Roper Exhibits Strong Prospects Despite Persisting Headwinds

Roper Technologies, Inc. ROP is benefiting from strength across its segments. Solid momentum across the Deltek, Vertafore, PowerPlan and Aderant businesses bodes well for the Application Software segment. The growing adoption of SaaS solutions and continued GenAI innovation are key catalysts to Aderant’s growth and solid demand for SaaS solutions in the GovCon and private sectors and cloud offerings bode well for the Deltek business. The Vertafore business is gaining from excellent enterprise delivery capabilities to the largest customers in the market, which has also resulted in strong annual recurring revenue (ARR) growth. Strong customer retention and adoption of new SaaS solutions are aiding the PowerPlan business.

Solid demand for Gen AI-powered solutions within the ConstructConnect business and strong customer retention are fostering the growth of the Network Software segment. Increased average revenue per user (ARPU), driven by a rise in product packaging and continued customer cross-sell activity, is supporting the DAT business. Continued growth in SoftWriters and SHP alternate site healthcare businesses bodes well for the segment.

The Technology enabled Products segment’s growth is being supported by the solid performance of the Neptune business, due to continued demand for ultrasonic meters. Strength in the Verathon business, driven by strength across single-use BFlex & GlideScope offerings, bodes well for the segment. Strength in the NDI business, driven by strong demand for cardiac & orthopedic surgical programs, is aiding the segment as well.

Roper solidified its product portfolio and leveraged business opportunities through asset additions. It’s worth noting that acquisitions boosted the company’s sales by 8% in the first quarter of 2025. In March 2025, Roper signed a definitive deal with Insight Partners to acquire CentralReach, a provider of SaaS solutions for Applied Behavior Analysis treatment. The inclusion of CentralReach’s leading software solutions, high recurring revenue mix and strong customer retention capability is expected to boost the company’s organic revenue and EBITDA growth. Management expects the transaction to be completed in April/May 2025, conditioned on the fulfillment of certain customary closing conditions.

In December 2024, Roper’s business unit, DAT Freight & Analytics, completed the acquisition of Trucker Tools LLC. The acquisition will enable the company to strengthen DAT's real-time GPS tracking and load optimization features on the DAT One platform. During the third quarter of 2024, Roper completed the acquisition of Transact Campus. The inclusion of Transact’s expertise in campus technology and payment solutions enabled the company to boost its CBORD business, which provides food service, nutrition, access and security and campus commerce solutions.

ROP’s commitment to rewarding shareholders through dividends and share buybacks is encouraging. In the first quarter, the company rewarded its shareholders with a dividend payment of $88.6 million, up 10.1% year over year. Also, in 2024, it rewarded its shareholders with dividend payments of $321.9 million, up 10.9% year over year. In November 2024, the company hiked its dividend by 10%.

In the year-to-date period, this Zacks Rank #3 (Hold) company’s shares have gained 11.7% against the industry’s 5.0% decline.

Headwinds Plaguing ROP

ROP is dealing with escalating costs and expenses. In the first quarter of 2025, the cost of sales increased 17.9% year over year while selling, general and administrative expenses climbed 9.8%. Cost of sales, as a percentage of sales, was 31.3%, up 260 basis points year over year. Higher costs related to the amortization of acquired assets are pushing up operating expenses. Escalating costs, if not controlled, may impede the company’s bottom line.

Roper has considerable exposure to overseas markets. This brings social and environmental risks as well as forex woes. A stronger U.S. dollar is weighing on the company’s overseas business performance.

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