ROP · Research
Roper Is 77.11% Software, but an $835.2M Indicor Gain and a $2B Revolver Draw Shape 2026
Roper's Q2 2026 revenue was $2.11B, with software at $1.63B. Revenue grew 8.50%.
| Scorecard | Read |
|---|---|
| Thesis | Roper's vertical software portfolio keeps compounding recurring revenue near 10%, and cash flow funds both acquisitions and buybacks |
| What proves it wrong | Recurring software revenue growth falls below 7%, or net debt rises above 4x EBITDA |
| Next catalyst | Q3 2026 results for the quarter ended Sep 30, 2026 |
| Key multiple | 16.65x EV / GAAP EBITDA of $3.24B |
| Debt | $11.32B: senior notes $8,500M, revolver $2,850M, other $18.6M, less $49.2M costs; $718.3M current |
| Stock pay | $191.80M from the cash flow line, 2.32% of revenue |
What Roper owns
Roper Technologies owns a portfolio of niche software businesses plus a smaller group of product companies. It buys vertical software companies and runs them as separate units [1].
Q2 2026 revenue was $2,108.9M, up 8.50% from $1,943.6M [1]. Twelve-month revenue was $8.28B.
How much of Roper is software
Roper splits revenue between software and product. In Q2, software revenue was $1,626.1M, 77.11% of the total.
Product revenue, all from Technology Enabled Products, was $482.8M, 22.89% [1].
Inside software, recurring revenue was $1,216.4M, reoccurring $202.2M and non-recurring $207.5M [1]. Recurring is 74.80% of software revenue and grew 10.85%.
Segments
Application Software was $1,180.8M, up 7.85%. Network Software was $430.9M, up 11.81%.
Technology Enabled Products was $497.2M, up 7.32% [1].
Gross margin was 69.8% in Application Software, 84.3% in Network Software and 56.9% in Technology Enabled Products [1].
Network Software SG&A rose to 43.4% of revenue from 39.3% [1]. That segment is spending more to grow.
Segment operating margin was 27.4% in Application Software against 26.9%, 41.0% in Network Software against 43.9%, and 33.3% in Technology Enabled Products against 35.4% [1]. Only Application Software improved.
Total segment margin was 31.6% against 32.3%, and income from operations was 27.7% of revenue against 28.2% [1]. Revenue grew faster than profit in the quarter.
Backlog
Remaining performance obligations were $5,222.6M at Jun 30, 2026. About 63%, or $3,286.0M, is expected to be recognized within the next twelve months [1].
Roper calls the twelve-month portion backlog, and it grew 11.0% from $2,961.3M [1].
Network Software revenue grew 11.8% to $430.9M in Q2, led by 2025 acquisitions, most notably Subsplash. Organic growth in the segment was 3.6% [1].
Acquired revenue did most of the work in that segment.
Backlog of $3,286.0M equals 39.68% of trailing twelve-month revenue of $8,280.3M. That revenue is 2025 revenue of $7,902.5M plus first-half 2026 revenue of $4,204.2M less first-half 2025 revenue of $3,826.4M [1].
The Indicor gain is not operating income
Roper holds 43.4% of Indicor at fair value. Q2 included an equity investment gain of $835.2M, and six months $1,002.5M [1].
Q2 net income was $1,168.5M against operating income of $584.7M. The gain sits below operating income and is not in EBITDA.
It is flagged as an anomaly.
Twelve-month GAAP EBITDA is $3.24B: operating income of $2.32B plus D&A of $922.40M, mostly amortization of acquired intangibles [1].
The toll-gate test
A toll gate owns the record, owns the connection, prices on outcomes and spends R&D on the gate. Roper's businesses own records in small markets where few rivals exist.
The test varies by business. Networks connect parties and some earn per transaction.
Application software owns records and charges subscriptions.
The owner-cash staircase
Start with GAAP EBITDA of $3.24B: operating income of $2.32B plus D&A of $922.40M over the twelve months [1]. Each step down the staircase removes one thing an owner cannot spend.
Step one is operating cash flow of $2.67B, below EBITDA by $568.90M. Operating cash ran below EBITDA because of cash taxes and interest on the senior notes and revolver [1].
Step two subtracts stock pay of $191.80M, taken from the cash flow line. That leaves $2.48B.
Stock pay is 7.19% of operating cash flow [1].
Step three subtracts all capex of $108.10M, including capitalized software. Owner cash is $2.37B, or 28.61% of revenue and 73.17% of EBITDA.
Capex is very low. Property and equipment capex sits in the other productive assets line, and capitalized software is added [1].
| Step | Twelve months | What the gap is |
|---|---|---|
| GAAP EBITDA | $3.24B | Operating income plus D&A |
| Operating cash flow | $2.67B | Working capital, cash taxes, interest and non-cash items |
| After stock pay | $2.48B | Stock pay treated as a real cost |
| After all capex | $2.37B | What an owner could take out |
Balance sheet and debt
Debt is $11,319.4M: senior notes of $8,500M, revolver borrowings of $2,850M and other debt of $18.6M, less $49.2M of costs. $718.3M is current [1].
A new $3.5B credit agreement was signed Mar 30, 2026. In the first six months Roper borrowed $2,000M on the revolver [1].
Six-month buybacks were $2,726.7M in the cash flow statement [1]. Borrowing funded a large part of them.
Six-month operating cash flow was $1,061.6M, up 14% from $932.8M, helped by lower cash taxes [1]. Acquisitions used only $27.5M against $2,005.2M a year earlier.
In 2026 Roper chose buybacks over deals.
Six-month capex was $25.3M and capitalized software $30.9M [1]. Both are small against $4,204.2M of revenue.
The cover-page share count is 98,900,874 [1].
What the multiple measures
EV is $53.92B: equity value at the Oct 27, 2026 close on 98.90M cover-page shares, plus debt of $11.32B at carrying value, less cash and equivalents of $364.90M.
On GAAP EBITDA of $3.24B that is 16.65x. On operating cash flow of $2.67B it is 20.20x.
Owner cash of $2.37B is 4.39% of EV.
Net debt is $10.95B, or 3.38x GAAP EBITDA.
What gets overlooked
Interest expense rose to $111.4M in Q2 from $79.1M [1]. Debt-funded buybacks raise the cost of carrying the portfolio.
The Indicor stake is marked to fair value each quarter. Gains and losses swing net income without affecting cash.
Amortization of intangibles was $440.9M in six months [1]. It reflects past acquisitions and makes GAAP operating income lower than cash earnings.
How Roper allocates capital
In our reading, Roper's model has three steps. It buys niche software businesses, lets them run on their own, and uses their cash for the next purchase.
Six-month acquisition spending of $27.5M against $2,005.2M a year earlier shows how much that pace can vary [1].
That model works only while deals return enough cash for the price paid. The first half of 2026 shows large buybacks and few deals.
Buying back its own shares is in effect buying more of the same portfolio. It adds no new growth source, so organic growth across the existing units now carries the whole case.
That makes segment margins and backlog the figures to track each quarter, ahead of headline earnings and the Indicor mark.
Peers
The peer set is Tyler Technologies, PTC and Autodesk: vertical and design software.
Peer figures come from each company's latest periodic filing [2][3][4]. Figures are derived from filed statements, and nothing here is a price view.
Roper carries the most debt of the group relative to EBITDA.
Its stock pay share of revenue is among the lowest of the group, as the peer table shows.
Bull, base and bear
| Case | What happens | What the filings would show |
|---|---|---|
| Bull | Recurring revenue grows 10% and acquisitions add more | Revenue growth near 10% |
| Base | Recurring growth near 8% and buybacks slow | Revenue growth near 7% to 8% |
| Bear | Freight networks slow and debt costs rise | Revenue growth near 4% and net debt above 4x |
The base case is steady recurring growth with slower buybacks.
The bear case is leverage. Debt-funded buybacks leave less room for acquisitions.
The bull case is the Roper model working as designed.
What to watch
Watch recurring revenue growth in Q3 [1].
Watch revolver borrowings.
Watch the Indicor mark. A large swing either way changes net income but not cash.
Watch Network Software margin. It fell 2.9 points in Q2 as SG&A rose to 43.4% of segment revenue from 39.3% [1], and it is the highest-margin segment.
Watch the acquisition pace. Roper's model depends on buying businesses, and six months with $27.5M of deals is far below the $2,005.2M of a year earlier.
Watch net debt against EBITDA. Debt-funded buybacks pushed it to 3.38x, and the next deal would push it higher unless cash flow keeps growing.
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