• Revenue Growth: 14% total revenue growth for 2024, reaching just over $7 billion.
• Free Cash Flow: Grew 16% to nearly $2.3 billion with a 32% margin.
• EBITDA: $2.8 billion, up 13% from the previous year.
• Organic Revenue Growth: 6% for the year.
• Acquisition Contribution: $3.6 billion deployed towards acquisitions, contributing 9% to Q4 revenue growth.
• EBITDA Margin: 39.6% for Q4.
• Application Software Revenue Growth: 24% in Q4, with 18% from acquisitions and 6% organic.
• Network Software EBITDA Margin: 57.4% in Q4.
• TEP Segment Revenue Growth: 9% for the year, both total and organic.
• 2025 Revenue Guidance: Total revenue growth expected to be over 10%, with organic growth between 6% and 7%.
• 2025 DEPS Guidance: Adjusted DEPS expected to be between $19.75 and $20.
• Acquisition Firepower: Over $5 billion available for acquisitions.

• Warning! GuruFocus has detected 5 Warning Signs with ROP.

Release Date: January 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Roper Technologies Inc (NASDAQ:ROP) reported strong cash flow growth, with a 16% increase in free cash flow, reaching over $2 billion for the first time.
• The company achieved a 14% revenue growth in 2024, balanced between organic and inorganic contributions.
• Roper Technologies Inc (NASDAQ:ROP) has over $5 billion in acquisition firepower, positioning it well for future M&A opportunities.
• The company experienced accelerating demand for mission-critical solutions, with enterprise bookings growing in the high-teens by the end of Q4 2024.
• Roper Technologies Inc (NASDAQ:ROP) successfully deployed $3.6 billion towards market-leading vertical software businesses, including acquisitions of Procare and Transact Campus.

Negative Points

• Core EBITDA margin was down 30 basis points compared to the prior year, indicating some pressure on profitability.
• Some software businesses within the AS segment took $9 million in restructuring actions, which impacted Q4 results.
• The Network Software segment only achieved 3% revenue growth, partly due to challenges in the freight matching business and the writers and actors strikes affecting Foundry.
• The company faces potential risks from US policy changes affecting the Deltek business, which serves federal government contractors.
• Roper Technologies Inc (NASDAQ:ROP) anticipates lower organic revenue growth in the first quarter of 2025 due to a tough comparison created by MHA in the previous year.

Q & A Highlights

Q: How clean is the 6% to 7% organic growth outlook for 2025? Are there any notable one-off headwinds or tailwinds affecting this? A: Jason Conley, CFO, explained that there are no significant one-time factors affecting the growth outlook. He mentioned a minor impact in Q1 due to a previous one-time event in their MHA business, but overall, the growth is expected to pick up from Q2 onwards, with strong growth anticipated across the enterprise.

Q: Regarding the M&A pipeline for 2025, is there a preference for growth bolt-ons or standalone category leaders? A: Neil Hunn, CEO, stated that the company has added capacity and capability in their M&A group, focusing on building relationships for both platform and bolt-on acquisitions. With $5 billion to deploy, they aim to balance between bolt-ons and potentially finding one or two platforms, depending on the situation.

Q: Can you quantify the impact of AI tools on pricing, margins, and business efficiency? A: Neil Hunn, CEO, noted that while it's challenging to quantify the exact financial impact of AI in 2024, there is a halo effect with increased bookings at Aderant and Deltek. AI is being used to enhance customer service and R&D productivity, focusing on serving customers more efficiently and advancing product roadmaps.

Q: Are there any concerns about potential headwinds for Deltek due to US policy changes? A: Neil Hunn, CEO, mentioned that while it's early to determine the full impact of policy changes, Deltek's strengths align with increased accountability and performance-based pricing models. Bookings in government contracting have been robust, indicating customer confidence.

Q: How are AI developments affecting Roper's competitive position, especially in regulatory-heavy business processes? A: Neil Hunn, CEO, emphasized that Roper's deep customer intimacy and market leadership position them well to leverage AI for specific customer needs. The company remains vigilant and proactive in investing in AI to maintain and deepen its competitive advantage.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.