Roper Technologies, Inc.
Analysis
Roper spent 2025 explaining away two businesses; in 2026 it stopped needing to. Organic growth is back above 6%, profit guidance has been raised twice, and management is buying back stock while it waits for AI products to become real revenue. How much of the guidance raise came from a smaller share count?
- AI products have moved from demo to shipping across the portfolio.
Aderant posted record bookings, CentralReach's AI now drives most of its new business, and Vertafore shipped agents that cut an hour of paperwork to minutes. Management says the revenue lands in 2027; selling has barely started. Which Roper businesses are furthest along in selling AI, and which are behind?
- The two-year run of misses has turned into raised guidance.
Q2 FY2026 beat on sales and earnings, and the full-year profit outlook is $0.80 above January's. The drag sat in Deltek and Neptune rather than the middle of the portfolio, so a good quarter wasn't cancelled out by a new problem. Which Roper businesses drove the 2025 organic shortfall management owned?
- Capital allocation flipped from buying shares to preparing for deals.
Roper bought back over 8% of its shares for $3.2 billion in eight months, then said new money pays down debt so it can buy companies when private owners cut prices. The bet: deals, not buybacks, compound cash per share faster from here.
- AI bookings keep converting the way CentralReach's do. Customers pay for work the software takes over, so sales grow without Roper having to go find a lot of new customers.
- Government contractors start spending the new defense budget. Deltek is Roper's biggest drag, and guidance assumes no recovery there, so a normal year would be pure upside.
- Free cash flow keeps compounding at the pace it has. Cash grows while the share count shrinks, so each share left owns more of the business even if sales stall.
- The AI revenue slips past 2027. The costs land now and the money arrives a year later, so the next few quarters look weaker than the business really is.
- Buybacks stop and the acquisition market stays shut. Roper is carrying more debt and has nowhere to put its cash, which slows the growth in cash per share it relies on.
- Copper and other input costs stay high at Neptune. Water meter profit stays squeezed until higher prices work through the order book, which takes a couple of quarters.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Sale | ≥$1K | Jul 8 | Sep 22 |
Donald Trump Republican · Executive | Purchase | ≥$50K | Jun 24 | Aug 22 |
Donald Trump Republican · Executive | Sale | ≥$500K | Jun 18 | Aug 22 |
Donald Trump Republican · Executive | Sale | ≥$15K | Jun 16 | Aug 22 |
Donald Trump Republican · Executive | Purchase | ≥$15K | Jun 12 | Aug 22 |
Congressional trading data provided by QuiverQuant
How Roper Technologies turned $7.9B of revenue into $2.2B of operating income.
| Revenue | ||
|---|---|---|
| Software And Related Services | $12.3B | ▲ 14.15% YoY |
| Total revenue | $7.9B | |
| Gross profit | $5.5B | 69.2% |
| Operating income | $2.2B | 28.3% |