard.
And, Jason, you previewed this before, ProCare. It sounds like that got off to a little bit of a slower start. What are some of the lessons learned there, and what's the plan for turning that one around?
Yeah, well, ProCare was our first maturing leader, and I think what we've learned and we've taken that to the next two businesses is really just around, like, you know, if a team sort of got you from A to B, can they get you from B to C? And so we didn't move fast enough, I think, and so we've made those changes when we need to. And that just comes from our history where we were a little bit more deferential to management, and so kind of turning that crank a little bit more, our governments and our telemetry and our just cadence around the value creation plan is much tighter now. So we just learned lessons on how to stand that up and how to operationalize that. And so those are probably the two biggest lessons. And then I think the other part is just working with management on the value creation thesis to the value creation plan and having that be really tight. And I think we did a really good job with that. Central region such as such that, you know, in the second week of ownership, we know exactly where we need to go and we know exactly if things are off the track, how do we do countermeasures, and how do we partner together to work on those solutions rapidly.
right outstanding so if we if you look into 2026 um how does the m&a pipeline look um and what's going on with multiples i mean we definitely see what's going on in the public market with multiples is that getting reflected at all into into the private markets yeah what a what a change
since the uh since how long ago we did earnings call five or six weeks ago it was um on the call we're like hey this is as busy as we've been in a long time in terms of just a sec sort of there's not a whole lot that happened in the last four months of last year, but there's a lot of organizing and a lot of pipeline building and a lot of meetings and a lot of processes that we're launching. And then we did earnings call. That was absolutely the case. And then what's happened to public markets, just the private sellers have just tapped the brakes on that, as you expect. I mean, that is so right now, there's not a lot of activity and everybody's just trying to understand where valuations are. If you're a private equity seller and the types of assets that we're owners of, you're under no stress, right? You're not a venture. You're not running out of money. There is some option value to wait to sort of see where the world sort of settles. That said, this is where now we're solidly into the third year of very serious LP pressure on the asset class. And so this will settle itself. It's hard to predict what timing. I don't know if it's second half of this year, second quarter of this year, or the next year, which is okay. We're patient. We've always been patient. We've never viewed our capital allocation capacity as a budget because we're owned businesses forever. You have to sort of be patient, find the right asset, the right quality asset at the right price. In the meantime, the market's presented an opportunity for us and a lot of other software companies to be pretty aggressive in the buyback, which we've been. So I think between Q4 and what we put in our K, it's been $1.8 billion-ish of buyback, is what we've done in the last five months or so. And that's, what, 5-ish percent of our shares outstanding. So it's sort of a once-in-a-generation opportunity for us.
Got it. I have a couple more questions. I want to take the opportunity to see if anyone in the audience has questions.
You want to take that or you want to do it? You can start.
Yeah, so I think the process is I think a lot of that starts with really talking to the customers, right? So you look at sort of the competitive positioning. You look at the net promoter score. You understand sort of the key purchasing criteria and how each competitor sort of ranks on that. So generally, we're buying, again, the largest player that wins on the key purchasing criteria, whether it's your features or integration, whatever it is. And I think that gives you a sense. They're making the right investment into the tech stack or into whatever it is. Or if customer support and that promoter score is horrible, then they may not have enough in customer support. It would be sort of one. Number two, when you run a portfolio of very like-oriented businesses, we have internal benchmarks about kind of what good generally looks like from a cost structure in a business. You're running a $300 million vertical market business, this three-time market share of the next closest competitor, and you have 40% sales and marketing as percent of revenue, something is not right about that business. Conversely, if you're like 5% of revenue as R&D, something's not right about that business. And so we've got the internal benchmarks that we throw things against. Those are two things that come to mind. Yeah, I mean, the other thing is it's really about the focus of the organization.
And so it's about reallocating resources where the best returns are. What we found is that typically private equity, they do a lot of bolt-ons. Sometimes they don't have – like we wouldn't do that bolt-on because we've got to own the business forever. They don't have a high right to win, yeah. So it's like a new TAM. So it distracts, I think, the organization around some of these edge businesses. So our pattern is to focus and then get the resources focused on the core. And typically you don't have to do a lot of – you don't have to sort of surge invest for that because it's just getting focused on the things that are going to drive the most growth.
Any additional questions? Yeah, fair question. So just for those who might not have heard it, are we over-monetizing and sacrificing growth, essentially, if it's a fair representation of the question? So the examples we gave on central reach and subsplash, first of all, let me back up. At the enterprise layer, when you look at R&D as a percent of revenue over the last five years, it's gone up like two or 250 basis points across the entire organization. We're almost like 11% of revenue today, and that includes the product businesses that are like sub-five. So from an R&D perspective, that's been going up over time steadily. The two assets, the two businesses we just described, in the case of Subsplash, this is just wildly under-monetized on how they deal with the payments infrastructure. This is just literally how they have the relationship with the processors and how they monetize with the processor. It's not taken away from R&D. It's just an under-sub-optimized sort of part of that business model that we had a pattern wreckage on with two or three of our other businesses that we monetized through payments. So we're not sort of taking dollars, if you will, out of the company. We're sort of monetizing the environmental sort of factor a little bit better. And on Central Reach, like I said, that's going to margin. It's going to scale over time. There's not like a cost action that's happening inside of that business.
And we did some tuck-ins for Central Reach. So, I mean, if you wanted to penalize the P&L for that, but that just got us to market probably three or four years ahead of time with a solution that's all about outcomes-based care. So sometimes we will do the tuck-ins to sort of get us where we need to get to with that platform. And so you could argue that's part of the investment of the business. But these businesses just typically run on, if you think about the go-to-market, a lot of what we're doing is cross-sell or we got expansions, and there's just not a lot of go-to-market costs around that because you already have the relationship with the customer.
Unfortunately, that takes us to the end of our time. But Jason, thank you so much for joining.
Thank you. Appreciate it.
Thank you.