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ROPER TECHNOLOGIES INC (ROP)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered strong top-line and cash flow: revenue $1.88B (+16% YoY), adjusted EBITDA $744M (39.6% margin), GAAP diluted EPS $4.28 (+22% YoY), and adjusted DEPS $4.81; adjusted free cash flow was $684M (+15% YoY) .
  • Adjusted DEPS of $4.81 exceeded the company’s guidance range ($4.70–$4.74), a notable beat driven by Application Software performance despite $9M restructuring charges absorbed in the quarter .
  • 2025 guidance initiated: total revenue growth 10%+, organic +6–7%, adjusted DEPS $19.75–$20.00; Q1 2025 adjusted DEPS $4.70–$4.74; effective tax rate expected 21–22% .
  • Strategic catalysts: recurring/reoccurring software base of $4.6B growing high single digits, enterprise bookings accelerating to double-digit growth, and ~$5B M&A firepower with an active pipeline; management emphasized GenAI deployments across businesses and DAT/Foundry network resilience upgrades .

What Went Well and What Went Wrong

What Went Well

  • Enterprise software momentum: “enterprise bookings growing solidly in the double-digit area” exiting 2024; recurring/reoccurring revenue base remains healthy and growing high single digits .
  • Verathon’s market-share gains: “becoming the market share leader in the U.S. for single-use bronchoscopes and extending their global market share lead in video laryngoscope” .
  • Cash compounding continued: FY adjusted free cash flow rose 16% to $2.282B with free cash flow margins of ~32%; management highlighted robust cash generation and operating leverage .

What Went Wrong

  • Restructuring charges: ~$9M targeted actions in Application Software (largest at Deltek) taken in Q4 to enable reinvestment in product and growth; absorbed in quarter .
  • Network software still facing freight/strike hangover: segment grew only +3% in Q4 as freight matching recovered from tough conditions and Foundry navigated post-strike impacts; Foundry declined through the year, though innovation continued .
  • Core margins modestly lower in Q4: core EBITDA margin down ~30 bps YoY given acquisition mix and restructuring; headline margins down a touch with acquisitions (Transact seasonality) .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$1.717 $1.765 $1.877
GAAP Diluted EPS ($)$3.12 $3.40 $4.28
Adjusted DEPS ($)$4.48 $4.62 $4.81
GAAP Net Earnings ($USD Millions)$337.1 $367.9 $462.3
Adjusted EBITDA ($USD Millions)$695 $717 $744
Adjusted EBITDA Margin (%)40.5% 40.7% 39.6%
Gross Margin (%) (Total)69.5% 69.2% 68.3%

Segment breakdown (Q4 2024 vs Q4 2023):

SegmentNet Revenues Q4 2023 ($M)Net Revenues Q4 2024 ($M)Gross Margin Q4 2023 (%)Gross Margin Q4 2024 (%)Operating Profit Q4 2023 ($M)Operating Profit Q4 2024 ($M)Operating Margin Q4 2023 (%)Operating Margin Q4 2024 (%)
Application Software$851.8 $1,056.9 68.9% 67.0% $219.5 $272.9 25.8% 25.8%
Network Software$362.7 $373.5 85.9% 85.4% $167.4 $174.4 46.2% 46.7%
Technology Enabled Products$399.0 $446.7 56.9% 57.2% $127.0 $150.3 31.8% 33.6%
Total$1,613.5 $1,877.1 69.7% 68.3% $513.9 $597.6 31.9% 31.8%

KPIs:

KPIQ2 2024Q3 2024Q4 2024
Operating Cash Flow ($USD Millions)$384 $755 $722
Adjusted Operating Cash Flow ($USD Millions)$384 $755 $722
Adjusted Free Cash Flow ($USD Millions)$367 $719 $684

Notes: Q4 FY highlights include adjusted net earnings $520M (+10% YoY), adjusted EBITDA $744M (+13% YoY), and revenue components of +7% organic and +9% acquisition contribution .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted DEPS ($)Q1 2025N/A$4.70–$4.74 Initiated
Adjusted DEPS ($)FY 2025N/A$19.75–$20.00 Initiated
Total Revenue Growth (%)FY 2025N/A10%+ total; organic +6–7% Initiated
Effective Tax Rate (%)FY 2025N/A21–22% Initiated
Adjusted DEPS ($)Q4 2024$4.70–$4.74 (as of Q3) Actual $4.81 Beat vs company guidance
Adjusted DEPS ($)FY 2024$18.21–$18.25 (raised in Q3) Actual $18.31 Beat vs company guidance
Dividend per share ($)Q1 2025 (payable Jan 17, 2025)“each quarter of 2024” increased by $0.075 quarterly (10%) implied prior level not explicitly stated $0.825 Raised 10% (+$0.075 quarterly)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
AI/technology initiativesDeltek “Dela” assistant; Aderant GenAI features; DAT fraud detection; ConstructConnect AI takeoff; Foundry ML/VFX Continued GenAI deployments across segments; pipeline innovation; Foundry ML; DAT tech stack Broad GenAI deployments: assistants (Deltek/Aderant), DAT real-time fraud detection, Foundry computational AI, ConstructConnect automated takeoff; focus on customer intimacy + data advantage Strengthening adoption; viewed as moat-enhancing
Freight/network conditions (DAT/Loadlink)Pressure persists; market “bouncing along the bottom” Stabilization signs; mid-single digit growth expected in Network ex-challenges Network Software +3% in Q4; pricing/packaging actions at DAT; Trucker Tools bolt-on for real-time visibility Gradual recovery; monetization actions underway
Foundry (post-strike impacts)Expect return to normalized growth as pipelines refilled in 2025 Continued impact; innovation continues Difficult year given strikes; accelerated innovation to benefit when market recovers Recovery likely in 2025; investment maintained
Recurring revenue & bookingsHSD enterprise bookings; 32% TTM FCF margins Double-digit bookings; raised FY guidance; strong ARR growth Bookings high-teens in Q4; recurring/reoccurring base $4.6B growing HSD Momentum building into 2025
Talent upgrades/leadershipNew DAT CEO; Strata/Syntellis synergy execution and growth focus Transact Campus integration leadership; investment in talent Portfolio-wide “talent offense”; internal promotions (ConstructConnect) and leadership upgrades Deepening bench strength
M&A firepower & pipeline>$4B capacity; active pipeline Transact acquisition; increased capacity via bonds; active market ~$5B firepower; expect 2025–2026 clearing; disciplined business-picking High activity expected; disciplined deployment

Management Commentary

  • “We grew revenue 14%… deployed $3.6 billion towards market‑leading vertical software… grew free cash flow 16%… topping $2 billion for the first time in our history.” — Neil Hunn, CEO .
  • “EBITDA of $744 million was 13% over prior year… DEPS of $4.81 was above our guidance range… despite the costs associated with the restructuring.” — Jason Conley, CFO .
  • “We now have over $5 billion of acquisition firepower… M&A markets are very active and appear to be accelerating… we will be business pickers first and foremost.” — Neil Hunn, CEO .
  • “Trucker Tools is a perfect complement to DAT… providing real‑time visibility… helps drive higher retention and enhanced network monetization.” — Neil Hunn, CEO .
  • “We’ve identified $20 million of cost synergies [Transact+CBORD]… start rolling through in Q1… ERP across the business to create efficiencies… great cross‑sell tailwinds.” — Jason Conley, CFO .

Q&A Highlights

  • AI impact and competitive threat: Management remains “paranoid” but confident incumbency plus intimacy/data and scale advantages deepen moats; no existential threats identified; bookings halo seen from AI features (Aderant/Deltek) .
  • DAT pricing/packaging and fraud mitigation: Actions taken on half the network in Q4 with more in 2025; innovations to increase safety/reliability and monetize network value; Trucker Tools bolt-on enhances visibility .
  • Transact + CBORD integration: $20M cost synergies, Q1 timing; ERP rollout and cloud migration services enable efficiency and cross‑sell; market feedback positive .
  • Organic growth and margin cadence: Organic 6–7% for FY25; Q1 lower in AS/MS due to comps/acquisition seasonality; core margins “up a little,” headline flattish, H2 weighted; Transact’s largest margin quarter is Q3 .
  • Capital deployment and potential equity: ~$5B balance‑sheet/debt capacity first; equity possible only for very high‑quality opportunities with higher return bar; expect 2025–2026 clearing pace .

Estimates Context

  • S&P Global consensus data for Q4 2024 (EPS, Revenue, EBITDA) was unavailable due to request limits at time of analysis; therefore, comparison to Wall Street consensus cannot be provided. Values would be retrieved from S&P Global when available.
  • Notably, Roper’s adjusted DEPS of $4.81 was above the company’s guidance range ($4.70–$4.74), indicating an internal guidance beat even without consensus context .

Key Takeaways for Investors

  • Strong Q4 finish with across‑the‑board growth and a clear guidance beat on adjusted DEPS; momentum carried by Application Software and robust cash generation (Q4 adj. FCF $684M; FY adj. FCF $2.282B) .
  • Network Software is recovering with targeted pricing/packaging actions and fraud mitigation; Trucker Tools adds real‑time visibility, supporting higher retention and monetization in 2025 .
  • Verathon’s leadership in single‑use bronchoscopes and Neptune’s operational execution underpin solid TEP outlook (HSD growth guided) .
  • 2025 setup attractive: organic +6–7%, total +10%+, core margins up slightly over the year, and ~$5B M&A capacity amid an increasingly active market; expect deployment across platforms and bolt‑ons .
  • GenAI is an enterprise‑wide theme with tangible product rollouts; management views AI as moat‑enhancing given customer intimacy/data and scale, not a disruption risk near‑term .
  • Watch Q1: seasonal margin headwinds in Application Software (Transact’s seasonality) and Network comps; H2 should improve with higher margins and bookings conversion to revenue .
  • Dividend increased 10% to $0.825 per share (payable Jan 17, 2025), continuing 32nd consecutive year of raises; supportive for income investors alongside durable FCF profile .

Appendix: Additional Comparisons vs Prior Periods and Company Guidance

MetricYoY (Q4 2024 vs Q4 2023)QoQ (Q4 2024 vs Q3 2024)
Revenue+16% to $1.877B +6% vs $1.765B
GAAP Diluted EPS+22% to $4.28 +26% vs $3.40
Adjusted DEPS+10% to $4.81 +4% vs $4.62
Adjusted EBITDA+13% to $744M +4% vs $717M
Adjusted EBITDA Margin−110 bps YoY to 39.6% −110 bps QoQ vs 40.7%

Company guidance vs actual (Q4 2024):

MetricCompany Guidance (as of Q3)Actual Q4 2024Result
Adjusted DEPS ($)$4.70–$4.74 $4.81 Beat

All data and commentary cited from primary company sources (8‑K releases, press releases, and earnings call transcripts) as referenced above.