Roper Technologies (ROP) Piper Sandler 5th Annual Growth Frontiers Conference summary

Company evolution and business model

• Transitioned from a diversified industrial to a diversified technology company, focusing on vertical market software since 2008.

• Compounded free cash flow in the mid-teens over 20 years, now generating $9B revenue with 40% EBITDA and 30%+ free cash flow margins.

• Operates 29 businesses, 21 in vertical market software and 8 in product tech, emphasizing recurring revenue and mission-critical applications.

• Targets niche markets with TAMs typically under $4B, prioritizing leadership and low outcome variability.

• Focuses on high retention, recurring revenue, cross-sell potential, and low CapEx in protected end markets like healthcare, govtech, education, and insurtech.

M&A strategy and market outlook

• Differentiates from private equity by holding businesses for decades, reinvesting for long-term growth, and acquiring earlier in the lifecycle.

• Increased bolt-on acquisitions to about a third of M&A activity, aiming to boost organic growth of platforms.

• Expects a more robust M&A market closer to 2027 due to private credit cliffs, DPI pressures, and normalization of multiples.

• Maintains constructive pre-process conversations with sponsors and management for unique acquisition opportunities.

• Shifted to acquiring earlier lifecycle companies in 2023, deploying $10B in capital, with a focus on capturing higher organic growth and more market white space.

AI adoption and commercialization

• Began building agentic AI solutions in late 2023, with adoption varying by end market and customer change management.

• CentralReach led AI adoption, using a freemium model to drive rapid uptake and ROI in autism therapy workflow.

• Applied learnings from CentralReach to other businesses like Vertafore, accelerating AI product rollout and adoption.

• AI accelerator team of 25–30 helps businesses develop agentic products, sharing expertise and speeding up go-to-market.

• Strata’s Financial Decision Intelligence leverages AI to integrate financial, operational, and clinical data for health systems, with strong early feedback and expected bookings.