The paragraph is an introduction to the Roper Technologies Conference Call discussing the company's first quarter 2025 financial results. Zack Moxcey, the Vice President of Investor Relations, introduces the call participants, including key executives like Neil Hunn (CEO) and Jason Conley (CFO). The call will focus on adjusted non-GAAP and continuing operations results, with differences from GAAP results explained, including amortization of acquisition-related intangible assets, transaction-related expenses from acquisitions, and financial impacts from a minority investment in Indicor. The presentation materials and additional information are available online, and Zack then hands the call over to Neil Hunn.

The paragraph discusses the company's recent performance and future outlook. It highlights the solid Q1 financial results, with a 12% increase in total revenue and a 5% rise in organic revenue. The company also completed the acquisition of CentralReach, which has led to an increased revenue guidance for the year. They emphasize their strong position for capital deployment, with over $5 billion available in the next 12 months. The business model is described as a durable cash flow generator, with 85% of revenues generated in the U.S. and 85% from recurring software revenues, boasting a 95% gross retention rate. The company efficiently converts about 30% of its revenue into free cash flow.

The paragraph discusses the acquisition of CentralReach, a leading cloud-native software platform for applied behavior analysis (ABA) therapy providers treating autism spectrum disorder. CentralReach is used daily by 200,000 professionals for tasks like scheduling, data collection, and reimbursement processing, leveraging GenAI technology. The acquisition was made for $1.65 billion, with expected revenues of $175 million and EBITDA of $75 million by June 2026, projecting further growth around 20%. CentralReach aligns with key acquisition criteria, including leadership in a niche market, customer focus, strong margins, and cash flow conversion, with the acquisition financed via a revolver and reported in the Application Software segment.

The paragraph discusses the significant shortage of ABA therapists in the U.S., where demand far exceeds supply, with only 300 million therapist hours available compared to the 900 million needed annually. This gap is expected to persist for the next decade globally. CentralReach is identified as a key player providing critical solutions that enhance operational efficiencies, thereby helping to deliver more care hours to underserved patients. The company has multiple strategies for revenue growth and margin expansion, including expanding its product portfolio, entering new markets like speech and occupational therapies, and international expansion. The paragraph ends by transitioning to Jason Conley, who will discuss the company's financial performance.

In the latest quarter, the company reported a 12% increase in revenue to $1.9 billion, with acquisitions contributing 8% and organic growth at 5%. They anticipated Q1 as their lowest quarter for organic growth due to network segment challenges. Software bookings saw low single-digit growth, while product demand improved without pull-forward concerns. EBITDA rose over 9% to $740 million, with a reported margin of 39.3%, though down 90 basis points from the prior year. Core EBITDA margins expanded by 50 basis points. Acquisitions like Transact have lower margins in Q1, expecting improvement later. Diluted EPS exceeded expectations at $4.78. Free cash flow was $507 million, slightly down due to a $24 million legal settlement, aligning with previous performance projections. The company remains cautiously optimistic due to current macroeconomic conditions.

The paragraph discusses the financial performance and strategy of the company. They report a stable free cash flow margin of 31% to 32% despite recent bond issues and legal settlements impacting cash flow by $70 million or 80 basis points. The company's operational performance is strong, evidenced by a favorable working capital conversion and free cash flow margin. They finished the quarter with a net debt to EBITDA ratio of 2.4 times, and closed the acquisition of CentralReach using their credit revolver, bringing their net leverage to about 3 times. They have over $5 billion in acquisition capacity and are exploring new opportunities, benefiting from a market where some private equity sponsors are cautious. The paragraph concludes by highlighting the growth in the Application Software segment, with revenues up 19% total and 6% organically, and improving EBITDA margins.

In the quarter, Deltek, Aderant, and PowerPlan showed significant growth and strong cloud migration activity, with Deltek experiencing strong revenue retention and Aderant gaining market share. PowerPlan's revenue stream has become more recurring, and the company received positive feedback on its cloud offerings. Rafi Shure was promoted to CEO of PowerPlan, taking over from Joe Gomes, who now leads ProCare, another growing business with competitive market performance. Vertafore maintains steady growth and customer retention. Meanwhile, the integration of TransAct and CBORD is on track. Looking ahead, the focus is on maintaining growth and improving operational efficiency across these companies.

The article discusses the financial outlook and performance of different segments within TransAct. It reiterates that the company's revenue, earnings, and margin profile tend to peak in the third quarter, and maintains an expectation for mid-single-digit organic growth. The Network Software segment saw a 1% revenue growth, with strong EBITDA margins, and DAT showed growth due to increased ARPU and successful integration of a recent acquisition. MHA and Foundry experienced declines, but Foundry is expected to return to growth. ConstructConnect performed well, driven by strong customer activity and retention, and is exploring innovative products under new leadership.

The paragraph reports on the positive growth and outlook for multiple business segments. SoftWriters and SHP are experiencing steady growth, while the TEP segment saw a 6% revenue increase with strong EBITDA margins. Despite tariff challenges, the company has effectively managed risks and maintained compliance with the USMCA. Verathon continues to lead in its market with strong sales of its BFlex and GlideScope products, along with ongoing new product development. Additionally, Neptune is performing well, and the company recently acquired a cloud-based utility billing software solution to further bolster its offerings.

The Neptune team has successfully completed a strategic acquisition that enhances their ability to close the loop in the meter to cash cycle, improving customer value by integrating water meter reading, data management, billing, and collection. Thanks are given to Don Deemer and the leadership team for this move. Verathon and Neptune saw improved order momentum as the quarter progressed, despite declines in CIVCO Medical Products due to a tough prior year comparison. NDI experienced significant success with its precision measurement technologies in healthcare, notably in orthopedic surgery, interventional radiology, and cardiac ablation, thanks to a strong market focus and go-to-market strategy. The outlook for this segment expects high single-digit revenue growth for the rest of the year. Consequently, the company is increasing its total revenue growth outlook for 2025 from 10% to 12% following a strong Q1 and the CentralReach acquisition.

The article highlights the company's strong first-quarter financial performance and resilience amid macroeconomic challenges. They maintain an organic growth rate of 6% to 7% for the year, with a slight increase in their full-year debt outlook. The recently completed acquisition of CentralReach, which is crucial for delivering autism care, is expected to drive revenue and EBITDA growth by 20%. The company is modestly raising its full-year guidance due to a solid start to the year and plans to utilize over $5 billion in available capital for mergers and acquisitions. Despite market uncertainties, they are actively pursuing opportunities in vertical market software businesses.

The paragraph discusses Roper's optimistic outlook on deploying capital, highlighting that times of uncertainty can offer advantageous opportunities for investments, as exemplified by the Verathon acquisition in 2020. Roper emphasizes its strategic approach, which involves operating a portfolio of market-leading, vertically oriented businesses in a decentralized environment to enhance growth and quality. Additionally, Roper follows a centralized, disciplined process for capital deployment aimed at acquiring new market-leading businesses, contributing to their long-term cash flow compounding strategy. The company claims to double cash flow approximately every five years and expresses gratitude for ongoing support before opening the floor to questions. Brent Thill from Jefferies then asks for insight into the private equity landscape and mentions observed hesitancy, asking Neil for his perspective.

Neil Hunn discusses the current state of business deal opportunities, noting that despite general macroeconomic uncertainty, there is a strong level of activity and a robust pipeline. He mentions successfully completing the CentralReach deal and having $5 billion to deploy over the next 12 months. While there is cautious optimism amid uncertainty, such times can present unique investment opportunities. Brent Thill asks about Deltek's exposure to federal sectors. Hunn explains that 60% of Deltek's business involves federal government contractors, with 40% in other professional services. Government-related uncertainties like budget issues and shutdowns create challenges, causing project timelines to shift, a pattern they're familiar with since they acquired the business in 2016.

In the paragraph, the leadership team expresses confidence in dealing with current challenges, viewing them as short-term issues rather than long-term concerns. The company's growth rate has slowed, with Deltek's organic growth rate slightly reduced due to market uncertainty. Jason Conley explains that the GovCon Enterprise segment is primarily growing through perpetual licenses, affecting in-year results. He also discusses cash flow expectations, indicating that while the first half of the year may see slower cash flow due to timing of interest payments and tax payments, the second half is expected to be stronger, particularly in the third quarter, driven by their Transact business and frontline business performances. Brad Reback asks about these cash flow trends, to which Conley confirms the back-end weighting of growth expectations.

In this paragraph, Jason Conley discusses the retention rates of their platform, noting that while the gross retention rate is in the low 90s due to some market fluctuations, they compensate for this with a high net retention rate of 115 to 120. This illustrates market consolidation benefits. Brad Reback and Joshua Tilton then engage with Conley, querying about the company's resilience amid uncertainty and its decision to maintain revenue guidance. Conley explains that while some areas like Deltek may underperform, other parts of the business have strong bookings converting to recurring revenue, providing enough confidence to maintain their guidance.

The paragraph features a discussion among company executives about their confidence in business performance for the rest of the year. They mention that the DAT business is expected to improve, and Foundry has shown positive signs, anticipating a high single-digit exit. The MDI business within TEP is doing well, with new indications in cardiac ablation and orthopedics providing positive momentum. Despite a slightly lower growth outlook due to trimming some perpetual aspects, Deltek remains 80% to 85% recurring, providing predictability and durability. While they avoid giving specific quarterly details for individual businesses, overall confidence is supported by strong software bookings and product order patterns as leading indicators.

The paragraph discusses the perspectives of businesses transitioning to cloud or subscription models and whether there are concerns about customer preferences slowing due to macroeconomic uncertainties. Jason Conley notes that Adonis, a leader in cloud transitions, had a strong Q1 and is progressing well with high-end clients. He mentions Deltek might face some uncertainty. Neil Hunn adds that PowerPlan's recent launch of a new product has positively impacted their recurring revenue growth. Overall, they have not observed any slowdown in customer decisions regarding cloud transitions. Joseph Vruwink further inquires about potential declines in nonrecurring revenue elements and how they might handle stress testing for both nonrecurring and recurring revenue streams.

The paragraph comprises responses during a Q&A session, primarily focused on financial implications and market strategy. Jason Conley discusses the impact of nonrecurring revenue on the company's profit margins, indicating that these are relatively small and not expected to significantly affect margins. He highlights uncertainty regarding AS (presumably a division or product line) projections for the year. Terry Tillman from Truist Securities asks about AI solutions in CentralReach's offerings, referencing a report stating that 75% of customers purchase AI solutions. Neil Hunn responds, noting that AI products from CentralReach are relatively new, having been released over the past 12 months. While AI-driven revenue is not yet substantial, it is seen as a key growth driver for the company.

The paragraph discusses the performance and strategic direction of Roper Technologies, highlighting CentralReach's progress within the Roper portfolio. The company is focusing on incorporating AI technologies like GPT into its products and services, aiming to expand its Total Addressable Market (TAM) by integrating Agentic capabilities into customer workflows. Financially, Jason Conley notes that core EBITDA margins are expected to increase slightly at the segment level this year, with acquisition margins improving as well. Additionally, the company foresees stability and potential growth in network-related margins in the latter half of the year, supported by developments from TEP, MDI, and Verathon's new products. The conversation concludes with Terry Tillman acknowledging and thanking the participants.

In the paragraph, the discussion focuses on the company's portfolio and recent sales performance, noting that Deltek experienced a slight delay, but other areas remain stable or are performing well. Aderant reported its highest bookings quarter, Strata had a strong quarter in terms of total contract value, and while Vertafore was slightly weaker year-over-year, it followed a strong Q4. Future concerns about potential sales weakness are addressed by highlighting the company's strategy of prudent investment pacing and variable incentives, which help in preserving margins and maintaining growth.

In this segment of the conversation, Scott Davis of Melius Research asks about the impact of tariffs on the business. Neil Hunn clarifies that while tariffs affect most of the product businesses within the TEP segment, the impact is minimized due to USMCA compliance, making it a $10 million to $15 million issue. Scott then shifts the focus to freight activity, suggesting potential concerns about a slowdown. Neil explains that while they monitor the metrics closely, the demand on the carrier side of the DAT network does not fluctuate significantly with short-term changes in freight activity. A sustained impact over 6 to 12 months would be necessary to affect the carrier side.

The paragraph discusses a Q&A session where Deane Dray from RBC Capital Markets inquires about the availability and growth potential of the business CentralReach, which was originally owned by Incyte. Neil Hunn explains how they came to be interested in CentralReach approximately a year ago through meetings with Incyte's team and the CEO. After conducting market research and recognizing positive structural elements and growth drivers, the opportunity was pursued through a competitive process facilitated by an investment bank. Hunn emphasizes that the company effectively communicated the Roper value proposition to the management team, aiding in the acquisition.

The paragraph discusses the business strategy and growth prospects within Roper Technologies. It highlights the benefits of having long-term capital for business growth and mentions a successful transaction facilitated by a unified management approach. The focus is on mature leader-type businesses with growth rates between 10% and 25%, aiming for better returns over five years through various opportunities, including higher-growth businesses and margin expansions. There's also a mix of bolt-on acquisitions contributing to growth. Regarding CentralReach, it is noted as having a negative working capital impact, with the goal of maintaining a negative working capital overall. The conversation involves multiple speakers, including Neil Hunn, Deane Dray, and Joe Giordano, discussing financial strategies and market opportunities.

In this exchange, Joe Giordano asks about the financial guidance adjustments and the potential risks associated with Deltek, referencing concerns about DOGE risk and Elon Musk's focus potentially shifting back to Tesla. Jason Conley explains that previous contingencies in margin and interest were adjusted, leading to updated guidance following a slight quarter beat. Neil Hunn adds that while DOGE is a factor, the uncertainty is also influenced by potential government shutdowns and budget issues. However, he emphasizes that government contractors provide essential services, suggesting these issues are temporary rather than structural.

The paragraph discusses recent financial and operational updates related to DOGE and education. DOGE is currently valued between $160 million and $170 billion, with expectations of limited growth due to Elon Musk's focus on other commitments and government constraints. Steve Tusa from JPMorgan asks about organic growth and educational impacts, to which Jason Conley and Neil Hunn respond. They mention a slight increase in Q2 organic growth due to factors like Procare and NS ramping up. Regarding education, Neil Hunn notes that while there is some uncertainty, the Department of Education does not plan to cut funding but instead intends to allocate it directly to states through block grants.

The paragraph discusses the 2025 Department of Education funding, which is expected to remain the same as in 2024, with Title I funding comprising about 80% of it. The President and the Secretary have repeatedly stated that the total amount will not be reduced, although there are pressures on DEI and specific issues in Maine affecting funding. Despite these concerns, there has been no significant panic among customers about their funding. In the broader conversation, Steve Tusa of Barclays inquires about software bookings and organic sales growth. It's noted that the company grew organically by 5% in Q1 and over the past year but expects growth to accelerate to over 8% later in the year. The confidence in this growth is attributed to improvements in areas like network, foundry, and DT, with anticipated flat performance among carriers and improvements in TAP through Neptune's progress.

In the paragraph, Neil Hunn discusses the positive outlook for bookings, noting low double-digit growth over the trailing 12 months and highlighting that bookings are gradually converting into revenue. Although Q3 was slower, Q4 shows strong performance, and caution is advised against overanalyzing Q1 booking numbers. Julian Mitchell inquires about the application software EBITDA margin, specifically addressing a 30 bps year-on-year headwind in Q1. Jason Conley responds, indicating expectations for margin expansion throughout the year, although it may not match Q1's growth. He cites benefits from Deltek's restructuring and improvements in acquisition margins, with ProCare and TRANZACT anticipated to perform better in subsequent quarters. CentralReach is temporarily set aside from this analysis.

The paragraph details the financial expectations for CentralReach and Deltek, noting that CentralReach is anticipated to achieve EBITDA margins in the low 40s. Deltek has improved its EBITDA due to cost-saving measures implemented in the previous quarter, which are expected to positively impact their performance throughout the year. Neil Hunn responds positively to Julian Mitchell's comment, and the operator concludes the question-and-answer session. Zack Moxcey provides closing remarks, thanking participants and expressing anticipation for the next earnings call. The conference then concludes, and participants are instructed to disconnect.

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