Sign in
RT

ROPER TECHNOLOGIES INC (ROP)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue grew 12% to $1.88B with 5% organic and 8% acquisition contribution; adjusted EPS was $4.78 and adjusted EBITDA was $740M, while GAAP EPS fell to $3.06 due to equity investment impacts and higher amortization .
  • Versus S&P Global consensus, EPS modestly beat ($4.78 vs $4.74*) and EBITDA slightly beat ($739M vs $735M*), while revenue was essentially in line/slightly below ($1.883B* vs $1.883B actual), with margin strength cited as the driver of the EPS beat .
  • FY 2025 guidance raised: adjusted EPS to $19.80–$20.05 (from $19.75–$20.00), total revenue growth to ~12% (from 10%+), organic growth maintained at +6–7%; Q2 adjusted EPS guided to $4.80–$4.84 .
  • Strategic catalyst: completed acquisition of CentralReach (Apr 23), adding a vertical leader with GenAI-enabled ABA therapy workflow; management highlighted >$5B of M&A firepower and an active pipeline as a continuing stock narrative .

What Went Well and What Went Wrong

What Went Well

  • 12% total revenue growth with solid 5% organic and 8% acquisition contribution; adjusted net earnings +9% and adjusted EBITDA +9% underscored resilient cash compounding .
  • “We are increasing our full year outlook… underpinned by resilient demand for our mission critical solutions and our expanding recurring revenue base” — Neil Hunn (CEO) .
  • Closed CentralReach, expected to deliver ~$175M revenue and ~$75M EBITDA TTM by June 2026, with growth “in the 20% area,” strengthening Application Software and future margin trajectory .

What Went Wrong

  • GAAP net earnings decreased 13% (to $331M) and GAAP EPS fell 14% (to $3.06), driven by equity investment losses and higher amortization; adjusted EBITDA margin fell 90 bps to 39.3% .
  • Free cash flow down 1% YoY to $507M, impacted by a $24M legal settlement and coupon timing on 2024 bond issuance; management expects FCF to be back-end weighted in 2025 .
  • Slight softness in Network Software (organic +1%), with DAT still operating amid low spot volumes and Foundry working through strike-related headwinds; guidance implies improvement through the year .

Financial Results

Core P&L and Margins (Oldest → Newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$1.765 $1.877 $1.883
GAAP EPS ($)$3.40 $4.28 $3.06
Adjusted EPS ($)$4.62 $4.81 $4.78
Adjusted EBITDA ($USD Millions)$717 $744 $740
Adjusted EBITDA Margin (%)40.7% 39.6% 39.3%
Total Gross Margin (%)69.2% 68.3% 68.7%
Operating Cash Flow ($USD Millions)$755 $722 $529
Adjusted Free Cash Flow ($USD Millions)$719 $684 $507

Segment Revenue

Segment Revenue ($USD Millions)Q3 2024Q4 2024Q1 2025
Application Software$984.4 $1,056.9 $1,068.2
Network Software$367.1 $373.5 $375.9
Technology Enabled Products$413.1 $446.7 $438.7
Total$1,764.6 $1,877.1 $1,882.8

Segment Margins (Selected)

Segment Gross Margin (%)Q3 2024Q4 2024Q1 2025
Application Software68.3% 67.0% 67.5%
Network Software84.9% 85.4% 84.0%
Technology Enabled Products57.4% 57.2% 58.7%
Total69.2% 68.3% 68.7%

KPIs

KPIQ3 2024Q4 2024Q1 2025
Organic Revenue Growth (%)4% 7% 5%
Acquisition Contribution (%)9% 9% 8%
TTM Adjusted Operating Cash Flow ($USD Billions)—$2.39 $2.39
TTM Adjusted FCF ($USD Billions)—$2.28 $2.28

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSFY 2025$19.75–$20.00 $19.80–$20.05 Raised
Total Revenue GrowthFY 202510%+ ~12% Raised
Organic Revenue GrowthFY 2025+6–7% +6–7% Maintained
Adjusted EPSQ2 2025—$4.80–$4.84 New
CentralReach DilutionFY/Q2 2025—~$0.15 FY; ~$0.05 Q2 New (included)
Tax Rate (Effective)FY 202521–22% 21–22% Maintained
DividendQ3 2025 Payable—$0.825/share (payable Jul 22, 2025) Announced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
AI/Technology InitiativesBroad portfolio GenAI deployments (Deltek, Aderant, Foundry, ConstructConnect) Continued GenAI product assistance and fraud mitigation; bookings halo CentralReach’s GenAI products (early revenue), agentic workflows; portfolio accelerating Expanding use cases, monetization ramping
Supply Chain/OperationsNeptune resolved mechanical meter production issue Verathon/Neptune strong execution Order momentum improved at Verathon/Neptune; TEP outlook HSD Improving
Tariffs/MacroFreight markets stabilizing; Foundry strike hangover Macro stable; bookings strong Tariff exposure mostly USMCA-compliant; ~$10–$15M issue; macro uncertainty but resilience Manageable impact
Product PerformanceVerathon leadership (BFlex, GlideScope) Verathon record year; Neptune strong Verathon/Neptune growth; NDI strength in healthcare OEMs Sustained strength
Regulatory/Legal—$9M restructuring charges in AS; legal settlement charge $24M legal settlement paid in Q1; FCF timing impacts One-offs absorbed
R&D ExecutionConstructConnect AI takeoff; Aderant/PowerPlan cloud PowerPlan ARR acceleration from new tax/fixed asset product New Verathon product releases slated; portfolio innovation Continued cadence
M&A/Capital DeploymentTransact + CBORD combined; active pipeline >$5B firepower; LP liquidity pressures CentralReach closed; >$5B firepower; robust pipeline Active/constructive backdrop

Management Commentary

  • “Our quarterly financial results were solid with Q1 total revenue growing 12% and organic revenue growing 5%… cash flow growing 12% over the last 12 months.” — Neil Hunn (CEO) .
  • “We continue to be very well positioned for capital deployment with more than $5 billion of available firepower over the next 12 months.” — Neil Hunn (CEO) .
  • “Q1 [adjusted] EPS of $4.78 was above our guidance range… led by strong margin performance.” — Jason Conley (CFO) .
  • CentralReach “is a powerhouse business… with multiple levers to grow revenue and expand margins,” expected ~20% revenue/EBITDA growth when organic .
  • DAT pricing/packaging actions and fraud mitigation underpin Network Software recovery; Foundry saw “green shoots” with ARR returning to growth in 2025 .

Q&A Highlights

  • Deltek GovCon exposure: pipeline push-outs amid budget/shutdown uncertainty; still 80–85% recurring; modestly lower 2025 organic growth for Deltek but not structural; sentiment remains good .
  • Free cash flow cadence: back-end weighted due to bond coupon timing and two federal tax payments in Q2; strong H2 given Transact seasonality (Q3 peak) and frontline strength .
  • CentralReach retention and AI: gross logo retention low-90s due to therapist churn, but net retention ~115–120%; AI a meaningful future growth driver though early in revenue mix .
  • Tariffs: exposure primarily in TEP; majority of cross-border flows USMCA-compliant; ~$10–$15M issue manageable .
  • M&A pipeline: robust despite PE hesitancy at the macro level; >$5B capacity, times of uncertainty historically advantageous (e.g., Verathon in 2020) .

Estimates Context

  • Q1 2025 vs S&P Global consensus: Adjusted EPS $4.78 vs $4.74* (beat), Revenue $1.8828B vs $1.8834B* (inline/slight miss), EBITDA $739M vs $735M* (beat). Management cited stronger margins and acquisition timing (Transact seasonality) supporting EPS .
  • Q2 2025 guidance $4.80–$4.84 sits broadly in line with consensus EPS $4.83*; management expects Network Software to improve and Application Software acquisitions to contribute .
MetricQ1 2025 ConsensusQ1 2025 Actual
Primary EPS ($)4.74394*4.78
Revenue ($USD Billions)1.88344*1.8828
EBITDA ($USD Millions)735.0*738.9

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Resilient compounding: strong adjusted EPS/EBITDA growth and raised FY guidance despite GAAP noise from equity investments; recurring software base remains the core engine .
  • Mix shift tailwinds: portfolio increasingly tilted to higher-growth vertical software (CentralReach, Procare, Transact), supporting medium-term organic acceleration and margin expansion .
  • Near-term cadence: expect back-end weighted FCF and margin expansion through the year (Transact Q3 peak; DAT pricing/packaging) — use pullbacks on seasonal cash patterns to add .
  • Watch Deltek GovCon: monitor federal budget/shutdown headlines; management indicates temporary timing effects rather than demand destruction .
  • DAT freight recovery: monetization via price actions and fraud mitigation offsets low spot volumes; incremental upside as carrier participation stabilizes/improves .
  • Tariffs manageable: USMCA compliance and proactive countermeasures suggest limited P&L impact (~$10–$15M), reducing macro downside risk .
  • Capital deployment optionality: >$5B firepower and active pipeline provide ongoing acquisition catalysts; CentralReach integration offers an attractive proof point .

Non-GAAP Adjustments (Q1 2025 context)

  • Adjusted results exclude minority investment impacts (Indicor), acquisition-related transaction expenses, and amortization of acquired intangibles; per-share impacts include +$1.42 from amortization and +$0.29 from minority investment adjustments .

Additional Notes

  • Trailing-twelve-month adjusted operating cash flow rose to $2.39B; FCF margin ~31% TTM, demonstrating durable conversion .
  • Dividend of $0.825 per share approved (payable July 22, 2025), consistent with ongoing cash return while preserving M&A flexibility .