Roper Technologies, Inc. Common Stock Piper Sandler 5th Annual Growth Frontiers Conference

Thanks for having me. Yeah, absolutely.

Sure. Thanks for having us. It is the first time I think we have been in Nashville, so it is great. Roper is a free cash flow compounder. If you think about Roper, we have compounded free cash flow in the mid-teens over the last 20 years. Our roots are really in, we were a diversified industrial company, and now today we are a diversified technology company. Really since 2008, we have been acquiring vertical market software businesses. We have sort of had this industrial veneer, but a lot of software underneath it. Then our GICS code changed in 2022 when we divested our industrial businesses. The through line for Roper, over the last 20 years, is we like being leaders in niche vertical markets. Small markets, typical TAM size for us, the largest TAM that we are in is maybe $4 billion. Right? We're leaders, so we extend our leadership.

When you have market leadership, you can still continue to grow, cross-sell, get new logos. It's a good place for us to be. You get a low range of outcomes as a result of that. We take our free cash flow, we reinvest that to the next great vertical software business. Today, we're about $9 billion of revenue, 40% EBITDA margins, 30% plus free cash flow margins. We have 29 businesses, 21 of them are vertical market software. Eight of them are product tech, vertical tech businesses with a lot of recurring revenue. Think of us as mission critical across the industries that we play in. System-of-record application software or critical network software businesses are primarily what we own in terms of software.

Sure. Just to set the context, we love end markets that are protected, but at the end of the day, we really are thinking about the types of businesses we want to own, the business models, the high gross retention, the high recurring revenue, the ability to cross-sell, all those things I've mentioned. Good working capital efficiency and low CapEx. Those are the characteristics from a fundamental standpoint. If you think about, as we've acquired over the years, we've just sort of naturally fallen into really good kind of protected markets. We're in healthcare, we are in govtech, we're in education, institutional tech, insurtech, and then a variety of sort of, I'd call them just broadly industrial tech type spaces.

Sure. I would say just from the outside, if you talk to sponsors or you talk to bankers, they think of us more as a private equity versus a sponsor, or versus a strategic. That can be true, but I think the way we differentiate is we think about owning a business over decades, not over five years. So we can think about a business that in 10 years is going to be better than it was in five years and the like. Because we are just continually reinvesting in that business. We are adding new capabilities, new leadership. So, I think that is a huge differentiation. The other is, if we are going to buy a business, and this is part of a change in strategy to buy a little bit earlier in their lifecycle, we are doing bolt-ons to increase the organic growth of that platform.

I would say private equity does the same thing, but they also know that they can potentially buy down a multiple by doing bolt-ons. So we will do bolt-ons really to make the platform stronger. Again, just thinking over a very long arc of time. So I would say that is a key differentiator between us and private equity.

Sure. Part of that is, we know that when we acquire a business, we know also the kit of tools that it takes to sort of get the business Yeah where we need it to be.

Maybe it's not the first year or the second year, but the third. We're trying to move that forward. Obviously, we're always trying to get better, but they're always really good businesses in good markets that have primarily, they started in venture, had good product market fit, then got into private equity. They had that iteration of a strategy, which is kind of shorter term, and then it's like, well, now we have a strategy where we can build on that forever. That's sort of Yeah that's the life cycle, and we like that space.