M&A Pipeline and Competition
Q: What's driving optimism in M&A opportunities?
A: Management is optimistic due to a large number of deals entering the market, with pipelines being full. Reduced competition from private equity firms, which are becoming net sellers rather than buyers, is leading to better valuations. They remain disciplined in capital allocation, considering each deal individually. "

AI Strategy and Growth Impact
Q: How will AI affect organic growth?
A: The company is integrating AI tools across its 28 businesses to enhance productivity and add value for customers. Early successes include code assistance and marketing content generation. Products using AI, such as those from Aderant, Deltek, DAT, ConstructConnect, and Foundry, are seeing accelerated bookings and, in some cases, higher price points due to the added value. "

Procare Acquisition Contribution
Q: How did Procare perform this quarter?
A: Procare contributed a little over $20 million in revenue with EBITDA margins in the mid-30% range, meeting expectations. Its revenue is consistent monthly, with little seasonality. Integration is progressing well, with positive momentum toward growth milestones. "

Procare Growth Outlook
Q: What's the growth outlook for Procare?
A: Procare is expected to achieve mid-teens organic growth, outpacing the market growth rate of around 10%. With a 1.5x relative market share, it is poised to gain more share. Future bolt-on acquisitions are anticipated to be modest. "

Freight Matching Business Outlook
Q: What's the outlook for the Freight Matching business?
A: The Freight Matching business is expected to be down low single digits for the year, aligning with prior expectations. Carrier conditions have been stable, and this stability against prior year comparisons shapes the annual outlook. "

Flat Q2 EPS Guidance
Q: Why is Q2 EPS guidance flat sequentially?
A: Flat Q2 EPS guidance is consistent with historical patterns, where Q1 to Q2 is usually stable on a segment EBITDA basis. Last year's sequential increase was due to strong deliveries from Verathon, a dynamic not present this year. Management remains confident in the full-year guidance and progression through 2024. "

Neptune's Growth Factors
Q: What's driving Neptune's growth?
A: Neptune is growing due to working through a significant backlog and fulfilling delayed maintenance from COVID-19 disruptions. Approximately 5 to 5.5 years of demand is being met over 4 years, boosting growth. There's also momentum from new technologies like solid-state ultrasonic meters and improved network connectivity solutions. "

Increase in Recurring Revenue
Q: What's driving higher recurring revenue in application software?
A: The increase is primarily due to Procare, with about 75% of its revenue coming from payments. This contribution is now reflected in the recurring revenue line, boosting growth in this area. "

SaaS Transition Progress
Q: How far along is the SaaS transition?
A: With over $900 million in maintenance revenue, only mid to high single-digit percentages have been converted to SaaS so far. Significant progress is underway in businesses like Deltek and Aderant, the latter having over 80% of bookings in the cloud. There's substantial opportunity remaining in the transition. "

Impact of Job Market on Software Business
Q: Are job market trends affecting software revenue?
A: The company hasn't observed significant impacts from shifts in the job market. Very little revenue is based on seat pricing, and where it exists, they're transitioning to different metrics to avoid being affected by changes in workforce compositions. "