# How Roper Technologies makes money

CXProWealth Business Lens · Roper Technologies (ROP) · Q2 FY2026

Read from the 10-Q for the period 2026-04-01 to 2026-06-30, filed 2026-07-31 with the SEC (accession 0000882835-26-000036): https://www.sec.gov/Archives/edgar/data/882835/000088283526000036/

Business Lens explains how a company earns, spends and keeps its money, from its own filings. It is insight and context, never a view on the shares, a target, or advice. Figures are raw units as filed; percentages are percentage points.

## Headline figures

- Revenue: $2.1B (+8.5% on the year)
- Operating income: $584.7M (operating margin 27.7%)
- Net income: $1.2B (net margin 55.4%)
- Gross margin: 69.7%
- Free cash flow: —
- Cash conversion (operating cash flow / net income): 0.40x
- Capital expenditure: — of revenue

## Where the money goes (Q2 FY2026)

- Recurring → Net revenues: $1.2B
- Reoccurring → Net revenues: $202.2M
- Non-recurring → Net revenues: $207.5M
- Product Revenue → Net revenues: $482.8M
- Net revenues → Cost of sales: $638.7M
- Net revenues → Gross profit: $1.5B
- Gross profit → Selling, general and administrative expenses: $885.5M
- Gross profit → Income from operations: $584.7M
- Income from operations → Other expense, net: $500.0K
- Income from operations → Interest expense, net: $111.4M
- Income from operations → Earnings before income taxes: $472.8M
- Equity investment (gain) loss, net → Earnings before income taxes: $835.2M
- Earnings before income taxes → Income taxes: $139.5M
- Earnings before income taxes → Net earnings: $1.2B

## Where the revenue comes from

### Products and services (Revenues from Contracts - Schedule of Disaggregation of Revenue (Details))

| Member | Value | Share |
|---|---:|---:|
| Recurring | $1.2B | 57.7% |
| Product Revenue | $482.8M | 22.9% |
| Non-recurring | $207.5M | 9.8% |
| Reoccurring | $202.2M | 9.6% |

The members sum to total revenue.

### Segments (Reportable Segments (Details))

| Member | Value | Share |
|---|---:|---:|
| Application Software | $1.2B | 56.0% |
| Technology Enabled Products | $497.2M | 23.6% |
| Network Software | $430.9M | 20.4% |

The members sum to total revenue.

## Income statement, as filed

| Line | Q2 FY2026 | Of revenue |
|---|---:|---:|
| Net revenues | $2.1B | 100% |
| Cost of sales | $638.7M | 30.3% |
| **Gross profit** | $1.5B | 69.7% |
| Selling, general and administrative expenses | $885.5M | 42.0% |
| **Income from operations** | $584.7M | 27.7% |
| Interest expense, net | $111.4M | 5.3% |
| Equity investment (gain) loss, net | ($835.2M) | 39.6% |
| Other expense, net | (-$500.0K) | 0.0% |
| **Earnings before income taxes** | $1.3B | 62.0% |
| Income taxes | $139.5M | 6.6% |
| **Net earnings** | $1.2B | 55.4% |
| Basic (in dollars per share) | $12 | 0.0% |
| Diluted (in dollars per share) | $12 | 0.0% |
| Basic (in shares) | 100,400,000 |  |
| Diluted (in shares) | 100,600,000 |  |

## History

| Period | Revenue | Operating income | Net income | Operating cash flow | Capital expenditure | Free cash flow |
|---|---:|---:|---:|---:|---:|---:|
| FY2007 | $2.1B | $438.4M | $245.7M | $343.8M | $30.1M | $313.7M |
| FY2008 | $2.3B | $486.2M | $281.9M | $434.4M | $30.0M | $404.4M |
| FY2009 | $2.0B | $395.4M | $239.5M | $367.5M | $25.9M | $341.6M |
| FY2010 | $2.4B | $514.3M | $322.6M | $499.5M | $28.6M | $470.9M |
| FY2011 | $2.8B | $660.5M | $427.2M | $601.6M | $40.7M | $560.9M |
| FY2012 | $3.0B | $757.6M | $483.4M | $677.9M | $38.4M | $639.4M |
| FY2013 | $3.2B | $842.4M | $538.3M | $802.6M | $42.5M | $760.0M |
| FY2014 | $3.5B | $999.5M | $646.0M | $840.4M | $37.6M | $802.8M |
| FY2015 | $3.6B | $1.0B | $696.1M | $928.8M | $36.3M | $892.6M |
| FY2016 | $3.8B | $1.1B | $658.6M | $963.8M | $37.3M | $926.5M |
| FY2017 | $4.6B | $1.2B | $971.8M | $1.2B | $48.8M | $1.2B |
| FY2018 | $5.2B | $1.4B | $944.4M | $1.4B | $49.1M | $1.4B |
| FY2019 | $4.7B | $1.3B | $1.8B | $1.5B | — | — |
| FY2020 | $4.0B | $1.1B | $949.7M | $1.5B | — | — |
| FY2021 | $4.8B | $1.2B | $1.2B | $2.0B | — | — |
| FY2022 | $5.4B | $1.5B | $4.5B | $734.6M | — | — |
| FY2023 | $6.2B | $1.7B | $1.4B | $2.0B | — | — |
| FY2024 | $7.0B | $2.0B | $1.5B | $2.4B | — | — |
| FY2025 | $7.9B | $2.2B | $1.5B | $2.5B | — | — |

Latest trend (the newest full year against the year before; a reading, not a forecast):

- Revenue: +12.3% (year before +13.9%): steady
- Operating income: +11.9% (year before +14.4%): slowing
- Net income: -0.8% (year before +11.9%): slowing
- Free cash flow: +16.5% (year before +28.0%): slowing

## Operating figures stated in the filing

- Backlog growth, year over year: 11.0% (as of 2026-06-30). "Backlog increased 11.0% to $3,286.0 at June 30, 2026 as compared to $2,961.3 at June 30, 2025 due primarily to acquisitions and organic growth in our software segments." (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Organic revenue growth, quarter: 4.9% (as of 2026-06-30). "Organic Revenue Growth 4.5 % 3.6 % 7.1 % 4.9 %" (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Organic revenue growth, six months: 5.3% (as of 2026-06-30). "Organic Revenue Growth 4.8 % 4.4 % 7.1 % 5.3 %" (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Application Software organic revenue growth, quarter: 4.5% (as of 2026-06-30). "The growth of 4.5% in organic revenues was broad-based across the segment, led by our application software businesses serving the legal, project-based private sector, property and casualty insurance, higher education, and acute healthcare markets." (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Network Software organic revenue growth, quarter: 3.6% (as of 2026-06-30). "The growth of 3.6% in organic revenues was led by our network software businesses serving the freight match, construction, and media and entertainment markets." (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)
- Technology Enabled Products organic revenue growth, quarter: 7.1% (as of 2026-06-30). "The growth of 7.1% in organic revenues was led by our medical products businesses, highlighted by our precision measurement and airway management businesses." (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)

## Key insights

### One Indicor revaluation outweighed the whole operating business

A $835.2M gain on the Indicor stake exceeded income from operations of $584.7M, so net earnings of $1.17B mostly reflect one revaluation.

Equity investment activity was a gain of $835.2M in the quarter, against $16.6M a year earlier. The filing attributes it mainly to a higher fair value for the Indicor stake, revalued "in anticipation of Indicor's planned divestiture of its portfolio of instrumentation businesses." The gain equals 142.8% of income from operations of $584.7M and 63.9% of earnings before income taxes of $1.31B. _(from the filing)_
The same transaction lowered the tax rate. Income taxes of $139.5M were 10.7% of pretax earnings, against $107.0M and 22.0% a year earlier. The filing ties the change to "net tax benefits recognized in connection with a change in our outside basis in Indicor," together with legal entity restructuring. _(from the filing)_
Net earnings rose 208.9% to $1.17B, a net margin of 55.4%, and diluted earnings per share were $11.62 against $3.49. Fewer shares added to the per-share rise: diluted shares were 100.6M against 108.4M a year earlier. _(from the filing)_
Analysis: the filing calls the Indicor valuation a matter of significant judgment. A gain tied to one planned sale is unlikely to recur in the same form, and it brings no cash until the sale closes. Income from operations, up 6.6%, is the steadier read of how the businesses did in the quarter. _(analysis)_

### Acquisitions added revenue, amortization took the margin

Revenue grew 8.5% but only 4.9% organically, and SG&A rose 11.1%, so operating margin slipped to 27.7% from 28.2% despite a higher gross margin.

Total revenue grew 8.5% and organic revenue 4.9%. The filing credits most of the difference to acquisitions, led by CentralReach and Orchard Software in Application Software and Subsplash in Network Software. _(from the filing)_
Gross margin rose to 69.7% from 69.2%. Selling, general and administrative expenses grew 11.1% to $885.5M, or 42.0% of revenue against 41.0% a year earlier. Income from operations rose 6.6% to $584.7M, slower than revenue, and operating margin slipped to 27.7% from 28.2%. _(from the filing)_
The filing attributes the higher SG&A mainly to "higher amortization of acquired intangibles" from last year's acquisitions, and in Network Software to the SG&A profiles of the acquired businesses. In Technology Enabled Products it names input cost pressures at the water meter business and a revenue mix within medical products weighted toward consumables. _(from the filing)_
Analysis: amortization of acquired intangibles is an accounting charge for the price paid for a business, not a cash cost of running it, so part of the margin slip reflects how deals are booked. The test over time is whether the gap between total and organic growth turns into operating profit, rather than being replaced by the next deal's amortization. _(analysis)_

### Subscriptions grow while one-off licenses stand still

Recurring revenue of $1.22B grew 10.9% to 57.7% of revenue, while non-recurring revenue grew 0.1%, so the subscription base carries the growth.

The filing defines recurring revenue as SaaS, annual term licenses and software support. It was $1.22B, 57.7% of revenue, up 1.2 points of share. Reoccurring revenue, transaction and volume fees that run through the software, grew 7.9% to $202.2M. Non-recurring licenses and services grew 0.1% to $207.5M, and product revenue grew 6.9% to $482.8M. _(from the filing)_
Backlog, the revenue the company expects to recognize within twelve months, grew 11.0%, faster than revenue at 8.5%. The filing attributes the increase to "acquisitions and organic growth in our software segments." _(from the filing)_
Analysis: recurring growth includes acquired subscription businesses, so 10.9% is not a like-for-like renewal rate, and the filing does not give organic growth by revenue type. Even so, a rising share of revenue that renews narrows how much any one quarter can surprise. _(analysis)_

### Competitive edge

- **Customers pay for the year in advance** In last year's third quarter, the filing's renewal season, operating cash flow of $869.5M exceeded operating income of $573.0M, as prepaid renewals arrived.
- **Owning more software raised gross margin across the history** Gross margin rose from 63.2% to 69.2% across the annual history, while revenue first fell to $4.02B and then grew to $7.90B.
- **Organic growth spread across many small niche markets** All three segments grew organically, 4.5% in Application Software, 3.6% in Network Software and 7.1% in Technology Enabled Products, each led by different niches.

### What to watch

- **Interest now takes 19.1% of operating income** Net interest of $111.4M rose 40.8% while income from operations rose 6.6%, lifting interest to 19.1% of operating income from 14.4%.
- **AI could blur what makes niche software distinct** The filing warns AI capabilities could become commoditized and that AI provider price rises may not pass through, in a company where Application Software is 56.0% of revenue.
- **Customer systems rest on a few cloud providers** Roper hosts customer systems on Amazon, Google, Microsoft and Oracle clouds and says that concentration raises its exposure to outages and pricing changes.

## Investor view

**A $835.2M gain on the Indicor stake, not the software, drove most of Roper's quarterly earnings**

### How it makes money

Roper describes itself as a company that designs and develops "vertical software and technology enabled products for a variety of defensible niche markets." Net revenues were $2.11B in the quarter against $1.94B a year earlier. Application Software brought in $1.18B, or 56.0% of revenue, Technology Enabled Products $497.2M (23.6%) and Network Software $430.9M (20.4%). _(from the filing)_
Most revenue renews. Recurring revenue, which the filing defines as SaaS, annual term licenses and software support, was $1.22B, 57.7% of the total. Reoccurring revenue, "transactional and volume-based fees facilitated through our software," added $202.2M (9.6%). Non-recurring licenses and services were $207.5M (9.8%) and product revenue, mostly hardware in Technology Enabled Products, was $482.8M (22.9%). _(from the filing)_
The economics are those of a software company. Gross margin was 69.7% of revenue and income from operations was $584.7M, an operating margin of 27.7%. Selling, general and administrative expenses took 42.0% of revenue. The filing explains much of their growth by amortization of intangibles from acquired businesses, so the cost of buying companies sits mostly below gross profit. _(from the filing)_
Growth has two engines the company names: "continuous improvement in the operating performance of our businesses" and acquiring businesses "capable of realizing growth while maintaining high margins." In the quarter, organic revenue growth was 4.9% against total revenue growth of 8.5%, so acquisitions supplied a large part of the increase. _(from the filing)_

### What shifted

The headline earnings are mostly one item. An equity investment gain of $835.2M, against $16.6M a year earlier, came mainly from a higher fair value for the Indicor stake, revalued "in anticipation of Indicor’s planned divestiture of its portfolio of instrumentation businesses." The gain was 63.9% of earnings before income taxes of $1.31B. Net earnings rose 208.9% to $1.17B, a net margin of 55.4%. _(from the filing)_
Underneath, operations grew steadily but a little less profitably. Revenue rose 8.5% and gross profit 9.3%, lifting gross margin to 69.7% from 69.2% a year earlier. SG&A grew 11.1%, faster than revenue, and operating margin slipped to 27.7% from 28.2%. The filing attributes the higher SG&A mainly to "higher amortization of acquired intangibles" from last year's acquisitions, CentralReach in Application Software and Subsplash in Network Software. _(from the filing)_
The mix kept moving toward subscriptions. Recurring revenue grew 10.9% and gained 1.2 points of share, while non-recurring revenue grew 0.1% and product revenue 6.9%. Organic growth was 4.5% in Application Software, 3.6% in Network Software and 7.1% in Technology Enabled Products, where the filing credits medical products and notes "an expected decline in our water meter technology business." _(from the filing)_
Financing costs rose. Interest expense, net, was $111.4M against $79.1M, up 40.8%, which the filing puts down to "higher average debt balances and a higher weighted-average interest rate on our senior notes." Interest took 19.1% of income from operations, against 14.4% a year earlier. Diluted shares fell to 100.6M from 108.4M as the company bought back stock, and diluted earnings per share were $11.62 against $3.49. _(from the filing)_
The tax rate fell with the same transaction. Income taxes of $139.5M were 10.7% of pretax earnings, against $107.0M and 22.0% a year earlier. The filing ties the change to "net tax benefits recognized in connection with a change in our outside basis in Indicor," together with legal entity restructuring. _(from the filing)_

### Risks in the filing

Roper names its reliance on third-party cloud platforms, including Amazon Web Services, Google Cloud Platform, Microsoft Azure and Oracle Cloud, and says "concentration with a limited number of providers increases our exposure to outages and pricing changes." It also names its software supply chain as a target: open-source components, build pipelines and developer tools, including AI coding tools. _(from the filing)_
AI is named as a competitive risk. The filing says AI "capabilities could become commoditized, reducing our ability to significantly differentiate our offerings," and that new AI offerings "may disrupt our offerings or transform workforce needs." It relies on AI providers such as OpenAI, Anthropic, Google and Microsoft and says it "may not be able to pass such cost increases on to our customers." _(from the filing)_
The acquisition strategy carries its own named risks: difficulty making acquisitions and obtaining regulatory approval, integrating acquired businesses, unforeseen liabilities from future deals, limits imposed by its indebtedness, volatile interest rates, and potential write-offs of goodwill and other intangible assets. _(from the filing)_
Of these, the numbers already show the debt and interest rate risk: interest is taking a growing share of operating income. The AI and goodwill risks do not yet appear in the figures. If AI did erode differentiation, organic growth and gross margin in the two software segments are where it would likely surface first, ahead of any write-off. _(analysis)_

## Founder view: mechanisms

### Recurring revenue compounds the base

Most of Roper's software is sold as subscriptions, annual licenses and support contracts that renew. Each year's sales add to a base that mostly carries over, so growth depends on keeping customers and adding some price and product each year, not on winning the whole book of business again. _(analysis)_

### Buy niche leaders and keep them

Roper grows by buying businesses that lead small vertical markets and running them for cash, rather than merging them into one product. The parent allocates capital; the businesses keep their own customers and products. An acquisition adds revenue at once, and its cost shows up later as amortization of acquired intangibles and as interest on the debt that paid for it. _(analysis)_

### Customers pay before the work

Subscription and support customers pay in advance, often once a year. The company holds that cash as deferred revenue and earns it over the following months. Working capital runs negative as a result: customers help finance the business, and cash arrives in waves around renewal dates rather than evenly through the year. _(analysis)_

### Shifting the mix toward software lifts margin

Software carries little cost of sales, so a portfolio that tilts toward it earns a higher gross margin even if no single business improves. Roper's history reads as that kind of shift: revenue fell for two years while gross margin rose, and the company still holds a minority stake in Indicor, a set of instrumentation and flow control businesses it no longer runs. _(analysis)_

## Member research

Signed-in members read, on the page: what Roper Technologies's numbers depend on from here, and the playbook behind each mechanism (what needs scale, what transfers, how to test it, the metric that would show it).

## Sources

- Roper Technologies 10-Q for the period to 2026-06-30: https://www.sec.gov/Archives/edgar/data/882835/000088283526000036/ (2026-07-31)

Methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02 · as of 2026-11-02