Roper Technologies (NASDAQ:ROP) reported third-quarter 2026 results marked by 7% organic revenue growth, 15% adjusted diluted earnings-per-share growth and continued investment in artificial intelligence products and bolt-on acquisitions.
Revenue rose 8% year over year to $2.2 billion, while EBITDA increased 7% to $864 million. Adjusted diluted earnings per share totaled $5.89, above the company’s prior guidance range of $5.75 to $5.80. Free cash flow was $805 million, or 37% of revenue, though it declined 4% from the prior year.
“It was a solid quarter,” President and Chief Executive Officer Neil Hunn said, pointing to growth across the company’s software businesses, continued recovery signals at freight-market platform DAT, and ongoing challenges in Neptune’s water-meter market.
Full-Year Earnings Outlook Raised
Roper raised and narrowed its full-year adjusted diluted EPS guidance to a range of $22.35 to $22.40, representing a $0.15 increase at the midpoint from its previous forecast and a $0.95 increase from its original outlook. The company continues to expect total revenue growth of more than 8% and organic revenue growth of about 6% for the year.
For the fourth quarter, Roper forecast adjusted diluted EPS of $5.95 to $6.00 and a tax rate in the 20% to 21% range.
Chief Financial Officer Jason Conley said the company expects full-year free cash flow to exceed 30% of revenue. He said third-quarter free cash flow was affected by the timing of interest coupon payments on bonds issued in 2025 and a temporary collections lag at Illumia during an ERP implementation.
Roper expects some improvement in Illumia collections during the fourth quarter, although Conley said some effects could extend into the first quarter of 2027. The company expects free cash flow per share for the year to grow in line with, or potentially somewhat faster than, adjusted EPS.
Software Segments Show Growth, AI Rollout Expands
Roper’s Application Software segment recorded 7% total revenue growth and 6% organic growth, with EBITDA margins rising 30 basis points to 43.7%. The company expects fourth-quarter organic growth in the segment to remain in the mid-single-digit-plus range.
The Network Software segment reported 8% total revenue growth and 5% organic growth. EBITDA margins were 52.4%, down 130 basis points year over year, while core margins were essentially flat. Roper expects Network Software organic growth to be modestly higher in the fourth quarter than in the third quarter, aided by DAT and Subsplash becoming organic in the fourth quarter.
Hunn said the company’s AI momentum is expanding across its vertical-market software portfolio. He said 17 or 18 of Roper’s 21 software businesses have agentic solutions in the market, while the remaining businesses include a group purchasing organization and laboratory-software companies with highly automated workflows.
Among product developments highlighted on the call:
- Vertafore has launched 12 workflow automation agents since the start of the year, including tools for insurance policy and submission processing.
- Aderant has seven AI agents in early access designed to help law firms improve billing, collections and billing appeals.
- PowerPlan launched an intelligent unitization product that uses AI to help electric utilities classify capital investments into assets.
- CentralReach introduced ReportDraftAI, intended to reduce time spent preparing clinical reauthorization reports for autism-care providers.
- Strata made its Financial Decision Intelligence, or FDI, offering generally available on Sept. 1 as an add-on subscription for healthcare finance teams.
Hunn said AI adoption is still in an early commercialization phase, with customer governance requirements, budget cycles and sales processes affecting adoption speed. However, he said early customer interest has been positive and that the company has not experienced what he characterized as an outright failed product launch.
In response to an analyst question, Hunn said CentralReach has seen roughly 75% of bookings tied to AI-specific or AI-related products, while Aderant has seen approximately 25% of bookings in that category. He said Roper is using several monetization models, including recurring fixed-consumption arrangements, direct consumption pricing and higher-priced cloud add-ons.
Deltek Cloud Migration and DAT Recovery Signals
Deltek delivered another encouraging quarter, supported by private-sector solutions and solid government-contracting bookings, according to management. The broader government-contractor market remains uncertain, but Conley said customers are increasingly moving from perpetual licenses to cloud offerings.
Deltek has announced that support for its Costpoint on-premises product will end in the first quarter of 2028, which Conley said is creating a catalyst for customer migrations. He cautioned that cloud bookings do not convert to revenue as immediately as perpetual license sales.
At DAT, Roper cited accelerated growth supported by network expansion, higher average revenue per user and continued adoption of digital freight marketplace offerings. Hunn said the company is seeing supply-side recovery in freight markets, though it would like to see stronger load volumes before declaring a broader recovery.
Roper said Foundry reached a record level of annual recurring revenue, while SoftWriters continued to benefit from adoption of its AI order-entry product for pharmacies.
Neptune Faces Near-Term Mix Pressure
Roper’s Technology Enabled Products, or TEP, segment grew revenue and organic revenue by 10% in the third quarter. EBITDA margins declined 90 basis points to 34.3%. The company expects mid-single-digit organic growth in the fourth quarter.
NDI posted what Roper described as exceptional growth, driven by demand for precision measurement products, while Verathon reported strength across its BFlex, GlideScope and BladderScan product lines.
Neptune, however, had a softer third quarter after a better-than-expected first half. Roper now expects Neptune’s second-half revenue to be slightly down compared with its previous expectation for modest growth.
Management attributed the pressure to a shift toward lower-priced, lower-margin mechanical meters rather than ultrasonic or static meters. Hunn said several larger static-meter projects were delayed, though Neptune’s overall meter volume was close to expectations.
Roper said the North American water-meter market is also comparing against a post-pandemic installation surge, particularly in the Northeast. Management characterized current market conditions as a reset following that period rather than a broader macroeconomic cycle and said it continues to expect long-term demand for static meters to remain intact.
Acquisitions, Deleveraging and Capital Capacity
During the quarter, Roper deployed $436 million on three bolt-on acquisitions: Origo for iPipeline, Playground for Procare and C Myers for Strata. Management said each acquisition expands existing businesses in markets where Roper already has domain expertise and distribution capabilities.
The company reduced net debt to EBITDA by half a turn during the quarter to 2.9x, aided by seasonally strong cash flow and proceeds from the divestiture of Indicor’s instrumentation businesses. Roper ended the quarter with more than $300 million in cash and $1.3 billion drawn on its $3.5 billion revolver.
Roper expects about $600 million in pretax proceeds in the fourth quarter from Indicor’s planned sale of its remaining flow-controls businesses to Xylem, subject to regulatory clearance. Conley said Roper has more than $6 billion of capital deployment capacity over the next 12 months.
Hunn said the company remains “cautiously optimistic” regarding acquisition opportunities in 2027, while retaining share repurchases as an alternative if merger-and-acquisition conditions do not produce attractive opportunities.
About Roper Technologies (NASDAQ:ROP)
Roper Technologies, Inc is a diversified technology company that develops and acquires businesses serving specialized markets. Its portfolio includes application software, network software and technology-enabled products used by businesses, healthcare organizations, government agencies and other institutions.
The company’s software businesses provide solutions for areas such as education administration, healthcare information management, enterprise asset management, compliance, legal and construction workflows, and financial services.
