The paragraph is the introductory segment of a Roper Technologies conference call discussing their fourth quarter and full year 2024 financial results. The call is led by Zack Moxcey, Vice President of Investor Relations, and features key executives including the CEO and CFO. A press release with financial results and replay information was issued earlier. The call involves forward-looking statements, subject to risks detailed in company filings. Results are discussed on an adjusted non-GAAP basis, highlighting differences from GAAP results, such as acquisition-related amortization and litigation charges. Accompanying slides and further details are available on the company's website.

The paragraph is a script from a conference call discussing the company's strong financial performance in the fourth quarter and full year of 2024. Neil Hunn presents the company's financial highlights, including a 14% revenue growth driven by both organic and inorganic means, with significant acquisitions such as Procare and Transact Campus. The company achieved a 16% increase in free cash flow, exceeding $2 billion for the first time, and maintaining a 32% free cash flow margin. The discussion also emphasized the company's robust cash flow growth, substantial acquisition capacity of over $5 billion, and positive momentum entering 2025, with plans to delve into more detailed financial results, balance sheet status, cash flow growth, segment highlights, and guidance for 2025 and Q1 during the call.

The paragraph outlines the company's positive momentum and financial performance as they look to 2025. It highlights accelerating demand and high growth in enterprise bookings through 2024, leading to high single-digit growth in its $4.6 billion recurring revenue base. The company projects total revenue growth of over 10% for 2025, with organic growth between 6% and 7%, and adjusted DEPS between $19.75 and $20. They have $5 billion available for M&A in a promising market. The paragraph also compares 2024's performance to their long-term growth strategy established in March 2023, showing alignment by posting significant revenue growth, margin leverage, and cash flow growth in line with their mid-teens cash flow growth algorithm. It emphasizes strong performances in both 2023 and 2024.

The paragraph discusses the company's strategy of leveraging organic growth and capital investment to enhance enterprise quality and portfolio metrics. It highlights a successful execution of this strategy in 2024, with high performance and momentum continuing into 2025. Jason Conley reports a strong finish to 2024, noting that Q4 was the highest revenue quarter of the year with nearly $1.9 billion in revenue, including 9% from acquisitions and 7% organic growth. The technology segment outperformed expectations, while software segments met targets. EBITDA increased by 13% year-over-year, although core EBITDA margin slightly declined. The company undertook restructuring in some software businesses, which impacted costs. Despite this, DEPS exceeded guidance, indicating a strong quarter.

The paragraph highlights Roper's strong financial performance, with Application Software showing 24% revenue growth, driven by acquisitions and organic growth, including an 8% increase in organic recurring revenue, led by SaaS expansion. While the EBITDA margin was impacted by lower-margin acquisitions, it still showed a slight improvement over the previous year. Network Software saw 3% revenue growth and an impressive 57.4% EBITDA margin, while other segments like DEPS and Verathon also performed well. Overall, Roper achieved mid-teens revenue and cash flow growth, reaching over $7 billion in revenue, supported by a balanced mix of acquisitions and organic growth, demonstrating consistent and reliable performance.

The paragraph highlights Roper's strong financial performance, with $4.6 billion in software revenue expected to grow organically in 2025. Over 85% of revenue is from the US, minimizing risks while seizing domestic opportunities. EBITDA exceeded $2.8 billion, with a core margin consistent with the previous year, and strong operating leverage. Free cash flow in 2024 was nearly $2.3 billion, a 16% increase, and is expected to maintain margins of 30% or more. The company has enhanced its capital deployment and talent strategies, resulting in data-driven growth plans and long-term organic growth potential.

The paragraph reflects on Roper's significant strategic and operational achievements over the past year, highlighting better-than-expected Q4 free cash flow growth of 15%. It mentions Roper's profitable exit from Certinia, a professional services automation software company, yielding $246 million, doubling their invested capital in 14 months. The company reports a net leverage of 2.6 times and nearly complete access to a $3.5 billion revolver, offering over $5 billion for potential acquisitions. Although 2024 saw quieter market activity, Roper invested $3.6 billion in vertical market software businesses like Procare and Transact. Looking to 2025, they anticipate numerous acquisition opportunities due to private equity sponsors' need for liquidity. Additionally, Roper reviews its Application Software segment, noting a 21% revenue growth and improved margins.

The paragraph highlights the positive performance and developments across various business segments in 2024, with expectations of continued momentum into 2025. It mentions strong organic bookings, healthy recurring revenue, and successful business and talent building. Specific companies like Deltek, Aderant, Vertafore, and PowerPlan are noted for their significant achievements, such as investments in cloud technology and GenAI, product innovation, and robust ARR growth. Additionally, the paragraph emphasizes successful acquisitions of Procare and Transact Campus, indicating positive future contributions from these additions.

The paragraph discusses the performance and outlook of a business segment for 2024 and 2025. It highlights strong organic growth and solid leadership throughout 2024, predicting continued high growth levels in 2025 despite expected lower margins in the first quarter due to the Transact Campus acquisition. It also reports a 3% organic revenue increase in the Network Software segment, with external factors like market conditions and industry strikes impacting growth. Excluding these issues, the segment showed mid-single-digit growth, demonstrating its strength. EBITDA margins remained strong at 56.1%. Amid challenging freight market conditions, the DAT leader, Jeff Clementz, successfully advanced technology and market position. The acquisition of Trucker Tools enhances DAT's offerings by providing real-time visibility and supporting its strategy to boost value and retention in the freight network.

Despite a challenging financial year due to market conditions linked to strikes, Foundry focused on accelerated innovation in GenAI and computational AI. The company's operating model supports continued or increased investment during market issues, aiming to capture market share upon recovery, as seen with DAT and Foundry in 2024. Across its companies, there was significant talent upgrades, improved organizational alignment, and solid annual recurring revenue (ARR) growth. ConstructConnect saw leadership changes and improved lead-generation, contributing to revenue and ARR growth, while developing transformative AI products. The alternate site healthcare software businesses also performed well. For 2025, revenue growth is expected to improve, with DAT's network value capture boosting performance. Organic revenue growth for Q1 will be lower, impacted by last year's MHA performance. Lastly, the company made significant progress in GenAI development and deployment.

The paragraph highlights Roper's focus on leveraging customer intimacy and deep data knowledge to combine with emerging GenAI technologies for innovative solutions. In 2024, they made significant progress with GenAI product assistance at Deltek and Aderant, automation for client-specific tasks at Aderant, real-time fraud detection at DAT, automated content creation at Foundry, construction takeoff automation at ConstructConnect, and insurance forms automation at Vertafore. The company anticipates more deployments throughout 2025. Roper's tech segment saw a 9% revenue growth, with EBITDA margins at 35.2%. Verathon achieved market leadership in the US for single-use bronchoscopes and expanded globally in video laryngoscopy. Neptune experienced strong demand for ultrasonic static meters and meter data management software, leaving them in a strong position for the future.

In the paragraph, Northern Digital (NDI) rebounded in Q4 after a challenging year, and CIVCO and IPA ended with strong financial results. Looking ahead to 2025, the segment anticipates high single-digit revenue growth. The 2025 financial guidance projects total revenue growth over 10%, excluding capital deployment benefits, with organic revenue growth of 6% to 7%. Full-year adjusted DEPS is expected to range from $19.75 to $20, with a tax rate around 21% to 22%. Q1 adjusted DEPS is predicted between $4.70 and $4.74. The company has $5 billion available for acquisitions amidst favorable M&A markets, and ended the year with strong fundamentals, including 16% free cash flow growth, supported by 14% total revenue growth and 6% organic revenue growth. M&A activities worth $3.6 billion enhanced portfolio quality and helped drive growth momentum.

The paragraph outlines Roper's strong financial performance, highlighting a 7% growth in fourth-quarter organic revenue and double-digit growth in enterprise software bookings. The company has upgraded its leadership, expanded capital deployment capabilities, and advanced its operating model, with significant progress in GenAI solutions. With over $5 billion for mergers and acquisitions (M&A), Roper is actively pursuing opportunities in the software market. Their strategy focuses on compounding cash flow with a low-risk approach, operating a decentralized portfolio of market-leading businesses to enhance customer relationships and sustainable growth.

The company operates a centralized, disciplined strategy aimed at cultivating and acquiring leading vertical market businesses to enhance cash flow. They aim to compound cash flow in the mid-teens, doubling it approximately every five years. During a Q&A session, Ken Wong from Oppenheimer inquired about the 6% to 7% organic growth outlook. Jason Conley responded, indicating no one-time factors affecting this figure, except for a minor first-quarter anomaly in their MHA business. Organic growth is expected to accelerate from Q2 to Q4, due in part to Procare and new bookings contributing to revenue. The company considers 2024 a clean baseline year post-COVID and supply chain disruptions, projecting robust growth across their tech segment.

In the paragraph, Ken Wong and Neil Hunn discuss the company's M&A strategy for 2025, indicating a balanced approach toward growth through bolt-on acquisitions and standalone category leaders. They've enhanced their M&A team's capacity and built relationships with sponsors and companies, preparing to deploy $5 billion and pursue various opportunities. Additionally, Joe Giordano humorously references the installation of a new Neptune meter at his home and inquires about AI tools. Neil Hunn responds, highlighting successful learnings and momentum from deploying AI tools in 2024, noting improvements in product offerings, profitability, and efficiency.

The paragraph discusses recent advancements in technology that are making models cheaper and more accessible for specific use cases, boosting optimism about future applications. Although it's challenging to quantify the financial impact for 2024, there's a noticeable positive effect on bookings at companies like Aderant and Deltek. The focus is on improving customer service and productivity rather than just cutting costs, with a strategic emphasis on offensive productivity gains. A concern is raised about potential US policy headwinds affecting Deltek's government contracting business, but it's too early to determine the impact, with increased accountability for contractors being a key principle.

The paragraph discusses the evolving pricing models becoming more performance-based and how this aligns with Deltek's strengths, especially after acquiring ProPricer, a company focused on managing performance-based pricing. Deltek sees strong activity in government contracting from Q3 to early Q1, indicating customer confidence. Joe Giordano and Jason Conley engage in a conversation before Joe Vruwink from Baird asks a question about the impact of AI. Neil Hunn responds by expressing caution regarding AI but is confident that Deltek is well-positioned to remain a leader, given their focus and distribution advantages.

The paragraph discusses the company’s close relationship with its clients, focusing on tailoring services to meet specific billing requirements for law firms, which highlights their nuanced approach and data integration. The company believes it has a unique advantage with new enabling tools to solve previously unsolvable problems. It also emphasizes its market leadership in its verticals, holding a significant market share advantage over competitors, which allows for strategic investments. Despite their current trajectory, the company remains cautious and encourages continued investment to maintain competitiveness. Joe Vruwink then asks about the outlook for the following year, noting previous impressive performance, and inquiring if there are any risks or hedges considered that, if not realized, might lead to positive adjustments. Jason Conley responds to this query.

The paragraph discusses a company's financial performance and outlook for 2024, with a focus on achieving a growth rate of 5.6% for the year. It mentions strong gross revenue retention and good bookings in the second half of the year as key factors contributing to growth. The company anticipates further improvement, particularly with Procare's integration expected to boost the growth rate in the second quarter. There's potential upside if GovCon Enterprise remains strong and leans towards perpetual contracts, though the company prefers a different focus for long-term growth. Terry Tillman from Truist Securities then questions the executives, Neil, Jason, and Zack, about the factors driving enterprise software bookings strength, asking how macroeconomic factors, leadership changes, and conversion to SaaS might be contributing to this success. Neil Hunn responds, intending to address these points.

The paragraph discusses a more stable macroeconomic outlook compared to the previous year, which has positively impacted the company's growth. This success is attributed to having better leadership, strategic approaches, and execution models. The benefits of these improvements are evident in various company segments, with notable progress at Deltek, Aderant, PowerPlan, and others. Additionally, the shift to SaaS and cloud solutions is seen as a long-term growth driver, with a significant amount of on-premise maintenance being transitioned to the cloud, providing a beneficial tailwind. The company acknowledges that this transition takes time but is leading to accelerating organic growth.

The paragraph discusses the initiatives and future plans of DAT, a company involved in trading networks. Jason Conley explains that pricing, packaging, and monetization strategies have begun to impact the market, with more changes expected throughout the year. These efforts focus on increasing safety and reliability while innovating in trading partner interactions, particularly in fraud and performance on their load board. Neil Hunn highlights DAT's recent acquisition of Trucker Tools, emphasizing its potential to enhance network visibility and value for carriers and brokers, and its exciting monetization prospects. The conversation concludes with a question from Brent Thill regarding AI's impact on software buyers.

In the discussion, Neil Hunn addresses the impact of potential distractions on business engagements, particularly concerning AI technology. He notes that while there was some distraction in the first half of the previous year due to economic factors and the novelty of AI, this is no longer the case. The company remains a key system for its clients, focusing on applying generative AI technology to specific areas without the distraction of competing systems. Hunn also emphasizes the company's consistent focus on its strengths in small, vertical market leadership with a sustainable competitive advantage, while addressing M&A strategies.

The paragraph discusses a company's approach to investment and restructuring. The company prioritizes selecting individual businesses based on potential deals rather than following thematic investment strategies. They recently incurred a $9 million restructuring cost in a couple of their businesses, primarily within their AS segment, with the largest impact at Deltek. This restructuring aligns with Bob Hughes' review for reinvestment in growth and product development. The aim is to see benefits in 2025, reflecting a strategic decision for efficient resource allocation while maintaining healthy operations.

In the paragraph, Jason Conley provides an update on the integration of Transact with Seaboard, highlighting its positive progress. They have identified $20 million in cost synergies that will start materializing in the first quarter. A new Head of Services has joined the team to enhance capabilities, particularly for moving customers to the cloud with their campus ID solution. An ERP system is being implemented to enhance efficiencies over time. The market feedback is positive, with excitement from both Transact's existing on-prem customers and Seaboard customers regarding the cloud-native solutions. This integration is expected to drive beneficial cross-sell opportunities in the coming years. Following this, Deane Dray thanks Jason, and a new question from Scott Davis of Melius Research is introduced, shifting focus to an increasingly positive outlook on M&A activities.

In the paragraph, Neil Hunn discusses the company's approach to capital deployment in 2025, emphasizing that while they would consider issuing equity if market opportunities were compelling, their primary focus is on utilizing the $5 billion on their balance sheet and their debt capacity. He notes that, despite challenging years, the company has consistently deployed capital, benefiting from strong market relationships. Jason Conley adds that asset metabolism in private equity isn't immediate and will extend beyond 2025 into 2026. When it comes to talent acquisition, the company emphasizes upgrading talent and balancing internal talent development with external hiring, aligning with the belief that "winners hire winners."

In the paragraph, Neil Hunn discusses the company's strategy for developing and promoting internal talent, referred to as their "talent offense." This involves selecting, developing, and engaging talent with specific behavioral attributes necessary for leadership roles. Initially, the company hired externally but has gradually focused on internal development. This has led to successful internal promotions, such as Strasa moving to a frontline position and Brody advancing from roles within the company to CEO of ConstructConnect. This approach not only strengthens the talent pool but also serves as a risk management strategy by enabling smoother transitions in leadership roles. Scott Davis responds positively, congratulating the company on its quarterly performance.

In the paragraph, Steve Tusa from JPMorgan asks about the company's strong cash performance in the quarter, noting that it exceeded expectations. Jason Conley attributes the strong performance to a successful renewal season and specific companies like Deltek and Aderant reducing days sales outstanding, as well as successful integration efforts by Strata with Syntellis. He also mentions new bond issuances with upcoming coupon payments. Steve then asks Neil Hunn about potential threats from AI integration in their businesses, to which Neil acknowledges the potential competition and highlights their focus on investing to address any disruption.

In the paragraph, Neil Hunn discusses the strategy for handling potential threats in a business portfolio, stating that after reevaluating one company, they no longer view it as a threat but as a potential growth area due to better understanding of the market and intellectual property landscape. They acknowledge that while there are small AI startups, customers prefer to consolidate vendors, presenting an opportunity to benefit from this trend. Julian Mitchell then asks about EBITDA margin outlook for 2025. Jason Conley responds, indicating that core margins are expected to increase slightly. However, overall headline margins might remain flat with the possibility of a dip in the first half due to acquisitions like Transact.

The paragraph discusses Transact's financial performance, highlighting that the third quarter is their strongest, contributing about 50% of their EBITDA. The focus then shifts to the TEP segment, specifically Neptune, which is a significant part of the segment, contributing around 40%. They anticipate solid performance from Neptune in 2025, despite previous noise from customer inventory reductions. The backlog in Q4 is addressed, having decreased year-on-year but from a high base. Overall, there is consistent growth within the group, with improvements in supply chain lead times resulting in a backlog higher than pre-COVID levels. Positive early signs indicate that distributors are restocking, with continued market strength expected this year.

The paragraph is from a conference call, discussing returning to pre-COVID operations with a one to two-month backlog and continuous growth. The speakers, Julian Mitchell, Neil Hunn, and Zack Moxcey, participate in a question-and-answer session before Moxcey gives closing remarks, expressing anticipation for the next earnings call. The operator then concludes the conference.

This summary was generated with AI and may contain some inaccuracies.