Key financial results
- Total revenue grew 8% to $2.2 billion, underpinned by organic revenue growth of 7%.
We delivered revenue of $2.2 billion, which is up 8% over prior year, underpinned by organic growth of 7%.
- EBITDA grew 7% to $864 million, with a margin of 39.8%, while core EBITDA margin decreased by 30 basis points.
EBITDA of $864 million was up 7% and converted to EBITDA margin of 39.8%.
- Adjusted diluted EPS was $5.89, representing a 15% increase year-over-year and exceeding the guided range of $5.75 to $5.80 due to better margin performance.
DEPS of $5.89 was up 15% over prior year and above our guided range of $5.75 to $5.80 on better margin performance.
- Free cash flow was $805 million, down 4% compared to the prior year due to the timing of interest coupon payments on bonds issued in 2025 and a temporary collections lag at Ilumya during an ERP implementation.
Free cash flow at $805 million represents 37% of revenue, but was down 4% versus prior year
Business segment results
- Application Software: Application Software revenue grew 7% in total with 6% organic growth and EBITDA margins of 43.7%, up 30 basis points year-over-year.
Revenue grew 7% in total with organic growth of 6%.
- Aderant: Aderant expanded its AI agent platform with capabilities across rates, compliance, and general ledger forecasting, and saw 25% of its bookings be AI-related.
- Vertafore: Vertafore grew across agency, MGA, and carrier businesses, launched six new AI agents and a value-based credit pricing model, and achieved ARR growth in line with the segment.
- Deltek: Deltek achieved encouraging results with strength in private sector solutions and solid government contracting bookings, while introducing end of support for costpoint on-premise solutions in the first quarter of 2028 to catalyze cloud migration.
- Network Software: Network Software total revenue grew 8% with 5% organic growth, while EBITDA margins were 52.4%, down 130 basis points year-over-year.
Total revenue on our Network Software segment grew 8% with organic growth of 5%.
- DAT: DAT accelerated growth supported by network expansion, higher average revenue per user, and digital freight marketplace solutions as supply side recovery progressed.
DAT was strong in the quarter and accelerated growth supported by expansion of its network, higher average revenue per user
- Foundry: Foundry reached a record level of annual recurring revenue.
Foundry also continued to grow and reached a record level of ARR.
- SoftWriters and Subsplash: SoftWriters grew as adoption of its AI order entry solution expanded, and Subsplash tracked in line with year one targets.
- TEP: TEP total and organic revenue both grew 10%, with EBITDA margins at 34.3%, down 90 basis points year-over-year.
Total revenue and organic revenue both grew 10% in the quarter
- NDI and Verathon: NDI delivered exceptional growth driven by precision measurement solutions demand, and Verathon performed solidly across BFlex, GlideScope, and BladderScan families alongside a positive response to the Cflex single-use cystoscope launch.
NDI, the business had another excellent quarter, delivering exceptional growth
- Neptune: Neptune faced a softer third quarter with a revenue mix skewed toward mechanical meters, which pressured revenue and margins.
Neptune had a softer Q3 following a better-than-expected first half.
Capital allocation
- Roper deployed $436 million toward three bolt-on acquisitions during the quarter: iPipeline, Procare, and Strata.
Specifically, we deployed $436 million towards bolt-on acquisitions for iPipeline, Procare and Strata.
- Net debt to EBITDA was reduced by half a turn within the quarter to land at 2.9x, enabled by seasonally strong free cash flow and proceeds from Indicor's instrumentation business divestiture.
we reduced our net debt to EBITDA by half turn within the quarter to land at 2.9x
- The company finished the quarter with over $300 million in cash and $1.3 billion drawn on its $3.5 billion revolver.
We finished with over $300 million of cash and $1.3 billion drawn on our $3.5 billion revolver.
- Indicor announced the sale of remaining flow controls businesses to Zyla, with approximately $600 million of pretax proceeds expected in the fourth quarter.
Indicor announced the sale of the remaining flow controls businesses to [ Zyla. ] We expect around $600 million of pretax proceeds sometime in Q4
- Roper has more than $6 billion of capacity for capital deployment over the next 12 months.
we now have more than $6 billion of capacity for capital deployment over the next 12 months
Industry trends and dynamics
- In the freight market, supply side recovery is progressing nicely, though management noted that it would be healthier with stronger load volumes.
We continue to see encouraging signs in the freight market with the supply side recovery progressing.
- The North American water meter market is digesting a post-COVID super cycle peak-to-trough normalization in installation volumes.
You're kind of going from peak the trough. This isn't like a macroeconomic cycle, it's still like a COVID super cycle dynamic
- Long-term secular demand for static ultrasonic water meters remains fully intact despite near-term mix pressures toward mechanical meters.
We view this as temporary as the long-term secular demand for static meters remains fully intact.
Competitive landscape
- Roper highlighted that its competitive advantage in software rests on deep domain expertise, proprietary data, embedded workflows, customer trust, and scale distribution.
Our confidence that opportunity is ground in the same advantages that have always made our vertical market software businesses strong.
- Private equity firms continue to face pressure from LP credit and valuation realities, creating a constructive environment for proprietary M&A outreach.
All the pressures that have been on the private equity firms for now going on 3 years continue to exist
Macroeconomic environment
- Management described the overall setup as constructive, supported by recurring software revenue and accelerating product development, while remaining cautious on certain end markets like government contracting.
Government contracting bookings have been solid over the last couple of quarters, although the broader market remains uncertainty.
Growth opportunities and strategies
- AI momentum continued to build with 17 out of 21 software businesses having agentic solutions in the market.
I think it's 18 of the -- 17 or 18 of the 21 software businesses have Agentic solutions in the market.
- Strata made its Financial Decision Intelligence AI tool generally available on September 1, helping healthcare finance teams diagnose margin drivers.
FDI became generally available on September 1.
- CentralReach reported that 75% of its bookings were AI-related or AI-specific, and launched Port Draft AI to automate clinical reauthorization reports.
- PowerPlan introduced an intelligent unitization product that uses AI to accelerate capital cost allocation for U.S. electric utilities from days or weeks to minutes.
Customers are completing this work in minutes that previous of days or weeks.
Financial guidance and outlook
- For the full year 2026, Roper raised and narrowed adjusted diluted EPS guidance to a range of $22.35 to $22.40, representing a $0.15 increase at the midpoint.
For the full year, we're raising and narrowing adjusted debt guidance to a range of $22.35 to $22.40.
- Full year total revenue growth is expected to be north of 8%, with organic revenue growth around 6%.
Our full year revenue expectations continue to have total revenue growth north of 8% and organic revenue growth in the 6% area.
- Full year free cash flow is expected to be 30% or more of revenue, with free cash flow per share growing in double digits due to share buybacks.
For the year, we expect free cash flow to be 30% or more of revenue.
- Application software organic growth in the fourth quarter is expected to be similar to the third quarter in the mid-single-digit plus range.
We expect to see application software organic growth in the fourth quarter to be similar to that of the third quarter in the mid-single-digit plus range.
- Network software organic growth in the fourth quarter is expected to be higher than the third quarter in the mid-single-digit plus range, driven by DAT strength and Subsplash turning organic.
We expect network soft organic growth in the fourth quarter to be a much higher than Q3 and be in mid-single-digit plus range
- TEP organic growth in the fourth quarter is expected to be in the mid-single-digit range.
we expect organic growth in the fourth quarter to be in the mid-single-digit range.
Q3 2026 results
| Metric | Result | Change |
|---|---|---|
| Total revenue | $2.2 billion | up 8% over prior year |
| Organic revenue growth | 7% | 7% |
| EBITDA | $864 million | up 7% |
| Adjusted diluted EPS | $5.89 | up 15% over prior year |
| Free cash flow | $805 million | down 4% versus prior year |
How management sounded
Balanced (+30 on our -100 to +100 scale). Management raised full-year guidance and expressed strong confidence in AI commercialization and capital deployment, despite minor headwinds in Neptune. Management sounded more upbeat than on 16% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Read the analyst Q&A summary and guidance and outlook for this call.
What to watch before the next call
- The pace of cloud conversions and customer migration at Deltek.
- The commercialization, adoption, and scaling of newly launched AI agentic products.
- The timing and recovery of static meter demand and mix at Neptune.
Earlier calls
- Q2 2026 (Jul 23, 2026), tone Balanced: Roper reported solid second quarter results with revenue up 9% and raised its full-year earnings guidance.
