Roper (ROP) 31 Jan 242023 Q4 Earnings call transcript

Good morning. The Roper Technologies Conference Call will now begin. Today's call is being recorded. [Operator Instructions] I would now like to turn the conference over to Zack Moxcey, Vice President, Investor Relations. Please go ahead, sir.

you quarter joining financial and Roper thank discuss as results and Technologies. fourth the full morning, all us for we for Good year XXXX

results. and morning on of President today's Vice Finance. Earlier press Vice includes issued Accounting Financial The Vice we Neil call Officer; me Cross, Chief Officer; a this this replay Brandon announcing and Joining Hunn, Conley, morning, the and our President also press President President for Chief Officer; Executive and Executive Jason O'Callaghan, financial are release release information Principal Shannon call.

accompany We have website. prepared call, available slides are on to through and the our also available today's webcast are which

Now safe if begin to We X. with harbor you our please turn Page statement.

statements, on subject as our the and uncertainties page, risks this SEC which are release today's course filings. make During of and described to our call, in press we in forward-looking will

will please on information. And You Page X. should of operations continuing context listen we that our the basis. to call to turn non-GAAP in and discuss results, now today's Today, adjusted primarily

hand Neil? now our we our telephone over release call remarks, website. And fourth quarter, the of turn questions in our you from results if of acquisitions. consists investments with results amortization our impacts I the our and and After press the on please following will Indicor can and lastly, financial associated our found Page Certinia expenses with between this in our take be in the items: the adjusted acquisition-related the and of minority GAAP participants. to associated transaction-related Reconciliations presentation intangible appendix will prepared to difference assets, For Neil. completed X,

sharing looking good for call. We're to our and results Xth with Zack, joining quarter morning. you, forward and thanks this year full everyone quite you Thank XXXX our to

annual ProCare let's our full to Solutions. This annual turn results position. pick at acquisition, outlook, X, results, both commenting most at results, your level aggregate we highlights to we our sheet walking on and our up turn in and year Page review I'll our and level, then share our and go through and morning, turn segment questions. discuss through our start to recent XXXX I'll today's strong our quarterly by up wrap Jason balance the agenda. will then look segment As Then

let's get So go ahead and started.

please. slide, Next

call we As we today's delivered X, into Page And key very are momentum positive we for are: and strong a turn X remain well takeaways XXXX. to the second, positioned XXXX. carrying first,

organization perspective, full flow we on at back we margins the From a proud XX% growth, EBITDA flow free what XX% As look delivered financial cash with the free XX% of accomplished. and growth revenue cash year, XX%. we're growth

organic QX growth revenue as Our acquisitions Replicon. total total the and Also underpinned our growth. strong by software year, during we a Jason highlighted and growth few will in was with revenue this of XX% $X.X of cover minutes, the vertical XX% bolt-on high-quality was acquisitions, but billion organic Syntellis in with well X% revenue X% growth. deployed revenue

opportunities, acquisition year opportunities. super value-creation all grow challenged team's to that outstanding given year proud convert conditions successfully ability market available we M&A the relative know, last our a to of and As X was I'm through

we positive year entered momentum. this, all this Given with

our to mission-critical strong continue see for We demand solutions.

critical As delivers or and a a of and/or of respective reminder, system each market technologies. is their businesses in life-saving leader our vital network record,

improved of Procare. Replicon in the our of organic strong we portfolio to we solutions. XXXX, to and quality our result, recent acquisitions, of reoccurring highlight Also, these It contributions underlying to profile. head see mix businesses growth Syntellis, have for and meaningful continue demand terms additions enterprise important is from our into our As we a revenue as also

to the in be M&A continue strong of we be XXXX with to balance opportunities. sheet we and in pipeline a expect active notably attractive and an improved large that very Finally, market, a environment

inorganic momentum, strong organic a solid both as XXXX. and 'XX and us behind we enter So

Now Procare Solutions. fantastic the Solutions please to a we'll addition turn to Procare the acquisition, most discuss recent Page Roper portfolio. is X, next page, where our

with Let's We're $X.XX fundamentals. $XXX tax of the net million business. for the start paying billion, benefit

our acquisition expect software to $XX solutions, company. flow about ended and $XXX will our expected a long-standing to in adjusted to leader us report portion million all this $X.X to 'XX. Procare passionate the and will acquisition billion 'XX model skilled, with on and in We be an XX free is QX by a competes business is asset-light close Procare ProCare team. What for market, DEPS in of this segment 'XX. delivers meets of leadership of operates leader smaller fund contribute in is incrementally customer for maturing based Software different cash criteria, nature deal a of accretive We'll quarter. EBITDA led and and revenue million Application verticalized months mission-critical the revolver our Procare intimacy, the a our

outlined leans As improvements. during last Day X year, we our strategy Investor modest implementing corporate our on

organic criteria line second, capital possesses a record profiles our and leader to additional our that evidenced deployment continue meeting capture growth deployment bolt-on as activity by capture, is value on prototypical capital a First, margins our value doing deployment from and to improve business sustainable mentioned top growth last capacity. Relative are the archetype, faster I enterprise. the structurally we a long-term of maturing as or opportunity to maturing business higher growth rate; proportion improve capital more above higher adding that scales. long-standing all year's to leader focusing Procare but our

For from the with to come. for top an improving years growth Procare, position mid-teens margins strong line already we expect

tuition the of and long-term daycare. and of a does. Procare management, teacher centers ranging billing the childcare purpose-built of the tailwind classroom functionality levels run of the families secular family leading engagement, higher provider seeking to needed and XX,XXX and company processing. is child software young attractive education itself mission-critical and scheduling, market payment use from The Let's of about is midst in provides parent early they dual-income talk which The their all education childhood what software to and operators business. to owners the center, early quite versus run staff

In one tech addition, undergoing like is enablement. long-term most industries, this

this area. these annually Given market double-digit is factors, low the growing in

player the X.Xx is As leading share role that the with advantage capabilities. market combines space payments compelling mentioned, proposition a super and value Procare in their both this software given integrated

and net high Given this, as well. has Procare very retention compelling gross retention

growth the creation and opportunity to of Finally, Net-net, we're extensive to shareholders Roper and and that our compelling all diligence has fact pathways this mid-teens Roper. welcome encouraged team is our long-term margin for your multiple value Procare leadership operating from due broker expansion. deliver Joanne, highly the by and a to the available and strategic business, family,

the financial let me can through position. call so our over to Jason, as walk So our you, quarter Jason? and fourth very well you as with that, results strong full turn year

walk sheet. with I'll results on segment a Thanks, results our with Starting Slide enterprise review and QX of Neil. Great. X. the enterprise full year, balance for through and QX along for the

benefit. Organic adding to billion points We excellent from year, our have in was outperformance X% an grew of by than Revenue TEP Gross solid a $XXX Verathon. of mix by currency year, and XX% strong with $X.X segment. point margin growth coming basis Neptune XX.X%. year. less led organic finish of by points TEP led was at and EBITDA our X acquisitions EBITDA highlighted was XX to down prior over a million XX% coming margin XX.X% prior versus given segment, with a higher a over

million, free above turn to was EBITDA we taxes, growth Software cash discussed by strong acquisitions software I'll incentive-based last expectations a to debt's prior With margin and segment balance $X.XX, year's click year to X% year XX% perspective million over to million. XX% XX.X%, the quarter the in Syntellis growth $X.XX. Slide of our to X, our year. $XXX a $X.XX briefly into Replicon. into offsetting XX% translated with good growth the finished contributing high impact and our of Also of bolt-on watermark was flow was XX.X% below of line lower which $XXX businesses. We in prior with delivered prior season driven in This cash renewal $XXX this with of revenue across range software and at of $XXX up with as interest guidance up organic performance over QX. was our and compensation. Network the X million, of primarily from Application points EBITDA coming from XX%

mixing As marketplace XXXX, are following we have businesses navigating growth which XXXX the freight rate and matching down a discussed our segment. for carriers before, is growth of drawdown over the exceptional

have However, EBITDA DAT growth carrier our drive at and the to the quarter. in base aligned leader Load solid still reduced business Link subscribers with cost

continued market single-use conditions. technologies led of was to $XXX XX.X% given up continued grew for Neptune across quarter. incentive laryngoscope some million. increasing Also, segment prior overall was in onetime its year, EBITDA TEP Growth from at by Verathon $XXX brochoscope. products XX% by in Our XX% favorable million, growth and exceptional the demand and ultrasonic strength quarter investments with to remarkable with performance and compensation EBITDA in with the down margin

full Turning Slide through our to walk X, XXXX I'll year performance.

prior in frontline X% just As organic billion, points, growth Neil and year, mainly was has up with XX% and revenue contributing under of over mentioned, acquisitions $X.X X Syntellis.

Neil has growth mentioned, CAGR X-year X-year at prior to over rate billion over the been organic Looking conditions up $X.X also slide, was EBITDA at the revenue XX%. XX.X%. Further, of a margin X%. benefited we XXXX, this organic from period. EBITDA Though market it's over average about just this period of as yielding that year, similar on -- time XX% some over

also Our up was XX%. over period X-year EBITDA this

for range, of same and back the by and and remains XX% EBITDA up XXXX. contribution future record XX% businesses, from high portfolio working own revenue is and XX% was business drove margin as the Roper. frontline So Of year and growth. Free allows new favorable DSO flow Roper. Full XX% is acquisition improving grow going renewals, inventory represents to cash negative for of story over percent billion. for of the turns. excellent Underpinned a this investment in margin sustainable convert which Stanley growth EBITDA the note, the annualized was shy across a performance a QX, gross just $X result. a in at year the which into enterprise capital net strong We generally our which our ample continually for

we period, cash have XX%. X-year a over flow compounded at Importantly,

can strong our with revolver in or over year financial Slide to position. that, to with cash. that on finished XX% our from solid free growing Our growth algorithm. which To focus our to of demonstrates divestitures be cash cash continue new long-term and expect to a the margin available million we we $XXX our flow liquidity From XX portfolio on flip consistent the following XXXX. With standpoint, discuss billion we a more flow end, base our strength $X.XX of

from a Regarding debt-to-EBITDA we beginning year-end of of X.Xx acquisitions. towards figure brought despite leverage, XXXX down billion net to at X.Xx $X.X the deploying

revolver We in expect close will transaction. our to and on later QX the fund to Procare utilize

our pro So this forma leverage will Xx. to be about

Our strong solid committed us our or XXXX. to optimism That our quality. posture. With turn capacity Neil? with patient and full year said, demonstrably deploy more has talk lift a about balance back asset call deal rating. Since in of process that, cash balanced generation remains to capital and performance billion while the increased call, solid for disciplined segment activity market indications corresponding Neil I'll to remaining over by October our investment-grade sheet, our $X gives our coupled to with

Jason. Thanks,

for EBITDA revenues strong grew margins year turn the we Total XX% revenues Page at segment. $X.XX organic let's Software billion, to look to XX.X%. As remained while Application on grew X% XX, and back

delivered results growth sector especially see continued the given solutions, to Deltek gains in and uncertainty Aderant, Within the Strata in market strong SaaS tempered private consistent was year, organic markets, all notwithstanding with government Vertafore, for year. Deltek spending, Deltek, at segment, were as the throughout discussed the Frontline. Deltek regarding the strength our the mid-single-digit

bookings team Roper, relates the it leaders agencies In innovate of $XX record ProPricer. their Roper about of add capabilities million had as hallmark continue of a solutions of they SaaS and market at to productizing transaction, which for add-on within addition, one software stack. and Chris, ProPricer and government year. contract closed that They Vertafore generative software was adoption product products. during Also, and just ARR within gains their is year. product Great price, Rafi by anchor solutions throughout strategy, federal significant leading bolt-ons uncertainty, late Deltek's and to family. Aderant smaller last and entire on, for of job Replicon contractors Costpoint the and with Aderant highlighted ideal strong solutions and is times the last the the pricing strategic by fit year amazing legal purchase delivers the was and AI Aderant. Continuing solid and

is and both MGA acquisition was case. strides with great and last Syntellis. systems ahead quite terms product Strata Additionally, and of integration trending in [ our Vertafore gains good ARR made organic the of associated also bolt-on investment well strategy our with ] deployment year, their work

executed the during Finally, strong well, year. frontline delivering and flow retention cash

As expected Procare this I will this report mentioned we quarter. in and solutions earlier, close to deal segment

As strong relates for the particularly market margins this segment XXXX delivered fraud. segment, to and continue record Gen full customer for turn and expect to model. grew with conditions. Similar both our AI year subscription in freight the to and Loadlink which at software DAT see it start matching revenue during the media our strong help activity, that to with interesting Page market organic our We'll Pipeline strong progress XX.X%. organic had the businesses, made innovations to to bookings to billion retention and leading meaningful businesses we entertainment and XX. Deltek, Full year combat expansion of DAT to muted were our a actor at transition innovate industry $X.XX year-long despite in both freight growth. Please outlook revenue very sluggish to Network muscle revenue with mid-single-digit and year growth. Foundry, the grew through business X% us strikes writers postproduction given ARR the and

facilities site Finally, the year census were SoftWriters healthcare levels senior strong in our MHA, care alternate as throughout SHP, and businesses, improved.

we XXXX continued expect muted relates continued margin with the conditions see low to freight segment, guide the of year but full it EBITDA based organic our on single-digit to for growth revenue expectation As market performance. strong

Organic segment's turn XX% the year Page for results. $X.XX TEPs and billion please remain to XX.X%. Now margins grew let's at XX, consistent our and review EBITDA revenues to

we uncertainty. a entered over year, chain degree year of with high we As look the back supply the

uncertainties year, of capturing job of the majority the and businesses our vast During the resolved, opportunity. these tremendous a were did

to look do not and meaningful see 'XX exit supply we As constraints. chain 'XX, we

great As momentum we'll meter just static water they and video-assisted about Ultrasonic, bronchoscopy. Neptune, the see was usual, and increasing residential their Neptune compete. Verathon as bullish awesome across the year. the technology and remain start ultrasonic We X product commercial single-use data software. with families: meters of continues and management adoption meter Bladder or was which was volume their and Verathon well and and demand to strong our market for business. Neptune in measurement, innovation all for of strong

Verathon's of stream. a about single-use now As reminder, offerings reoccurring up make XX% revenue the business' annual

and Just and business of to both quality improve underlying the product an scale the amazing business. execution journey

performance. businesses, Finally, very their managing a IDEAS, XXXX chain our supply financial did RF and terrific through product delivered job Inovonics and strong challenges rf

Looking guidance to segment. XXXX our for this

expectation single-digit see will organic area. year revenue growth the QX the in grow that We high for the and mid-teens expect full to

and XX. full Now establishing year This please XXXX quarter us turn with Page guidance. to morning, our first we're

finally, revenue full XX%. On an to grow growth revenue basis, to expect adjusted solutions, about total see see associated we and full we to of full the DEPS with year the expect XX% X% which be X% between in XXXX expect which range $XX.XX see organic and between impact Procare For the of year $X.XX Procare and deal. to of year, includes $X.XX dilution DEPS includes $XX.XX, we the and to

moment a in and XX% to historically, strategy tax everyone, rate Assumed To guidance X% growth a model. in the We our long-term to take to we X% organic to want range. of context operated guide our remind in XX% portfolio. a this set execution

in organic are growth ambition to to structurally to Our area. be X% the strategy X% rate improve and

some basis, X% extent the conditions. on organic years were an benefited certain X% from these we market X%, and X though years, Over last to grew

course our organic As X.X% view current is our rate the in and X% is to speed growth such, area.

growth very progress are date to organic We aspirations. to pleased work continue with and our to achieve

As our Software our being of segment our for subdued outlook year Application to large mindful entered and businesses revenue it conditions. our muted segment, factors: continued 'XX, freight below based for the relates in within organic expectations market X matching trend Network we activity customer on freight continued

see we DEPS to quarter, relates in and range adjusted the of to expect $X.XX it the $X.XX. As first

to please questions. your turn with we'll XX, then forward look Now and us Page to

which As with XXXX. performance; same great at One, heading with delivered positive year free flow key XX%. per our takeaways growth two, continued custom, revenue we EBITDA XX% Relative we'll and to conclude into XX% we margins growth, another cash we growth have the also of with flow momentum cash delivered XXXX's we performance, started. XX% free and

total XX% growth underpinned Our revenue of by X% growth. revenue was organic

of compounded of our reoccurring for an XX% revenues, quarter milestone cash free ever on softer $X recurring grown we important delivered and enterprise. basis billion has a X-year and quite first Importantly, flow

high-quality did In value is very addition, strong bolt-ons software creation and values, our billion structurally and so towards we year for In challenged capital of by our vertical at $X.X a leading deploying Syntellis where deployed acquisitions, Replicon. shareholders. highlighted we compelling to

XXXX, with we do As strong enter we momentum. so

We Also, our solutions for acquisition our Roper as and improve Adding scale and to from a quality count week's you momentum of continue the demand business mission-critical announcement to our organic year contributions cohort robust solutions. the growth. Procare can are outlook enterprise. underlying strong the to see for on XXXX last we for the

our to the opportunities a and remain sheet, strong an patience do Finally, We We very in this be unwavering well attractive in deployment capital XXXX. we to M&A we balance pipeline positioned a active discipline. and are expect execution. of notably environment levels large market, with can continue improved of that

Roper, so compound we portfolio oriented long by quality. structurally We strategic time is of the turn underlying operating slide, remind and what business the we Roper coach Now win and decentralized cash of flow vertically a a if company we that everyone improve our do we'd to to how is could to based arc flip organic businesses to final like compete you as growth at on our simple. your a We businesses over questions, application-specific operate Once flywheel, environment customer intimacy. market-leading and part our on businesses. of rates their and

centralized run process-driven on cash add we the Finally, next our deployment finding compounding focuses flow a business that strategy flywheel. to great capital to

flow the compound of area the long mid-teens Taken arc we over our together, cash time. in

open that, in your and with for questions. let's up to you Roper, interest your thank So continued it

question Today's comes first Markets. Instructions] RBC Deane [Operator with Dray Capital from

This had is and me people deal recall and we Research they say, interesting. X made X but not start active it's I at I time RBC Can with the customers. first where announcement, a that Procare "Hey, and you contact were

low And question leader -- show on them they low and is? And and see really And how was apps they're their a my highlighted here really mean, to glad to me maturing mid-teens. that the that digit, category. so interesting is growth maybe I'm and surprises much what double is how you digit phone, within that single I it dynamic. there

As the company maybe price. there of for you reasonable is start always growth might been the exit. no businesses, adage sellers exit. They're a private more public of public to to apt these kind have sell see that's at That's a equity go that orphan to type where a you bias company more

category, players Procare, multiples these If public might a you stretch the exit businesses start company equity maturing a leader of looking growthier even Might at at private mind. in the because have some that like

there. we maybe can So start

Yes.

appreciate I So comments first, on the Procare. I think

the the ratings relative in the are kids the education -- your so of The application their type TAM sub of not but and as many some we're engagement look subscale question $X like maybe colleagues about competitor. IPO market. transactions, -- The early there's going X-star couple store, the the centers. with are going a at is IPO IPO-able XX,XXX be about to their here That's very to on a liking think child market. and I app billion. to the I for mean most a what

which that market this we're the is underwriting talked growing mid-teens rate a leader, low growth double So small market underpins about, is, again, the we to here. digits

where we're In to their can't cost get understand valuation private especially I They of is. the LPs. They to capital have They world from liquidity them. terms sellers, funds new in world just equity need think constraints a multiples, of raise the where without and back sellers it.

I asset to traded months XX basis. multiple so to higher have for hard but a what this mean ago, would substantially guess it's on substantially, And XX

market valuations So think we coming the are about. we to because that just forces the for moment, the talked us of

is current in I this really think environment, key. liquidity

you if right your don't do liquidity an get So IPO, away. you

So I think that's important. pretty

you Jason leader? stage this that when be funnel, willingness And be are does level But that on that the a a nuance. sooner and within to how Procare more the of a might Is at at at look about spectrum, attractive? there Day, might of is something talked you that have an development maturing is at businesses stage about talked earlier Analyst that on businesses and look could of activity, acted earlier might -- are that your

perfect by So a acquired typically stage, in right? Procare earlier is companies. the They're like example these we've what early-stage than earlier not past. are

about So every we maturing they our talk to meet time I all of leaders. emphasize have criteria. that

it's competition market. So observable understood base The market this is in marketplace. a interesting. leader in particularly relative of The advantage has and share a company the is small

everything as are the the going underlying business bit are business little margins the model, we've to of those common So growing always scale faster grows. market is acquired. and This traits case, a

So we until that by occurred. the next the waited that's have just trade, about. Historically, after talking would one we're of the earlier one to maybe part Procare the what

just And our so much it's value do more a of when we this long transaction. look over this model arc, to at type of shareholders the for

the that of the a just I it's The reasons and -- Jason we're talked comments, of variety doing said more my noticeable his about. a some our in into the and we leaning marketplace opportunities. since in bolt-ons. activity said change for last terms In in as call I is, comments, of pipeline, mean in it

to then maturing in maturing we'll excuse and Janet build. fair of these to me, -- and a be activity leader a disciplined just there's have a of type of amount us. fair we'll what profiles, there's That's lot number bolt-on the leaders And patient ones So emerging to her for right figure team -- out there. working are

comes Mitchell with Our next from question Julian today Barclays.

Maybe Procare. just following up on

just clarify impact. the you financial little bit If could a

think maybe for $X.XX $X.XX that in guide. I you said year to the hit

So kind spread smaller QX close get deal clarify it Any sort is timing you'll because kind thoughts hit the then how And that debt that of related the down? of rest and sort seasonality around of just the out maybe the over the we in the -- a of Procare of just of of balance? quickly business? then on

Yes, sure, Julian.

So we expect to close in March, right that's sort now. of our assumption

out maybe So that in the way quarter. plays is $X.XX first the the of $X.XX,

we around of year $XX And revolver, which for an So around perspective, to we'll, on is then expect at the reload the going calendar million from EBITDA. we'll X%. interest be obviously,

so And cast the -- year. rest of the through and out -- obviously

So your $X.XX year. for the that's to can $X.XX, get how I

seasonality, the business. In growing nicely. a for of terms seasonality course, not And of it's of ton

aberrations So quarters. that sort of worked through you'd any have between

then in homing a network That's for second. software helpful. on And just

Foundry also been of sort that's in freight well for sort understood last some was some that year. So time. the of have weak you for markets softness of

are thinking the guide of So that in in for network growth we year organic single-digit the that low context software.

are in XXXX. you trying it's the kind X% of back dialed a sort than exited slower in a steady you Just of to understand, how half like rate just growth or pickup assuming start a

and color. of kind add ask the I'll any to take first Jason, wants anything then

'XX this of tough about, full well, as a in DAT right, talked that, pickup. DAT it assumed started the had, model. businesses. 'XX that's There our before to actors with we bit be but to suggesting and sort to businesses. muted a not -- Foundry, and so muted writer in a load core On had relative and matching our growth strike. will of Freight driver whole and that the market call and the Match the top subscription Freight that to We range we you're assumed Foundry of half 'XX model second the Match Canadian and for migration they a the as are is that's I for the So see the freight mean We've impact small certainly length are rate We've it businesses. assumption principal in want prognosticators relative of throughout conditions year.

comes next Jefferies. today Our question Thill from Brent with

Curious to baking Maybe for on and and in the guide organic down from the what for meaningful can the get you're did 'XX, in pretty if 'XX? growth explain taking obviously, overall initial you guide just a you last step what thoughts year? that

I'll a I few it's our long-term and the Sure. the believe mean to X% working are both said that. It's of few the aspiration have -- the -- grow the prepared possibility that the to right? do to all share and going we executives take range, run X% thoughts group a So in in what more the all years operating that's rate comment into to get we just the we're towards of across we teams company. to and remarks, the organically in aspirations

X the X%, and sort releases, supply X from -- was bottlenecks time. market comeback raging X% throughout of some whole that Things those of the were like benefited the As a sort period you it last We that, tailwinds, of last an that we years, X%, by in know, was chain pandemic, market. years. and freight some said

compared look year is the to to history speed range noise. and also And organic current we in as that possible. So then this think we all are growth through X% at course the X.X% our of

enterprise smaller which bit, of a segment, we is there Software talked this a in is just the talked our large data as was all little them notably Deltek in the compare our just QX company question, their slow a customer got few fair last year momentum. we makes activity. Deltek, about in slowdown, a of they sense be less large amount The being called about customer markets is expectation we quarters we're X then whole for it Application talked as One that, really slow what doing business ended So at throughout for bit buy little news with like to class a we the is simple about cautious factors. activity frontline, reconciling -- freight 'XX all And behavior. anticipating novations, against good year. last

I either double the they're in or low up single double digits, think high digits low quarter.

So We few those want they a fair It's see of of momentum. one to a down data with exited amount point. together.

this And think year are reconciling and That's model expectation the and activity so X run year we're slowdown where we our rate. in those in -- those and are are large last are much a where and this we embedded also a we where application. slowdown, freight items, pretty reconciled are factors recoiling between factor between from the year we

question Joe Vruwink comes next from our with And Baird.

And kind step-up considerations bookings? wanted I to reconcile on the for guess on outlook, any application mentioned, trying maybe other comments maybe have outlook happen just assumptions of guess be large in the accounts. to last I more call bit appreciate the specifically the good a you but that of Because to with off trend mid-single enterprise software. might to activity I the against the at I'm pick out? answer and subdued then just forecasting Do contextualize I planning related to year-end the Neil. you

quarters SMB at attractive. Yes, data portion our at better but end, enterprise X, we've going it's the And The moment. been to X business, the not underwrite and part and the was to I enterprise the slow, I The guidance activity Deltek the both point. of just in think through frontline the their of that step pipeline mean, was where one we're looks at QX. looks pipeline attractive for up strong the in

just and the enterprise which were of year for enterprise consistent low we all single digits, level. the is full they at consistent year In bookings, what year lower said with this activity around long sort terms of

mentioned And like then Foundry. ask, to Okay. there's events exogenous you wanted some Great. I

I that XXXX. now think they subscriptions exclusively in communicated here they're

You can that have streams businesses of that on-prem a also other over maintenance have time. big lot a get multiplier

things improving are you I to about be basis, XXXX? you there's when ultimately a what So over and of X% of from types that mean And helping, model hurting range X.X% next growth might to on suppose, these couple items blended and sense years? net a in the might this do the think have what contributing the

Neil maybe that, part can second. take the the of take can then I So and first Joe,

So the strong it the in mid-singles. terms to software, application be in still of we expect

expect by of to and of kind kind which been think talked last nonrecurring of for a throughout about, still of enterprise was shift we overcome the bookings, been headwind years, but small that things didn't will us I that's couple we SaaS we to be sort it's in 'XX. flattish revenue the still continue, get which

again, be will Nonrecurring strong. flattish. going is be to So recurring

As because especially in enterprise, the still upside in GovCon be lot Deltek large licenses. of are the there year customers picks those on-premise buying in up a could 'XX,

your muted off as our we'll still the of we didn't but into guidance. So clearly be could recurring just look current And of we'll any point, an least on single subscription. network, bake at then when based Loadlink, our fairly to point will to that last down on because that DAT we and well of think And assumptions. at be digits Foundry be -- will based opportunity, license low I that nonrecurring at conversion be be

that in they mandate digesting will piece mandate then in So 'XX, didn't we'll X%... 'XX, to and on that there the be last they

the more think SaaS I migration. on term just longer

bit on-premise It's cloud. a recent history, X $XXX converts in on-premise X it That ARR or SaaS as Xx it of our north maintenance little as million or X years. maintenance. converts that have on an We to basis over the last from and converts

we going that, curve. The which are classic are while maintenance bit -- of J-curve believe, historically, we overwhelm it's that's a that and of convert will do at transition, a that licenses, to to SaaS, that been we're So clip actually onetime going undergoing when convert revenue million it's $XXX-plus effect. to a companies J a this this will driver we might growth net perpetual in-period we --

net migratory believe making the bit is they're a a it's and just more of that we shift doing in a model like companies unique X Foundry driver. approach. a are pivot growth other in their business So almost day a

Allison next today Poliniak Wells comes Fargo. Our question from with

want Just year. tech-enabled turn a to to products. strong Obviously,

other? components big think Does extent? and that growth. development of lot that. outpace like certainly kind of and some Verathon that drive Does of of there's at a some to that It one that diverge we to start about could As Verathon seems the guide, Neptune

there? any Just thoughts

element productivity. more in is is rate the X last organic categories. they were Verathon believe the and low long-term of of be of by We're probably great believe Neptune growth the probably long-term the that rate talked grew see we want predominant I a both want mean at in than just Neptune that R&D the digits a years they of to faster segment. have than bit that. market We year, Verathon the digits. and the we more to both, -- are It's going encouraged growth higher high product Obviously, area. in both that, as across segment. some super R&D that the We pipeline about, single a to And believe double couple momentum we the it's

that's growth there. to where the be rates expect we So long-term

Got to pipeline comfort up it above cash thoughts. on is at transactions. obviously, there quality that flow like active any the with level just in strong generator. of But leverage through it. range? terms way incredibly a things, What's think And following side that? the sounds going Just then the M&A Xx, Is of

I always X.Xx. long-term -- to is policy mean between Xx our we're

look best finance the you look capital as think We're look where you at to -- we below the we valuations from about of criteria, meet this process If pickers, businesses you can continue that level, both the to above going draw think, XXXX, through know. value all to and best that some the acutely back what's always It's very understand, risk, it, right be a structure, in the we'll big in to risk swings. most and business those I those that the go for come assets. We our going businesses, just it. deploying line how part for and risk never We're and you how model to of at point. way then 'XX, capital of certainly that's attractive you

Christopher Glynn Our today with from Oppenheimer. next question comes

about question a segment. had the I TEP

couple years resolved. on issues all last chain commented from the the of supply you So

that benefits that you're seeing tailwinds margins some nice margin if some curious we So drives in and emerge from should XXXX. natural the if in production see productivity planning and

going balance and amount teams of added which a from Well, just operations sort from supplier focused we're last a turns -- at And help I or with chain the inventory certainly a We've helps. are time, the X added model was more resiliency scaling resiliency We've certainly asset RF supply to of IDEAS the between for certainly, We've velocity. that Verathon. capacity will at X in at products added think similar capacity businesses. maybe years rf The on and most not companies. Neptune. capacity the supplier fair

we capital we So of in of little inventory working bit there's if will for It do think a more that can a money execute on advantage plan. us. trapped be

terms at Jason. of margins, look I'll In

infrastructure. that -- or I low I what our structure of so cost think goods the that? it's your of probably more relative scaling about cost but the is type to of fraction we mean input just thoughts cost our industrial enterprise, companies

then seeing growth which Yes. No, we're leverage some of revenue grows, bit segment margin. has reoccurring revenue, the bit they great I are little lot lower have that or for the margin when bit is come do little we'll what but impact a have a on because business. a at of I is single-use a the that Neptune the we And little think will recurring EBITDA be products, they above in mean of have a it of too. the

of in expect what we've those factors. the would with to just So consistent couple years based seen on be I leverage last

to as driving Great. and opportunities the a of I would the list of respect. with of And Certainly, action you experts lot particular understand X% characterize things aspiration to the about businesses growth What enterprise. higher. you X% and that coordination top have best in then practices organic plan across

to of way portfolio way to X.X% in think X% we right? X%. We're on growth. So question, the the appreciate we a X% of, So X% point to we started X% to this

So about amount And progress repeat talk more XX the just going past, XX we're the you've It's less in of about discipline across we've made us the last were, over X but about consistent. X It's process on fair company. the it's heard if to or this now all years. a companies. which and anything,

where to strategy So how a each long-term of to and do growth. where how and the right it's terms in for have our lend to play about businesses durable win of design they

The enable repeat. you period advantage. so second how that strategy forever a We thing that long-term of you're that use long-term process execution as the ownership our is on can competitive do

for how do long-term competitive as a that our capabilities enduring, offense We've compensation we X as can over lot expectation the then is we a stack And the alignment much, to run then X use The about level the expectation. is talent performance higher, upgrade our we field that a So tighter or where outpace talked become The leadership at talent much last higher. is competitors. third, advantage. of years. much we

Verathon it's low so all growers the in low hopefully reacting And double-digit a or single-digit growers. that unison ago you get decade now that and

the mid-plus they inch You or the like and have in maybe mid high singles come can Deltek, time. take solidly they over they businesses

a on So bit sustainable little business better every doing it's about a basis.

Our next question comes with from Joe Cowen. Giordano TD

kind put Can to like weak markets just that forced Is market where being I really that that? ultimately they finer more inverse actually about weak. on that in is -- we where inflections of a relationship do and On about know kind the obviously, talked is that, you to trickle just we've if -- better. of freight but that like think market to DAT, it somewhat in then like should is DAT. that prolonged it's into point on how the spikes negative weakness Is tend

the X in product describes years, surge bit built. buildings business, markets of DAT down. look about about that we're are strength. particular commercial in coming because you're from. process the being line ConstructConnect going slow then at when different dynamics subscribed therefore, freight So want -- that content little for what if described. business the DAT their their are estate and weaker, DAT couple they our describing when markets when to come growth, perfectly planned very strong, exaggerated. The construction it's little a for In When of and dynamic jobs real growth. is to this are you of you tend -- They what case, are analytics look so than think like grows more the to manufacturers ahead your building such the which it's a a where And contractors next and where freight is the or maybe sort are bit step-type you to off stair of subcontractors a more

and in backlog The construction out. information their less when what higher. markets, value hot the So the fully much markets value estate years is market we of is the white are slows of and are the offer subscribed our real contractors then is spending

driver bit sort of So to construction little countercyclical a of demand a activity. the inside we have tend

way, have by are his done the balance and the ConstructConnect working Matt to out team, a So and good job.

be that's forward go to strategy -- hopefully, will down but execute. is up our to So markets, trying the in up up markets that's product what and and

color. good That's

to UPS. Just like guess, companies that more getting a spectrum broader obviously, like I and across more we're from tech layoff question, at announcements like, the

on customers recent are stands there read businesses somewhat that's your you having that. of -- where the implications your the are most discussions like for in how guys they're So kind what your with count and what's head dependent on

Yes.

been the isolated, employment probably level, not significantly is markets last macro isn't a seems at right? end great we our fully business government to upgrade talent the relatively higher, just property one, stable, where but higher, that of to and It protected aren't across insurance insulated unfortunately, way across months Because will bookings is higher, on is operate organization. the much we healthcare insurance for macro at up opportunity end read loosening plus casualty in to where has impact use staff say that sort where market, if labor contractors, -- all much. markets, right? swings -- been brokerages the the don't think in portfolio. doesn't impact where these have market us XX our I this drive the to where life higher, education for compliance our our not across advantageous We're able have I employment employment relatively generally employment

question Terry with Tillman Truist. next comes Our from

we've those architecture, companies with really on what friction those I one Neil, and just for new SaaS other is horizontal you, past, to it you. Maybe guess to even the buy customers modules. start reduce when our can question the in get seen for the modern it's they companies SaaS add-on vertical

in called those improving curious cloud? revenue And of out Anything you retention what still past to that from customers I'm businesses it's kind around like I is you some seen net it does growth. cumulative propensity move on be could help is a there those these that up? benefit a modules, a just one And speed to but share growth. that follow-up. then things days, that's organic can I add-on that Deltek early Does your the have about quicken so buy over of it of time and and also And have know

can delivery you about. we a a Same-store first, cloud current categorically, migratory appreciate shift, where cetera. to said checkbooks Same good example. question. open, doing slightly and Vertafore, short ARR over Strata they legacy is And the a is But The the product et different There's customer see buy that, sales, benefits that while lift shift and modules then talked goes X.Xx base. Super do answer that lift X metrics, uplift. more to the that, Xx from product. be we when their total yes. Aderant, at moment and and they they're . that up

to and be be recent of to software, all mechanism is our able both is products the of the And the being the able more benefits for implementations able cloud-delivered R&D because about to additional companies easily to delivery innovation on advantage most us, smooth. so and more release is SaaS what talking faster and to one deliver principal you're to the delivering are take which be the take of customer

in it more lot the you're expect see come. So right. across exactly the a We're to and that portfolio seeing to of years

more does I the much, things just appreciate that you and on there's environment start it's SaaS That's solutions, more careful more maybe office to in of want just front meaningful great. are kind interesting, SaaS. opening taking with the revealing into account office be but if I interesting guess it's your up And secondarily, know that. And picture. about or middle idea too horizontal and/or But not discipline. M&A going, just software or niche a shots business. a question. companies I follow-up of Usually, I'm back bigger what curious, vertical office whether payments albeit

also both said, the attracted competition able to able So to verticalized we've to will proposition want needs basis observed. market be so be we're value to to vast compete our They're and We and because customer as intimacy historically, of that understood the to is us software about them. we better, to do. we majority to businesses be win. the -- model integral going feedback based to pickers. the business giving right, to to input with to be be of us the us customers of product, always customer on be but are how the how companies, relationship. The win and always always deliver more vertical small The They reason want their they what been want value

but little loyalty There There's we And certainly nichey A so to on not horizontal those the very company. it's lot algorithm. gigantic the type compete things an meet have the for. you look are those dynamics of horizontal criteria, a base of some right? TAMs, lot. that that

We Business does have of on-prem, software a SaaS. the products you comment we with are software with and they're is So stream. The bought that types variety and the do those business a business embedded just where never deep of SaaS payments, invest what integration the payment models models. integration the company things payments. have of your will in. Relative is about -- to

to as And construct long embedded as business so it's the a business model. amount model immense durability of business the We're model. an open-minded in there's

from Clear comes Blanton next Asset Management. Alexander with Our question Harbor

I EPS one is year. You much dilution. might not you've this mentioned adjusted that have for some some on accretive -- not if not, the might is, caught that indicated questions How it's first it. have there's And have and that? I Procare to then earlier,

Alex, this is Jason.

EBITDA assume which revolver, revolver our be current of So billion around at, $XX we rate. the X%, million is our interest then $X.XX to is call and it, going

to number. dilution calendar get you how that's so And your

that in is number EPS? what But

$X.XX to $X.XX.

Okay.

$X.XX dilution. the accounts So consensus $X.XX or for the say versus that the you shortfall guidance in

Correct.

Okay.

XXXX, Now accretion at going that in good forward, mid-teens, going some if double digits, that growing you're pretty implies you're get correct? to

said, very looking We're I to conversion grown accretion it it's good mid-teens, cash and forward Yes. after dynamics. come, the 'XX, Absolutely. like will

We year have a tax of out of this the benefit a and a years next year, little that. after bit couple

going about good to feeling our yes, Procare's forward. So growth contribution

Now what business? their in that? is market I us In words, assume I the give be but might other or idea at can of that And share it they with an fragmented provider, how understand looks their approximate? leading total market. a And like you available it's market the it domestic compared point. look all do with this

today TAMs the XX% a million. It's about So $XXX is year. about growing

'XX, months, math So March you said on it's the XX XXX. we can next what do the

their share position. you do So math the share market current got to at the market XX% grow on their market and relative

having we are would characterize as a market X.Xx. market legacy relative of size Procare replatforming the from number a largest The their next So to is their and technology and the about perspective. generally competitor competitor Principal technology players

Okay.

the students, are aiming are the that you market, nursery in fit that serving and schools you larger There groups in that? or do have both? that Finally, there as you hundred sizes ones -- there at the smaller several are be ones schools, -- for might example, different serving. that to smaller. are the much small you or are Do Where

one bit. the this of that opportunity of because the Really we like address question a aspects to business appreciate the quite

actually higher enterprise operators, the the the way mid leader X both and the the So center. overall X.Xx in relative segment XX-plus faster substantially market we centers demonstrable to mid a the is so mid- market. operator advantage and growth share rate and the -- centers, the market single single than and enterprise is the Procare and the that are basically XX enterprise, growing in in

could the don't in but markets effectively single be well were highly that. want Procare not very I and segments our competes -- market to share so the So slowly the the is -- time, that They comment advantage. accretes there market very to the which means on the operator. the over also then that strongest and have as mid, in enterprise as well, ever and consolidates largest

business Okay. not? get finally, you there foreign or Or there And available? are to into looking any is that

business, because is business Yes. will a outlook something is we much near the domestically to but certainly after. long-term for to not in International It go that not term consider in meaningful something strategic get today. of there's the -- the so the part probably opportunity

session. question-and-answer our concludes This

Moxcey We closing will return now back to for Zack remarks. any

you during everyone, earnings joining our morning. us for to Thank this with We call. next forward you, look speaking

Thank presentation. you. now has concluded, we conference and all thank The today's attending you for

You may have now disconnect your lines, a day. wonderful and