Roper Technologies, Inc. (ROP) Earnings Call Transcript & Summary

Today, we're going to talk to you about 6 key things. The first one is we have a super high quality portfolio of market leaders. We'll talk about the importance of leadership, the importance of competency, how you can do that treat[indiscernible] you're going to hear from [indiscernible] today all that patterns [indiscernible] The second thing I want to talk about is our demonstrated ability to help these businesses to get better and improve. This is maybe something that's a little less appreciated or less than what [indiscernible] 5 years ago as over team talked about trying to embark on how we do this to be a little bit more closely to [indiscernible] that will be [indiscernible] so all the improvement. It's targeted against that, and we're going to talk about [indiscernible], we are going to about the incentives. We had seen in action with the 4 fixed studies today. [indiscernible] comes up to studies were really [indiscernible]. The third is that we have a highly disciplined and analytical approach to capital deployment. There's an [indiscernible] just like you think of the past U.S. [indiscernible] market organizations. We model our activities and disciplined tools analytics for every motion exactly behind [indiscernible]. It is a core to what we do discipline. It's a big insist last 20 years [indiscernible]. Forth is a true and authentic competitive advantage. We're really talking about this on a couple of pages, but I hope you think that's expenses have Q&A breaks the breakouts at lunch, when they're talking with the team, really drive it on this, right? But what the culture this area, I think what you tens is this other words, we on repeat we have this high trust autonomous culture. So that's the first day. And then we can make capable these of our leaders, right? We screen and hire for burns. -- competitors, builders and operators. So you have somebody is hungry bumble smart as a competitor. They want to learn and get better. And so then we built this enablement capability. where we see have recognition across all 7 of our funnel those paths keep thinking through the portfolio on to get better. So it's a combination of the tool price rate the unique enable and then sort of the wrapper behind that is our sales you heard us talk about forever is perhaps the most important part of the culture is we can to grow. And so because we pay everybody to grow, everybody's focused on a singular thing about how do we have -- how do we improve our growth rate, how do we improve CRI-accretive growth. And there's no negotiations around budgets, and when we -- if you pay somebody based on a plan or budget, you give all of our field operators and incentive to light to us, and we have a filter not to believe anything they say. So how can you have a culture at any amount of trust, right, in that system. So our compensation system ties all this together and we'll talk about that. Fifth is that we are low risk in our orientation. We filter all of our decisions whether it's an operating decision, a capital deployment decision through a long-term compounding lens. And those that have been around a compounding mindset for a long time, if there are rules, the first rule is nothing can go backwards for a compounding sort of organization to work. And so risk informs everything we do. When we're deploying capital, we're not going to deploy capital if we can see a 0 in the Monte Carlo, right? If there's existential risk that we can identify a way on the horizon, and we're going to steer clear from that. We're going to -- leadership in small markets are risk avoiding sort of behaviors and targets. So when we go through this, I want you to be listening, I invite you to listen to the risk orientation that we have because at every turn operationally and capital deployment were low risk. And then finally, we have a clear and compelling long-term growth algorithm. I should have said at the beginning, the slides on the website, some of you can flip through, but they're there for if you want to peruse and come along with us. So those are the 6 key themes. So we've organized our day and the agenda click around those exact things. So we're going to start. The first half of the agenda is walking through, if you will, the operating rigor and the operating part of this organization. So I'm going to spend a couple more minutes going through our -- the portfolio construct. Then we're going to invite Satish Maripuri who's one of our 4 group executives that come up and talk about our decentralized operating model, then we're going to go through these 4 case studies with Deltek, Aderant, Verathon and Vertafore. We'll then have a Q&A panel. We'll turn the lights up. We'll invite all the speakers up, and we'll spend 30 or the amount of time that's available. We might have a few minutes more than that, and we can address any questions you have, we'd ask at that point if we can direct them to the operating team. We'll then come back, Jason will walk through our capital deployment process and approach and rigor, I'll wrap up with the growth algorithm and pull things back together. And then we'll open up to Q&A again, and then it's a free for all for anything you guys want to talk about, if that makes sense. After that, we'll have lunch. Our team will be stationed outside for about an hour, so you can have some one-on-one conversations. So that's the flow of today. So we brought a big team, right? So how many people thought that we didn't have 15 people. So here's -- we have 15 people here today. So I'm going to generally introduce everybody. Most will be introduced as they come up for their speaking role. But first, our operating leaders. So they're scattered throughout the room. But Amy Zupon for Vertafore; Chris Carret from Aderant; Mike Corkery from Deltek; and Earl Thompson from Verathon are here. Then we have our operator group executive. So Satish Maripuri, Harold Flynn, Jeff Paulson, and then Mike Corkery also is a group executive. He runs Deltek full time, and he's a group executive and has 3 other companies that he looks after. So he sits as a part of my team and also leads Deltek. He will introduce Aderant as one of his companies. Then the administrative team from corporate. You certainly have Jason Conley, our CFO. You have Sean Callahan here who heads up most of you know, he used to sit with you guys out here for 100 of these things when he wrote coverage on us many moons ago. He runs FP&A and finance and treasury as a core member of our M&A team. John Stipancich is our Chief Legal Officer, General Counsel, also a core member of our M&A team. Tim Haddock, where's Tim. Tim is unicorn. You won't see him much. He's our lead incharge of our corporate development activities, our M&A executive. And so I'm sure they'll be aligned. It will be one on many with him. He's terrific. And I think that covers the operating team. And we're delighted back over here mid room to have 2 of our Board members, our Board Chair, Amy Woods Brinkley; and then our Nominating Governance Chair, Shelly Archambo. And so that's 15 folks. And then none of this would happen without Jill, my assistant; and Serena sort of making everything happen. So we're 17 stronger day and excited to spend time with you. Okay. So in a nutshell, if there's a sentence about Roper, right, we compound cash flow by acquiring and growing niche, market-leading technology businesses, right? That's how I have a dinner conversation, what Roper do? This is what I say. We compound cash flow by acquiring and growing niche, market-leading technology businesses. So who we are? The bedrock of what we are, our North Star financially has always been and will continue to be this notion of cash return on investment. Cash return on investment is centers on finding the very best businesses that have durability, that are blessed with terrific business models at high customer value and many other characteristics that we're going to tap into today and discuss today. The second point is trust and mutual respect. This is super important. The trust we're talking about in our culture is not the trust that Shannon will do what he commits to doing. The trust that we're talking about throughout our organization is what we call vulnerability-based trust. It's the trust that I have the confidence and the trust to say, "I don't know, or I need help. I need help solving a problem." And you can build a basis of vulnerability-based trust, then what happens is you can have real conflict. And the conflict is about the ideas, right? What's conflict without vulnerability-based trust? It's politics, right? And so we worked super, super hard at the base layer of this vulnerability for us to get conflict because through conflict, you can get commitment, through commitment, you get accountability and through accountability to get results. And so it is something that is truly special about our organization. We work hard at it at the corporate center. The businesses work hard at it. Just by way of illustration at the center corporate office, we have individual coaches. We have a team coach focused entirely on this notion of how do we authentically live in this vulnerability-based culture. That then enables high performance, right? That's part of the ethos of who we are. We manage our risk. And then as organizations scale, they invariably get more complex. That complexity creates chaos. There's a matrix. You have to referee the matrix. And one of the core things about Roper is there's nowhere to hide. 27 businesses have 27 P&Ls and balance sheets unallocated, and there's just nowhere to hide. It ties into the accountability. That's the bedrock on which everything stands. First pillar, as we talked about, market-leading defensible niches. What do we mean by that? And then the second one is the decentralized operating environment. If we compete on intimacy with our customers, so we need an environment, an operating environment that enables that to work. And so we have a decentralized approach. If we competed on scale, then our decentralized approach would not work. So the interconnectivity of these things is by design and intentional. And then third, we have a process-driven and center-led capital deployment approach. So what do I mean by market-leading defensible niches? Vertical in our orientation and mission-critical. So all 27 of our businesses do something -- or develop a product or sell a solution that is very specific to an industry, to a very specific person in the industry and solves a very specific problem in the industry is the essence of why vertical software is so mission-critical. As I alluded to, we are -- our customers can't do what they do without us, right? We're not a discretionary spend. You can't run a large law firm without Aderant, right? If you're a large government contractor, you basically can't run without Deltek where you run much better with Deltek. So we're the core of what our customers rely on. We compete on this notion of intimacy. Throughout the day today, you're going to get a sense of what intimacy really is with our customers. And then because we're mission-critical, purpose-built and intimate, we deliver this very, very high levels of customer value, which enables us to have high gross margins, which is the beginning of the flywheel, the investment flywheel. All the businesses have highly resilient and recurring revenue, and then as a hallmark of being focused on cash returns for 20 years, super asset-light, right? We create competitive advantage on IP and knowledge and networks, customer intimacy, not throwing up fortresses of fixed assets that require reinvestment definitively over time. What do we mean by decentralized operating model? So we're talking about the local resource allocation. What do I mean by that? The 27 business presidents are making decisions, hiring, firing decisions, how to allocate resources from go-to-market to R&D. They're making the strategic decisions about the course and travel of the businesses, asking the questions about where to play and how to win strategically. We're certainly going to engage with them and apply our pattern recognition and our learnings from other parts of the portfolio. But at the end of the day, we rarely come to lager heads where we have a -- we believe companies should go left and they want to go right. It's pretty clear and obvious, the course of travel and the strategy. So they're making the decisions about applying the resources. And then they execute from super nimbly. Maybe the best example of this is COVID. So when COVID happened in March, April 2000, we did not send an edict out to the presidents to say, "You need to get cautious or whatever." It just started happening. It was natural, like, "Wow, our customers are sort of slowing down, we should slow down. We're going to tap the brakes." And then a couple of weeks in, we got everybody together and hunker down and figured out what our game plan was. They weren't waiting to be told what to do. But we are -- what comes with that autonomy and local resource allocation is a very high expectation for performance. Our expectation is that every business every year is going to compete and win in the marketplace. That did not exist in our organization 7 years ago, right? So the expectation for high performance is sort of the -- is required. And as such, as I talked about at the beginning, the leaders -- these are leaders that are, again, learning competitive. They want to get help to the extent that they can help them be better. So we have our group executives at our corporate coaches, right? They have -- the group executives have 6 to 8 companies each. They themselves have their individual pattern recognition. We had our first-ever Roper Leadership Summit just a couple of weeks ago where we had our 27 leaders together, and they taught each other about problems and opportunities and best practices. And so it's about the sharing of the learnings and coaching. The core of what this is, though, is we care at the Roper level that the businesses are built for long-term competitive advantage. We're forever owner. So we need our companies to act and behave over a long-term period of time. So it's not about just getting bigger it's about getting better while you're getting bigger. And you're going to see in the case studies with the 4 companies, the last page is going to be what it was then and what is it now? And yes, they're bigger, but we tried to show the dimensions of how the quality has improved, the underlying quality of the organization. And I talked about the growth-based incentives. Finally, process-driven capital deployment. It's center led. So we take all the excess free cash flow from all 27 companies. It sits at the center, and then the Roper corporate team spent a lot of our time and Jason is going to walk through this in excruciating detail our process, but it centers on finding the very best business. What type of businesses? We just talked about it, market-leading, niche leaders, vertical orientation, et cetera, et cetera, to sort of get the next 28th and 29th next great business into the portfolio. It's a super liberal my job and the board's job of ultimately deciding where we're going to deploy capital, it's super liberating to not be wedded into a single or a small number of end markets. Because then you're trying to do the best you can from a very small pool of opportunities. Here, we have a wide array of opportunities to be able to put our capital to work at the very best and next high issues. It's low risk. We'll talk about that. We're going to show you dimensions of how we evaluate risk and deals, super disciplined and analytical, and it's a learning process, where we were 10 years ago versus today in terms of the diligence process, the learnings and the expert advice we get, it's light years better and 10 years from now, it will be light years better from where we are today. We do postmortems on every process. We do postmortems on every deal. We look at short-term postmortems, long-term -- medium-term and long-term postmortems to incorporate the learnings back in and try if we're going to make a mistake, which we will do, try to only make it one time. And then we fund it, as you know, from our cash flow and investment-grade leverage. So when you put all that together, this is the flywheel or the perpetual motion machine that is Roper, right? It's a combination of market-leading businesses that are beautifully run by our decentralized operating environment, and then our process-driven, center-led capital deployment. So what's our journey. I mean it has been a journey over the last 20 years. The first thing that happened is obviously the portfolio has changed quite a bit. In 2003 or 2000, we were a deeply industrial business, didn't even know how to sell software. Here we are today, 75% software, 25% medical and water products. What's led us on this journey is our CRI orientation, getting to -- changing the portfolio to be more asset light. Again, the basis of competition based on the intellectual property you can create versus and sell and the network benefits of that, for instance, as opposed to a widget. So obviously, it's been an arc in the portfolio. Also about the enablement or the disciplines, so CRI has always been the bedrock, the bedrock of organization. Sometime in the 2013, '14 time frame, we really changed what the corporate coach's role was. And the corporate coaches role before that period of time was really like a controller. And then starting in this period of time, it was how do we have a group of seasoned leaders able to help the businesses get better? And then once we had those folks, we worked together as a group saying, okay, and this -- how do we improve the organic growth outlook of the organization? What can we systemically apply across the entire 27 businesses to enable that? And we created, if you will, it's not branded, but this Roper enablement program around strategy, development, and Satish is going to walk you through what this means. Keep in mind, the Roper portfolio company, right, $6 billion revenue, 27 companies, talking $200 million plus or minus $1 million median company. These are small companies. They're not innately skilled thinking about strategy so we can help them think about how they can create a plan, answer the questions of where to play and how to win and make choice. Choice is a very hard thing to do, especially for a small company. So how do you make choice? Then once you made the choice is how do you enable the strategy right? Strategy, if you knew how to do it, you've already done it. And so if you need to build a European distribution and you don't have European distribution, how do you process enable that thing so it's repeatable and sustainable. And you're going to hear about that in all the businesses, but in particular, at Vertafore -- at Verathon today, sorry. Then our talent offense. So how do we create a true competitive advantage with talent. Most companies say they do, very few do because they don't have -- they don't do the tedious and rigorous and disciplined things day in and day out to enable that to happen. It's something that many of our businesses have really built that capability. And then how do you -- data and cybersecurity and ESG and DNI, these are all things, if we do these well, it meaningfully improves our ability to compete and win in the marketplace for both customers and talent. What stayed the same throughout this journey, right, is most of Roper, right? So CRI is a North Star or niche leaders or vertical or application specific, our high trust autonomous model, long-term builder mentality, growth-based incentives, centralized capital deployment being super disciplined analytical in everything we do, just passionate in what we do and then being low risk. Those things have not changed over this arc of time. So CRI, what is it? This is the math. It's not about the math today. We're not -- but what it does, if you apply this, what is CRI, they lead you to durable business model advantaged asset-light businesses, right? If you take the math, you throw it away and say, what is a high CRI business? It's a business model advantaged, high cash flowing business, high recurring revenue, high gross retention, high net retention, stability that underlies it is what CRI is. This is our journey. So on the x-axis is the asset intensity on the y-axis is your profit margin. And in 2004, we are pinned in the industrial landscape. And today, we're up with the software folks if not a little bit more profitable than on average the vertical software. So it's really been a transformational journey through our CRI lens here. So the portfolio optimization. Since 2019, we've divested 34% of our 2019 revenues. It's about 40% of our 2018 revenues. I'm proud to say that in 2022, we're [indiscernible] exactly the same scale, $5.4 billion because we're successful in deploying our capital and having a few years of terrific organic growth. But I think the moral of the story here is not the scale, it's the quality, right? So the portfolio construct is now 75% vertical software and 25% medical and water products, and that grade out part is the cyclical piece that we divested, cyclical and project-oriented piece, much more resilient, much more high quality. In terms of the quality dimensions, apologies for the small sort of [indiscernible] on the left. The top line is organic growth. 2016, sort of flat to down a little bit, 2022 plus 9. Software as a percent of revenue was 32%, now it's 75%. Cyclical revenue was 44%, now it's approaching 0, right? That was the core driving force behind the portfolio reshaping. EBITDA margins, 35% to 40%, and then net working capital percent of revenue 20 points better. So we now have a business that, as it grows, it creates cash as opposed to consuming cash as it grows. It's been a tremendous change in the quality. In terms of revenue composition, $5.4 billion of revenue, $4 billion of which is vertical software. Of that vertical software, $3.4 billion is recurring or reoccurring. And of the $2.9 million recurring, you can see here that $2.1 billion of it as SaaS subscription and $900 million of it is on-prem annual maintenance. As a note, this on-prem annual maintenance will eventually, over time, again, at our customers pacing, I'll say it again, at our customers pacing will convert to the cloud and SaaS subscription. It will convert at 2 to 2.5x. That's our experience as we move our clients from the ground to the cloud. My guess is that takes every bit of a decade. It's hard to put an exact time period on it, but it is an embedded long-term growth driver of our organization if that right-hand side converts to subscription. In terms of revenue growth, this 5-year period shows, through a pandemic, we will grow double digits, underpinned by very strong organic growth and then our ability to deploy capital through cycle. You'll see a little bit later on when Jason comes up sort of a pull this period out, look back over 20 years, and we've been able to sort of do the same thing through high interest rate environment, low interest rate environments, through growing macroeconomic conditions, declining macroeconomic conditions, really, I think this is a perfect proof point of how compounding sort of overwhelm sort of the short-term nature of some of those factors. This shows you the compounding over the last 15 years. Revenue of 8%, EBITDA, 11%, cash flow, [ 12 ], and market cap by 15%. So very proud of that. And then over the long arc of time, over the last 20 years, it's been about a 5x to that of the S&P. So this model has proven to work, and we have more conviction today that it's going to work going forward and excited to explain that story to you today. Okay. So with this, let me talk you through what our market-leading -- these businesses are in a bit more detail. So vertical, this is an array of our company. It's by size. So you can see the 27, it is quite an array. You can see the meat is in the [ 100 to 250 million ]. While -- I mean, these are just names and logos. The commonality of all this is that they're all #1 or #2 in the markets in which they serve. So leadership is super important. They're all application specific. They're all mission-critical. There's a note on leadership the study from 30 years ago about relative market share and profitability is absolutely true. So -- and then also, you have a statistically, like a 20x better chance of having a long term sustained economic outperformance if you're the market leader versus not. And so leadership is super important to what Roper is because it gives you the optionality to sort of find adjacencies, to continue to expand and grow from the position of strength of leadership. If you abstract away a little bit what our businesses do, these are the end markets by segment. So in -- I'm not going to read them all, but in application software, there's certainly health care IT, education, government contracting, legal and P&C. On network, freight matching, so transportation, life insurance, media and entertainment and also health care IT, but in the post-acute setting. And then on taper, technology-enabled products, medical products and water. Again, all purpose-built, all mission-critical, all high customer value. If you wanted to find secular trends that we benefit from -- our companies benefit from, certainly, digital transformation. You're going to hear stories today at Aderant, at Deltek and Vertafore about out their solutions are tech-enabling very manual workflows for sure. AI / ML, I want give you stories on both the product -- the tech-enabled product side and software where we're applying AI and ML. We're not creating the core technologies, but being application-specific focused companies, we will apply them to the very specific use cases. And then certainly SaaS migration, which I talked about before. And then on the medical, health care, medical products and water, certainly the aging of America, aging of the world, sort of the -- as you age, you get into a power curve of medical consumption. Single-use devices is a very real thing in the -- across the globe now for infection control. And then conservation certainly of water. So what is intimacy, right? So it's rooted, and we compete on this, right? We compete on intimacy, not scale. Mike, Chris, or Amy are going to make this real during their presentation. It's customers don't rely on us. They do rely on us, but they want us to win. When you're -- you enable their business, you're the leader, they tell they want us to win. They say, "Hey, can you do that?" Or they'll even tell you you're not doing something well, they'll tell you that, and they ask you to fix it. and those moments of crisis actually when you fix it bring you closer together. So our customers, they want us to win, and we partner with our customers. And so it's rooted in a deep understanding of markets. It informs the innovation road map and it forms go-to-market investments. It's -- we have these highly, highly specific solutions. You're going to hear about how our businesses don't just -- like you will hear from 2 businesses a day in Deltek and Aderant, both essentially deliver ERP for professional services firms. But one is so specific to legal because the needs there're so much different than have a government contractor or an architect or an engineer or a building contractor. You're going to hear about the specificity of the solutions, and that leaves the market share adoption and value capture. Over time, we talked about our gross margin is improving. This is, to us, an indication of high customer value. So over the last 15 years, they've grown from 50% to 70%. Our recurring revenue base is something that has been a nice byproduct of the portfolio solution. 70% of our total revenue is either recurring or reoccurring, that's both software and then there's a big -- a large percentage of our product businesses. We're also going to tell you more than 50% of Verathon's revenue base is reoccurring in nature, for instance. And then a percent of vertical software, 80% of our software revenues are recurring or reoccurring in nature. And then our asset-light journey sort of maybe speaks for itself. This is what we've tried to optimize over 20 years. And so you can see that we've beaten over 30%. This is -- in this particular care case, it's net working capital plus gross fixed assets divided by sales. So now our net working capital, the negative nature of net working capital overwhelms the fixed asset base. And so it's just been a tremendous journey for us. All right. So now let me introduce Satish, who's going to come up and talk about our decentralized operating environment. Satish has been with us about 4.5 years. He's a super seasoned software executive. He's a tremendous coach. And I think I had a couple of his companies before he did, and the companies came up to me and said, "We really liked working with you, but we really like working with Satish," and so I don't know what that says about me, but it says a lot about estates. So thanks so much.

Thanks, Neil. The good news of going after your CEO, he gets to introduce you, the bad news is he tells your story and covers all your slides. So I get to expand and look for room to actually add value after going after the Neil. As he said, he was in our shoes as a group executive before -- so often, the bar is very high when we walk into a room, the quest is to actually get to know about the business more than me actually knows about the business. So it's a great team, sets a very high bar. So thank you for all you do. Thank you, everybody, for taking the time. We've got about 15 or so minutes to shed some light on the details of the operating model that's decentralized, and why we are unique at Roper. And I'll do my best to cover all those in 15, and then we have some time set aside later where we can spend some more time answering more specific questions after that. It's an honor and privilege to be up here on behalf of the group executive team. And I'm just a spokesperson, but the team is really the one that does the work with us as a group. We push each other every day and try to make this operating model a little better. So if I just put a name to a face and if I could just have Harold Flynn stand up, please, Harold, Jeff Paulson, and Mike Corkery, I think he's back there, getting miked up. So these -- we are the 4 group executives. We get to work with the presidents of each of the operating companies. We're all based in Sarasota. And our mission is -- job #1 is to make the great company that Roper owns even better. And we do so with a very specific decentralized model, which I'm going to talk to you a little bit about. So appreciate, and we're all going to be available during the break and lunch, so if you want to pick up brains, we're happy to expand on that a little bit more. The -- I've got a short story, which Neil probably will remember that actually embodies everything we do here. My first week on the job, came from Nuance Healthcare, now part of Microsoft. I wanted to sit down with Neil and actually figure out what he has in mind for the first 90 days. He said, forget the first 90 days, here's a book you should go read, the Michael Lewis, those of you who know Moneyball. That's not the book he gave me though. That's what I was expecting. He through his book across is a book called the "Undoing project." Felt odd. This is -- I would expect the CEO to give me a first 90 days book of some sort, but that embodies the culture. It was about the common corporate cultures usually have a way of doing things and Roper was uncommon. And this was about, "Hey, it's great everything you learned over 30-some-odd years but pull that culture aside because at Roper, we have something special." And about 3 weeks into reading that book and finishing it, I now understand what he actually meant by that. And it's truly an uncommon culture for us here at Roper. We're pretty proud about it. Neil introduced Shelly and Amy, our Board Chair and the Nominating Governance Committee Chair. I want to acknowledge their contribution as part of the Board that really makes a difference in the way the cadence and the collaboration and yet giving us a room to make us a better place. So we appreciate everything you do. As Neil said, everything is interconnected in the way we do things at Roper. So if you actually look at the way we debate, we make the operating process better. We then align -- there's some disagreements, but we align and make that process better. It's going into the culture of how we do things at Roper. And that's what truly makes us -- it's simple, but yet very powerful. There are several topics that I'd like to touch on, but if I could lay the framework, there are 3 things I'm going to cover over the next 10 or so minutes. First is how does local execution and nimble execution really work at Roper? And what makes it tick? The second is, how do we govern coach and make that execution better? And the third is, how is it all linked to a little thing called compensation? So the 3 things I'm going to cover again, one is local execution, nimbleness; second is governance and Cadence and coaching; and the third is how is it linked to compensation. So those are the topics I'm going to touch on. So with that, local decision-making and execution. As Neil said, in 27 companies, we might have 27 CRMs, 27 ERPs because the presidents and the leaders of those businesses do get those to make those decisions, but under the umbrella of a very high bar of elite performance. So there's no ambiguity in how we set expectations from Roper for those companies. We'll talk a little bit about how we arrive at those growth rates, et cetera, but they get to make the decisions around talent, capital allocation, et cetera. And that's okay. The 27, if everything is fine, but it's under the guise of autonomy and the ability to make those those decisions at their levels. Now how does this all work? It only works if there is a level of trust and bounded autonomy and a high level of autonomous trust that's built in the leadership that's running these businesses. Now over a period of time, given that we are forever holders of businesses, we've learned a thing or 2 about what makes great leaders tick at Roper. There are 4 attributes we arrived at. Why 4? Well, they happen to be heavily debated. Trust me, there's a lot of debate about this. And we arrived at 4 things that are critical for successful leaders who run companies at Roper. First thing is a continuous learner. These executives are often put into situations where they're not necessarily from the domain. They're great operators or strategic thinkers, but they may come from outside the domain. And that's okay. Given our niche orientation, they have to be very quick at picking up the concepts in that vertical, being very data-driven, informed and very quick decision-making. And they are continuous learners. The second -- and I'll let you know how this all makes its way into decision-making in the operating model. The second is an autonomous competitor. These competitive executives are constantly looking to share -- take share from the competition. They're looking to grow faster than the market growth rates. And without this DNA, it's extremely difficult to set a very high bar and deliver against that bar at Roper. The third is a builder. Now given that we are not in the business of buying and selling companies, and we are forever holders, careers are made within the business. So leaders who actually want to build and live with the decisions that they make. And last, but not the least, strategic operators. This is often an oxymoron because if you're a strategic, you can be an operator or vice versa, but that's not the case. These executives are looking over the horizon, building the next 5- to 10-year strategic plan, but also are capable of making operating decisions today. And you'll see how all this leads into what we do. But at the end of the day, the punchline is they need to act like an owner, right? So looking at -- so that was the ingredients of a decentralized operating model with great leadership and empowerment with high expectations. So next, the second topic I want to talk to you about is the governance behind us and how do we coach. As I said, there is a very clear set of expectations. The presidents get to make the operating decisions at their level. We, as group executives get to work with them on a specific set of topics and make them better. Examples being collaborating with them during the strategy development cycle, bringing external resources that are best in the industry to help augment if needed, working with them on a talent office, working with them on a cybersecurity maturity matrix and helping them, if need be, not beyond our expertise, but actually bringing outside help if needed on a situation-by-situation basis. So with that, I want to take you to a little bit more about the specific, somewhat tactical, but important rhythm. And some of you just even in the discussion we were having before the start of the session said, how do you actually work with these companies as a group executive? So let me take a little bit of detail there and walk from the bottom to the top. Strategic reviews. These are every 2 to 3 years of engagements with each of the companies to get clarity on their growth equation, and how they're going to drive organic growth over the next 5- to 10-year period. There's a very detailed exercise. I'll talk about that in just a minute. But we get to work with the companies every couple of years or so to refresh that. The thinking is constant, but the events may be every couple of years. Next one up is the annual operating cycle. Every 12 months, typically around the November, December time frame, each of the operating companies and the presidents with their teams come to spend an hour with us outlining. Of course, the group executives have worked with them for quite some time to bring clarity into the next 12 months of their operating plan to execute against that 5-plus year strategic growth runway. Very detailed about where they're placing their bets, how they're driving profitable growth, the process and the capabilities that they're going to invest in over the next 12 months to help their 5-year trajectory. That cycle continues every year. Then next one up, and I think you'll see a theme here. We do -- [indiscernible]and I will be actually spend quite a bit of time on this, is doing twice a year talent reviews to look -- and I'm going to spend a few minutes on talent, so we'll skip this for a minute. And then you get into quarterly reviews where we're actually assessing the progress against the trajectory for the year. It's a very sporadic, light touch, but with a very deep and keen intent. So I think you get the idea of the rhythm, all rooted by 3 key variables of success, which is how are we driving organic growth? What is the EBITDA leverage of that growth? So it's profitable growth? And then how does that lead to CRI, to Neil's point, and pre-excess cash flow? So it's a very simple model that is very well understood and it's a like touch sporadic model for us. Like I said, Neil touched on a few of these, but I'm going to take the specifics and walk you through some levels of detail. There we go. This is where it all starts. Remember, the 4 attributes of great rope leaders, the autonomous competitors, this is where it really shines. Because they're looking at, what does my business have for growth potential? Where is the clarity of the growth runway, as we call it, a growth equation as to which subsegments of the market do I go execute in, which is more profitable, where is the faster growth rate? How do I outrun the competition in the growth rates? Where do I take share? And putting all these questions together and creating what we call a strategic plan that has a 5-plus-year horizon in the growth runway. And the key decisions being made there are where to play, and how to win? What is our right to play in a particular segment? And we work with them very carefully through this process so that we're not making the wrong bet. The trick, of course, is to filtering the 25 opportunity set down to a manageable fuel and then prioritizing that in the how to win from a capability standpoint. So a very detailed process. We needed -- we get some help from the outside of the likes of the [ Bain ] to really put a fine point on this, and this is where it all starts. So the competitors really shine as leaders in the stage. Next is the ability to take that and put that into motion. This is where the strategic operators come into the mindset of that comes into play. Taking all the strategic choices and building the capabilities required the process and capabilities required to actually execute on that as an operator. This is where choices have made of investments in the organization, capabilities such as product management, go-to-market, quote-to-cash capabilities and muscle pricing. All of these are capabilities that are developed when you deploy strategy into execution. And this takes quite a bit of time to put together and is very carefully watched and inspected by us to ensure that we're heading in the right direction. Next is talent offense. We talked about twice a year touch points with our companies as group executives, and this is one that consumes a good amount of time and well worth the investment of our time, by the way. But when we look at talent offense, we've looked at the attributes and the areas that we need to spend time to make the talent in the organizations better. And we arrived at 3 things of 3 areas that we rally around. One is selection of talent, the second is engagement of talent and the third is development of talent. So selection of talent, and I'll give you a couple of bits of details in here, a great workforce strategy, is where do you put your talent, what DNA, which locations do you need, how do you organize them, what's the org design, spans and layers, all of that. And having clarity around that is super important. You build in source talent especially with diversity in mind, diversity of skills, backgrounds, et cetera. And then you also deploy things like assessment tools, et cetera, to make sure that you're hiring the best talent possible at all levels. The next is the development of talent, where you're looking at succession grids, performance on 9 boxes, and ensuring that you put the right development in place for leaders at all places. So when time comes, you have the great succession at all levels in the organization. This is easy to say, super hard to get right. And we spent a lot of time on this, and this is where I think the muscle that we bring to the table really is -- we can use all the help we can. And the last thing is engagement. You don't really know how the organization is doing until you have the pulse on the organization. The tools like Gallup engagement surveys that most of our companies use, there are tremendous insights into areas for improvement as to where the organization can actually do better, and action planning that and actually doing a great job. And following on that is a regular discipline within the organization. So again, selection, engagement and development of talent is where we spend a lot of our time as group executives. Last couple of topics along this way, you sort of get a theme here is the ability to identify what great looks like, put it in a framework that's consumable, and let our leaders adopt and leverage that maturity matrix. We do that in talent. We're doing that in cyber. Now in the last 4 or 5 years, you've seen a tremendous amount of nations-state attacks, brute force attacks on organizations. The risk is very high if you don't get ahead of this. So as Roper, we'd recognize this. Over 5 years ago, put a lot of thought into what break looks like for cyber, cloud migrations and data privacy, encapsulated that into a cyber maturity matrix. Each of our companies has access to that cyber maturity matrix, a self-assessment tool with some inspection from us. And the inroads that have been made into progress on this front has been tremendous over the last few years. And you can never rest on this because the nation's state actors and the bad actors are getting better. So we continue to stay on top of this. And as you can imagine, a tremendous amount of work that goes into this. The last topic in the capabilities that we work with is ESG and D and high diversity, equity and inclusion I must say that the organic grassroots efforts on this front from each of the companies is quite impressive. And that's where it starts. At Roper, what we had to do is open the door, provide some help, some knowledge sharing around the best practices, and it's great to see the organic effort. This is a more recent muscle last few years, but very positively encouraged by how the progress with the company is shaping up in this area. So I talked to you about the localized execution and nimble model, spent a few minutes on governance and how we work with the business is in coaching and I'm going to sort of end with the growth incentives and how that works. As Neil said, the budgets are a fraud in the notion of budgets. You can -- you tend to work all year to sandbag your budget for the next year. And then, of course, the corporation has believed this program not to believe you anyway. In our case, we don't have a notion of budgets. It's about just plain simple year-on-year growth in EBITDA. And we all know that trying to grow EBITDA once twice a year or twice in a row works if you actually don't grow your profit -- your top line profitably. So what focus is on top line growth, the clarity of your compensation being tied with meritocracy to your growth rates year-on-year at EBITDA is very clear. Every company knows their growth curve. It's very transparent all the way down in that operating company. There's a really good reward for overperformance as the scale is not limited at 100%, and it's very clean. There's no negotiating that happens on the growth compensation curve, which is tremendous and it's built on trust and transparency. So again, super proud of these very simple tenants. You're going to hear from leaders following about how this all manifest themselves. But I have to say that the Roper team and the operating team here really spends a lot of time obsessing over this, improving it and really seeing how we deliver on that. So with that, I'm going to turn it over to Neil, but thank you for taking the time today. But again, remember 3 things, a decentralized operating model with a governance and coaching from the group executives tied to clean compensation. And that's a recipe for the operating model at Roper. So thank you for staying the time. Over to you now.

Thanks, Satish. Good live here. Thanks, Satish. So I have 1 slide, and I'll turn it over to Mike Corkery. So when you pull it all together, right, we've when you had the last couple of parts of this presentation around the composition of the portfolio and then our engagement model with our companies, they get sorted those 11 or 12 things we talked about get sorted into how we compete and win. By market, we compete and win because of our vertical mission- solutions and our leadership. I can't emphasize enough the importance of leadership as it relates to competing and winning. Second is the model, compete on intimacy, nimble execution, high customer value, resilient, highly occurring revenue and asset light and then culture. Local resource allocation, high performance, super high-performance expectations on competing and winning, building for long-term competitive advantage, like again, really utilizing our long-term forever home as a strategic weapon. So let's use it to build for an authentic capability for long-term competitive advantage growth based incentives and overlay that with corporate coaching. So let's turn to our case studies. The first one is Mike Corkery. You can come on up, Mike. Mike, has been with us since we acquired Deltek in 2016. He's done a great job. He's going to brag a little bit for the next few slides, deservedly so. And he's also, as I mentioned, a member of my team, the corporate team about making Roper better -- we've worked on -- we have vulnerability-based trust, right? And so I admit all mistakes to him all the time and vice versa. So I really appreciate what has you done for the company and looking forward to your presentation today.

Thanks, Neil. Appreciate it. Good morning, everybody. Very excited to give you a window into what we're up to at Deltek and how we power our customers' project success. So Deltek, who we are, we are the largest provider globally of software and solutions to project-based businesses. The thing that our customers have in common is their mission every day is to deliver for their customers on a project by project or engagement by engagement basis. Our solutions enable them to do that. And I'll talk a little bit more about how we do that in a bit. We delivered over $800 million of revenue this past year. We delivered the majority of our solutions in the cloud. So SaaS is the fastest part of our revenue stream in terms of growth, growing more quickly than any other. And as a result, we've been able to very successfully annuitize our business and drive the growth in our recurring revenues. So our recurring revenues are now 80% of the total. From a geographic perspective, the vast majority of our revenues come from North America. And in terms of vertical market, focus, 60% of our revenues come from government contractors. So that's the contractors that deliver projects to the federal government. Other 40% comes from commercial businesses that deliver projects to their customers, and I'll talk a little bit about the specific verticals that represent that area of our business. So these businesses run on our stuff. So as Neil talked about earlier, we are -- the analogy we use, we're not cable and Internet, we're like gas and electric for these businesses, right? Once we get in there, we're very difficult to get out. Our solutions are very sticky. So what we do is we help businesses navigate the life cycle of every project that they look to win and then deliver for their customers. So our solutions help them find new projects through our customer relationship management and also data as a service projects or products that allow them to see what projects are available in their space. Once they win a new project, our solutions allow them to then track time and expense so they can build their customers, track schedule, so they can see into our products and our processes. And again, really proud to win a number of awards for the quality of our customer support and customer success. Most notably, the last 4 years, we've been able to win the J.D. Power award. And then finally, we want to keep Deltek a great place to work. We want to be an employer of choice. We want to be a home where great technology talent comes to build a career. We have best-in-class employee engagement scores. We have a culture that we're incredibly proud of. And again, we've been recognized as a top workplace by a number of different organizations. Again, I think the one we're most proud of is the last few years, we've been recognized as one of America's best midsize employers by Forbes. So again, something that Team Deltek is really, really proud of. We are focused on a growing set of very vibrant markets, and we continue to take share in our markets and expand our market share in each and opens up an adjacency that allows us to continue to grow. And the most recent acquisition that we closed in the upper right-hand portion of the slide, Tip technologies. We closed out in 2022, a provider of quality assurance and manufacturing execution to the government contracting space, specifically in aerospace and defense. And again, all these acquisitions have been accretive to our growth, very successful and also been accretive to our EBITDA delivery as part of Roper. So to that point about our journey with Roper again, it's been a fantastic partnership for our business since we joined Roper in late 2016. You can see from a revenue perspective, we've been able to grow from just under $0.5 billion when we became part of Roper to over $800 million this past year. The vast majority of that growth is organic. Again, our organic growth profile has changed from a consistent mid-single-digit grower to a high single-digit grower. Since we became part of Roper, again as we put some of those more enduring muscle and capabilities in place to continue to take share and attack our market successfully. We've been able to annuitize our revenue stream. Again, over 80% of our revenue is now recurring. That's really important because it allows us to have great conviction about investing in advance in terms of our solutions. We have great visibility into the forward revenue stream. We can invest with great conviction around driving our solutions forward to make sure that we're delivering successfully for our customers and extending our competitive lead relative to what we deliver to our target markets. We've been able to scale the business, despite the fact that we've expanded our R&D investment during our period of time of Roper, we've been able to also scale other portions of our cost structure and expand our EBITDA margins, also the M&A activity has helped us with the accretive contributions they have made to our EBITDA as well. And from a retention perspective, our solutions are resonating with our customers. Our gross retention is up. Our net retention is well over 100%, still was when we has expanded since. And so again, we are really proud of the vibrancy, the ecosystem that we're part of and the success we've enjoyed with our customer base. So we affectionately refer to our ecosystem and the ecosystem in the project world that we lead is Deltek Project Nation. It's the intersection of our partners, our customers and our team. We're at the center of that, really proud to lead that ecosystem. We have our annual user conference. We get 4,000 people together, 4,000 project peaks in one place. It's like a project-based revival meeting that actually, when you say it out loud, it really doesn't sound all that exciting, but it's a pretty amazing thing, and it's a really vibrant ecosystem that we're very proud to lead. It's a growing set of markets. We're excited about our position to continue to grow and contribute to Roper success. And again, with the partnership with the Roper team has enabled us to be in a position to continue to successfully lead the ecosystem and continue to deliver the results that we've been able to put on the board this far. So thanks for the opportunity to tell you a little bit about what we're up to at Deltek, and I'm going to take the opportunity to introduce our next speaker, Chris Cartrett, who I partner with as part of my group executive responsibilities. Chris,has been the President at Aderant for 18 months. He's been at Aderant for 9 years, was the Chief Revenue Officer before taking on the leadership role. He's been in legal tech for over a quarter century, I think, Chris, which I don't know if that means you're really experience or you're really old, but deep domain expertise and a fantastic leader leading our Aderant business. So Chris, come on up.

Thank you. Yes. My name is Chris. I'm the President and CEO of Aderant. We're based in Atlanta, Georgia. So -- sorry, New York, I had to get that in there. So anyway, we get the chance now to talk about the very sexy world of legal tech, at least it's very sexy to me. So the way I've tried to structure this. I hope this will work because listening to Neil and everyone before, you kind of have the skeleton, you know the character traits of the business. I think Aderant is a really good place for you to really see how the meat hangs on the bone, if that makes sense. So I tried to lay this out in a way, give you a little bit of overview as it relates to numbers, then we'll talk about the business itself, like what do we do? Why is it special? What makes it click? And I thought I'd kind of get a little bit into the market piece and then we'll close it with some of the strategic directions stuff that we're doing. So I think all this will kind of tie in to what Neil was I'm discussing earlier. So first and foremost, like so -- Aderant, what we do basically is we help these big, large, massive law firms run a better business. So you think about the core inner workings of their financial system, how they get to build out the door, how they're able to collect money, whatever that may be. Now from a business perspective, we're a little over $200 million in revenue, about 80% of that is recurring. Our geographic mix, if you were to look at like large, medium law firms globally, our geographic mix kind of matches that. Like the vast majority of law firms are here in the States, and then you transition to Europe and then across APA. And then the big thing that's out at the bottom because this is a little bit of our story, and I'll get through this more. So ERP or in the legal space, we'll refer to this as PMS, which means Practice Management System. So that's the majority of who Aderant was forever. That's when we were acquired by Roper. And so it's still about almost 57% of the total business. But now the other parts of the business have actually grown to about 43%. And so I'll talk to you a little bit more about those in detail. So when you think about Aderant, if you were talking to your law firms, most of them know us for the very first thing you see up there, which is a product called Expert. Expert is that core kind of back-end financial system. Now here's what's interesting about this. So you don't think of -- within the legal world, the way they bill, the way your businesses require them to do certain things, is very, very, very specific. The way they have to manage rates, rates by client, rates for a different matter, even though you may have a negotiated rate for another client, how you have to split those bills. The point is inside the law firm, how they actually have to generate bills or think about their time cards, ultimately to get something out to you to potentially pay them is very, very, very complex. And we're very fortunate that expert, our main kind of product line there is the #1 product in that large and medium space, hands down. And so because of that, Expert basically gives us a right to play. Like you can imagine you've got all your financials, all your data about your clients in one financial system, you're putting it through crazy security audits, you're putting it through all kinds of pen tests and everything else, just inside the law firm because that data is so incredibly valuable. Well, that gives us enormous right to win when you think across the rest of the law firm. And so for example, when you go to some of our other offerings that we have, for example, BillBlast. BillBlast is an e-billing tool. One of the big things in the legal world today, if you don't submit a bill for e-mail, you tend to do it through a billings fight where somebody goes out there and basically make sure it mines with how your service level agreements are set up in stuff. So BillBlast is basically a product that I remember us texting Neil 4 or 5 years ago, a small law firm had built this. It was about a little less than $1 million in revenue, and we'll do $1 million in bookings of BillBlast this month. So the point is, it's that kind of an application because we earn that right to play because of the success that we've had with Expert and the way the large and medium space sees this. And the same goes for the other product lines iTimekeep another application that I remember us texting [ Thematic ] and working with [STP] to bring a Bellefield product line in. This was the first real true SaaS time application introduced into the legal marketplace. And then recently, you've seen where we acquired a company called viGlobal, which really kind of helps with how people recruit. We're even integrated into the law schools in Canada and then resource allocation, which in a legal world, how to manage your assets and who you're able to put on a matter and how you're able to pull them back, it's obviously very complex. Well, because of Aderant's relationship that we have of all these law firms that you have globally, it's given us an opportunity to be able to go to them and help them really kind of learn how they can manage their assets, how they can put their lawyers in different places when they're busy when they're not busy. And so those are the types of tools that we bring to the table. And then the last one real fast is another good one. We have acquired another very small company at the very end of 2021. I mean like December 31 at midnight. So -- but when that acquisition happened, we had another product calendaring and docketing. So think if you ever have a court case or are all these filings that you have to make. And there's a time when those things have to happen. Well, CompuLaw, one of our core products is considered really one of the leaders in the market space. Well, ALN American Legal Net, had actually come along and has started to become a little bit of a disruptor and really introducing the first kind of cloud application into that space. So we were able to acquire them, and the ending result now is a product called Milana, which is Hindi for better together, bringing this CompuLaw and ALN product together to really deliver this one true cloud application into the space. So that's to kind of help you understand what we do and why it's so unique and why it's so very specific within the legal world, that is some -- it's different, right? Now if you think about though who our market is. Now we do have about 2,500-plus law firms across the globe. I mean they are all large, medium-sized law firms. If you think about the big space, and I'll reference that a lot here. So inside the United States, we refer to them as the AmLaw 200, Think about the top 200 law firms that we have, of which a lot of them are obviously based right here in New York. So we have about 97% of them are current clients of ours. 86% of the Global 100, if you want to take even large firms outside that. And then we work in about 21 countries. But from a market perspective, the way to look at this is the most recent survey have like global legal services this year will continue to increase at about 5%. But if you look within those really large law firms, it's been on a pretty consistent about 10% CAGR over the last few years or the last year being just something that's really special within the firm. Now, who are those firms? I mean these literally are your firms. I mean it's your Skadden, your Maya-Browns, your Clearys or Jones Days, your Squire Patton Boggs. I mean, these really are the firms that people look at as being truly the leaders in their space, wherever it may be, really across the globe. So I want to kind of 0 in a little bit on Expert that I was talking about before because I think this kind of helps tell a little bit more of the story as we move forward of how the relationship with Aderant has really grown underneath Roper. So specifically in that Expert world, I mean, we've added about 220-plus law firms. You got to remember, you're talking about very smaller spaces for size, 220-plus firms over the last 5 years, 39 in the AmLaw 200. I mean these are the big ones, right? And so of that now, there's 97 firms in the AmLaw200 that are either own Expert or implementing Expert. And the most important part of that is during that entire time, we haven't lost any. So it really speaks to kind of the success that we've had inside the business. And so I actually used this [one stop ], and we were acquired by Neil and team, we were at about 31% of the market in the AmLaw200. And then today, we're 48% of that. So it's been a really strong story. But for that story to continue, when you're working in such a niche, you have to really be focused on the experience that the clients are going to have. And so we've put a lot of focus on our implementation teams and our services, and we're very happy to say we're probably the only provider out there that's not have like a failed implementation when you're going after these large firms. Second to that, though, was a heavy focus on our support. So we carry a pretty consistent and over 90% Net Promoter Score when it relates to how we're able to serve our clients. And then finally, from an organic piece, now we missed a little bit about some of the smaller acquisitions we've done. So of those, we've been able to build products and basically create new modules for clients to kind of help drive that organic growth. And since the Roper acquisition, we've built about 35, and it's actually close to 40 now, 40 applications that we've been able to take to the market. So if you think about this from a time line, we'll all kind of stick to the same piece. So the land grab is what we refer to that opportunity where you're going out and you're winning these clients away from your larger competitor. And that's still out there, and that will always be there and it's been a wonderful, wonderful thing to do. But for us, personally, as a business, I would say knowing that we had a great right to win in this space, we've been able to take and start expanding within that large and medium space into products like the things that I was talking about before, like e-billing and talent management and some of this. And so we started back in 2017 with a heavy focus on trying to do more bolt-on M&A work. And that bolt-on M&A has led us into this skill, which we think is one of the muscles that we're able to flex really, really well. And that is this idea about cross-sell and upsell. And so that's a heavy part of who we are as a business today, bringing new applications to our clients continuing to kind of expand our wallet share inside the firms. But probably one of the bigger things going on is the SaaS journey migration that started kind of in 2019. And I mean this is a great example where inside the legal world, whether -- I don't know if you'll realize this or not, but they're very risk-averse. It's not really out there. So -- but what was going on at the time is everybody was very nervous about taking their financial data and moving it into the cloud. If you read the Wall Street Journal, there's all kinds of hacks or things like this were trying to happen at law firms all the time. And so just they had this mindset that no, no, we need to keep everything close, we need to keep everything under our own ownership. But then as we moved into COVID and everybody had to start working from home, immediately, everybody started realizing like, no, this is not a good idea. We need to be looking to have more hosted providers or other people to help us on our cloud journey. So this was one of the places where Neil and team really have been hugely beneficial for us at Aderant. Because whereas we had SaaS applications as it relates to all those point solutions, we had not really tackled that with the large ERP or practice management solution that was Expert. So that became a large part of our journey really at the very beginning of 2020. Now I'll give you just a real good stat kind of relates to how this has radically changed. So in March of 2020, we had somewhere in the ballpark of 10% to 15% of our total sales pipeline with SaaS or subscription business. As I sit here today, it's 90%. So it's been a radical shift. And for us, this has been really good because on this journey, just kind of SaaS journey and then also the hosting journey as it relates to Expert, as people may move into our cloud or into our single tenant that we may be able to offer them. I mean, we're very early in those stages. And so that's basically increased our serviceable addressable market by about threefold. So it's been a wonderful journey that we look forward to continuing. So what do we look like compared to when Roper first acquired us? Because I will say, we worked very closely with Roper across a lot of things, helping us kind of grow and develop as a team, but then also maturing as a business. And shockingly, I just want to stand here and let I read the slides, but I guess I should point them out for the webcast. So because the truth is, we did. We went from a #2 position to the #1 position. When we were acquired, we were actually slightly below $100 million in revenue. Today, we're over $200 million. Our recurring revenue has grown now. We're 79%. By the end of this year, we'll be north of 80%. Our SaaS bookings, literally, it was 0, and today, it's 80% of what we have that's actually booked. And then from a margin perspective, we've actually been able to hold our margins even through this transition from perpetual into a more SaaS world. And then finally, and I think this speaks to being a better business or a healthier business, it's our net retention. It's basically increased from 102%, which was good, but to 113%, which is, I think we would all agree great. And I represent a really, really good team. And I'm very happy with the success that we've been able to have as a business. I think we do a really good job of representing what Roper is all about and how Roper is able to influence the business. So I look forward to talking to any of you at the breaks or at lunch. But with that, I appreciate it very much. Thank you. Jeff?

Well, we've heard from 2 of our software companies, and now we're going to shift gears a little bit and hear from one of our medical products companies. I think it's a very similar story, though, of process-enabled capability building. Earl Thompson is going to present our Verathon story. Earl has been with us since 2016. And he and his team have built a real execution machine at Verathon that are delivering exceptional results. And you'll draw your own conclusion from Earl's presentation, but I think it's a story of what can happen when you put exceptional leadership in a business and allow them the elbow room to put first things first. And they've had excellence and achieving excellence as a first-order priority, and it's just showing up in the transformation of the business. So with that, Earl?

Great. Thanks, Jeff. Okay. Great. Jeff and I have actually been on this journey together. We joined about the same time in 2016. He's been an amazing partner on this journey. Really, I'm excited to have an opportunity to introduce you to Verathon and share our journey with you. Let me start by talking about who we are. Verathon is a specialized medical device company. We're a technology company. We're a growth company. We're the global leader in really 2 spaces, airway management and bladder volume measurement devices. We're a hardware and solutions company. The best way to think about Verathon is to think about our mission. We've had an incredibly compelling mission. Our mission is to empower health care providers to improve and extend patients' lives. If you would talk to one of our clinicians, an anesthesiologist, an OR doctor, an intensivist, they would put a finer point on it. They would say Verathon, you're in the business of saving lives. So the mission is very personal. In fact, I would guess many of you in the room have a relative, a friend, an equate that has actually -- had a Verathon product used during their medical care at some point. We're largely focused in the hospital setting, the acute setting, we call it, in all aspects of the acute setting, the ER, the ICU and the OR. We're 3 quarters visualization, which is our airway management business, and that's our growth engine, one quarter bladder volume measurement. We're a global company, but we're still largely centered and anchored in the United States where about 79% of our business comes from today. I think the most important part of our story is the top graph, which is today our consumables business, driven by our single-use portfolio is 53% of our business. That's recurring revenue, 53%, and that will continue to grow every year. Finally, we exited 2022 at about $350 million, and I'll give you a peak at that journey, that growth journey going forward. This is really a story of accelerated growth through market expansion and product generation excellence combined with, as Neil has pointed out, and everybody has pointed out, a journey of continuing to build capability each and every year to strengthen our foundation for sustained growth. Let me introduce you now to our 3 core products. What we have are incredibly known and leading brands and leading product positions in all 3 areas. Our probably strongest brand is our GlideScope brand. If any of you know an anesthesiologist or an intensivist or an OR doctor, when you're seeing them on a weekend, ask them if they've ever heard of GlideScope. And I'll guarantee you, every one of them knows GlideScope. It has a very, very favorable view of the role GlideScope has played in helping them save lives. GlideScope is our video laryngoscope portfolio. What's a laryngoscope? Laryngoscope is a device that helps you in -- assist doctors in intubating patients. What does that mean? Setting the oxygen tube in the trachea for patients that can't breathe on their own. A video laryngoscope combines camera and imaging technology to allow you to see the vocal cords, the trachea when placing that tube, ensuring first-time success and improve patient safety. You think about who uses this? Think about a trauma patient in the ER that can't breathe on their own. Think about people in the intensive care unit, they can't breathe -- they might be on a ventilator. They must be intubated. That oxygen tube must be set. You must use a video -- a direct laryngoscope or video laryngoscope to set that tube. And then in the OR, if it's a long operating procedure, you'll need to be intubated during that OR procedure. We're the leaders in video information. The 3 blades there are our rigid devices. They're single-use. So every time you intubate, one of those three blades is disposed of, and you will use a new blade during the next intubation. It's the system play as well including a monitor, a core system for visualization. Our next product area are bronchoscope, single-use bronchoscope. This is our BFlex brand. We entered this market in 2019. We were #2 in this market. A competitor had created the market over the previous 10 years. A bronchoscope has been around for many years. They historically were big reusable systems, towers. They're used to visualize the airway, visualize the lungs. A single-use bronchoscope is just that. It's a single-use version of that flexible device for visualizing the airway and lungs. It's used for diagnostic procedures as well as management procedures of medical issues in the airway or in the lungs. We launched in 2019, our first products. We have 4 products in the portfolio today. And really the operation of these is the same as a reusable product, but they ensure patient safety through sterilization and through single-use and the lack of reprocessing needed, combined with availability in the workflow when needed. Our third brand is BladderScan. BladderScan is known to everybody out there. It's a product used by the nursing community and urologists. It's a purpose-built ultrasound device that allows you to make accurate decisions about when to cap the patient or not. It tells you very accurately how much fluid is in a person's bladder. It's -- you really don't want to have to cap the patient in the ICU or after an OR procedure unless you need to. Catheterization is a high source of infection in the hospital environment. So this device empowers nurses for when to make that decision. Let's talk about our market positions. We're in a really strong position in these markets, and these markets are very attractive. Globally, these markets combined to about $1 billion. They're growing at double-digit rates combined. The first market is our video laryngoscope market. This is a high single-digit growth market. The growth in this market really comes from the single-use side of the market. We're the global leader in single-use global leader. The middle market is the single-use bronchoscope market. This is a really attractive market, growing in the high teens. It's all driven by the replacement from reusable to single-use. We entered in 2019 with one scope. We have 4 scopes today. We're expecting whether it's undeniable #2 globally, a really strong #2 in the U.S., and we expect actually to exit 2023 as the market leader in the United States for single-use bronchoscope. It's been an amazing journey since launch in 2019. Finally, imaging. This is a -- this is largely a replacement market, grows low single digits, 1% maybe. Again, we're the global share leader and globally in this case, U.S. and strength of product outside of the U.S., and it's really a replacement cycle business. I guess kind of cool to look at the numbers to understand the scope and scale of what we do. I think there's like 6,300 hospitals in the U.S. acute setting facilities and we're in just the majority of well over 6,000 of them. With any of these 3 products, if not all 3 products. 4.8 million, we do about 5 million single-use devices. We ship supporting our video laryngoscope business in 2022 out-the-door, single-use products. 6 million patients are innovated annually with GlideScope. How is that different than the 5 million? We also have reusable video laryngoscopes. So the difference between the 2 would be how many customers are using reusable scopes around the world. But our predominant business is the strength and position of our single-use video laryngoscope business. On the bottom, we're #2 in bronchoscopes in the U.S. We have to be the #1 by 2023. And then finally, in our bladder volume measurement business, we estimate we scan patient exams, support annual patient exams of about 175 million exams a year. So really, a lot of scope, scale and volume of product shipping out to our clinical settings. This is a slide you've seen from all the businesses. As Neil reinforced, the key part of Roper is an expectation that we're building the business and building capability for growth every year. And I think Verathon is a real poster child for that journey. When we were acquired by, Roper became part of the portfolio in 2009, it was really in a venture-led company. Actually, it was 2 in ventures that created 2 leading medical device categories in video laryngoscopes and bladder volume measurement devices. But there was a real need to work on the foundation for growth. And the team went to work in 2010 and have been on that journey since. I joined in '16. I want to really focus on 2 areas. For us, it's first and foremost, product development or product generation excellence. We are on a journey to accelerate the rate at which we innovate, accelerate the quality of our products and the quality of better innovation. It's customer-driven innovation. I'll show you a stat on that coming out, but not only are we expanding our product development capability each year, we're accelerating the rate and how we do product development and how we drive customer-driven innovation. The other one that's really important for us is strategy development and strategy execution. We went to work in 2017 to really assess our markets, our growth potential going forward. And we made the choice in 2017 to expand our market into an adjacency that was a logical adjacency and airway management single-use bronchoscopy. We had a right to play and win in single-use bronchoscopy because of the intersection of video laryngoscopes. We made that choice in 2017. We've been laser-focused and relentless on execution since 2017. First product launched in 2019. Full portfolio by early 2020 and the market share results speak for themselves. The main part of our story then is accelerating growth. Historically, if you look at Verathon through 2016, 2017, it grew at about a 4% compounded rate. Since 2019, we're on a double-digit growth trajectory, 13%. We expect to stay on that double-digit growth trajectory going forward. The first key part of our story is what we call market expansion, our served available market expansion. When we were just in video laryngoscopes and bladder volume measurement, we played in about a $450 million market growing at low single digits. When we made the choice to expand the single-use bronchoscopy, we more than doubled our served available market. We're now playing in a $1 billion market, growing at low double digits. We made that choice back in '17. We entered in '19. We're in $1 billion-plus market today. We will continue on that strategic journey. We expect and are planning to expand SAM again into, again, logical adjacencies where we have a right to play and win. Additional endoscopy scope areas, combined with some imaging areas right next to the bladder that can leverage our point in such technology. The keys on the left side are what's really enabled this growth journey, market expansion, portfolio expansions and product development execution, acceleration, predictability, higher quality products, higher differentiated on our products, higher quality products. And then finally, commercial transformation. We win at Verathon because of the intersection of product leadership and customer intimacy. Product leadership and customer intimacy. We have a direct commercial organization around the world. They're clinically trained, and we've been scaling that organization in the last 5 years, as we continue to grow at an accelerated rate. Combined with that, we've added clinical capability as we entered the single-use bronchoscopy journey with clinical respiratory specialists throughout our commercial organization. To help train our customers on our single-use bronchoscope products. The summary is the graph on the bottom. We were on a 4% trajectory. Really since acquisition, since 2018, 2019 through 2022, we've grown at about 13%, and we will continue on a double-digit growth trajectory for the foreseeable future. To summarize, Verathon has become a much stronger company being part of Roper. The numbers speak for themselves. Our revenue back in '14 was $190 million. We finished last year, approximately $350 million. Our profile moved from low single digits to now low double digits. Our recurring revenue, this is, I think, the most impressive part of the story was less than 15% back in 2014, 53% last year. This will grow every year as our highest growth part of the business is all single-use consumables. We launched products every year. We launched 3 or 4 major products this year. Before, they might have launched one product every 2 or 3 years. And then the last part of our journey is so important. It's the people that make Verathon. We've got an incredible group of associates around the world that are really committed to our mission, aligned by a common set of Verathon values and really are the -- I think the differentiation is our people and our culture to what is underpinning Verathon's success. With that, I'm excited for the journey going forward. I hope I have a chance to come back and speak to you in a few years and let you know how we're proceeding, but thank you very much.

Thank you, Earl. So it's working. Okay. Save the best for last. We've got -- it's my pleasure to introduce Amy Zupon, who's the CEO of Vertafore. Vertafore, as you might know, was an acquisition just about 3 years ago, one of the largest acquisitions, in fact, one of the largest that Roper has made over the years. Amy's based in Denver. Great product executive, I could have you come up, Amy, please. And from Pittsburgh, we have some interesting conversations between stealers and my fans, the Patriots, but she's a [indiscernible]. So welcome, Amy.

Thank you. I appreciate it. Satish used my line. I was going to say, save the best for last, but here we are. So thanks, Satish. I appreciate that introduction. It is truly terrific to be here with all of you today to talk a little bit about Vertafore. So Vertafore is a company that focuses specifically on insurance, right? So we provide purpose-built software for the property and casualty distribution channel and the employee benefits distribution channel. We've enjoyed tremendous success over the year as we operate with high recurring revenues even more, I guess, count reoccurring revenues. And fundamentally, we focus on North America with the majority of our revenue actually coming from the U.S. market. I want to spend just a few minutes talking with you about what I mean by the insurance distribution channel. So what we do? Who we do it for? And why it fundamentally matters? When you think about insurance, I'd ask you to very simply think about 2 parts. Those creating the insurance product and then there's how we bring those products to market. How we sell market and service those products in the industry. We focus on the latter, right? How the products are sold, marketed and serviced in the industry, and we call that the Insurance Distribution Channel. And for property and casualty and employee benefits, it's actually quite a complicated distribution channel. And I'll kind of explain all of the players in there. And fundamentally, how they have to work together in order to actually sell and service insurance products in the market. You can start with the insurance carriers on the right. So insurance carriers, these are the folks obviously who create an issue and carry the insurance policies, right? At Vertafore, what we do for these folks is we help them manage their distribution channel. So think all of the licensing and agency partners that they have in the industry and how they manage them. We also help them connect with those insurance agency partners. So think -- they've got to get information from a policyholder in order to actually deliver a quote, in order to get that back to an agency, in order to get back to you, me and the end-insured at the end of the day, right? That's how we help the carriers. Some carriers actually go to market through a direct channel, which I would consider either through a website or they go through market through a captive agency who largely sells on behalf of that insurance carrier. But more often than not, those carriers go to market through the independent agency channel. There are 35,000 independent agencies out there. When I say independent, they are separate companies. They run and operate their own businesses and they sell insurance on behalf of many of the insurance carriers. So not just one but lots. To make it a little bit more complicated, the carriers actually go to market through many insurance agencies. So there's a many, many relationship here. There's about 35,000 insurance agencies out there. They range in size. Some are thousands and thousands of employees all the way down to 1 or 2 person shops. And fundamentally, what we do for them is we provide an anchor system that they run their business off of. So I think they have to manage their current business. Everything from servicing the end-insured to actually managing the policies and the information that needs to get to the carriers and back to them to do in the accounting inside of their business. We also service MGAs in the industry. I want you to think about MGAs as almost like intermediary in this distribution channel that are used for particular purposes. We provide anchor solutions for them to run their business off of. And then encompassing it all, we provide solutions to the Department of Insurance, so the state government. Insurance distribution channel is highly regulated, and it's regulated at the state level. We provide solutions to them, to help them managing the licensing and compliance requirements inside the industry. So you can see lots of players that all have to work together effectively to ultimately sell and service an insurance policy for all of you. And what I will tell you about us is something that is very unique about us is we service this entire distribution channel. So we focus on all pieces and parts of it, which is unique. And we also only focus on the distribution channel. So this is the niche market that we fundamentally work within each and every day. If you actually take a look, our company, our product, our people are consistently recognized by industry leaders as the best in the business, whether it's our people, whether it's our products or our company, and all of that's great. You can see some of the value that we have been recognized for alongside here. But what I'll tell you what really differentiates us as a business, what makes convertible Vertafore special is that we operate in a terrific industry. Insurance is growing and it has favorable trends towards Vertafore, right? We operate from a unique market position of strength as a market leader, and I'll share more about that here in a second. We also offer -- we operate in a complex industry. The distribution channel, hopefully understood a little bit as I was talking through it. It's complicated. There's a lot of moving parts. There's still a lot of manual practices in there that needs to be automated. But because it's complicated, it does create natural barriers for entry for us. So all that's really good. But what I think would tell you is what makes us most special is we take none of that for granted. We take none of that lightly. We have a very strong team in place to execute. We have a strong strategy that is built for long-term growth. And fundamentally, we are filled with a team of people who love our culture, believe in our culture and wake up every day super passionate about helping those inside the insurance distribution channel, our customers be fundamentally successful. To me, that's what actually differentiates us in the market. I mentioned we operate from a strong market position. So 100 of the top 100 brokers leverage a Vertafore solution. 66 of the top 100 brokers leverage a solution for agency management, so they actually use us as their anchor system. 96 of the top P&C, 100 carriers leverage a solution from Vertafore. 7 of the top 10 benefits brokerages leverage our solution for benefits. If you want to think about things more from the licensing and the compliance world, 20 of the state governments leverage our Vertafore solutions. About 50% of the industry's transactions today go through our system. And we have a little bit north of 1.2 million insurance professionals on our licensing and compliance network. We're super proud of that, but honestly, much more to do. At the end of the day, that gives us the privileged position of getting to service and partner some of the best and the brightest folks that are in the insurance industry. And as you think about our company, I think it's really important to understand that insurance market trends support our continued growth and that independent agents, which I described to you as kind of the heart of that distribution channel, they're a fixture in that distribution channel. And they're actually just continuing to grow and perform in that importance. If you look at the graph on the left, you'll see that consistent growth in insurance premiums. If you look at the graph on the right, you'll see consistent growth in employment in the distribution channel over time, both good markers for us. And if you look in the middle, you focus on independent agents, what it's really showing you is that the percentage of insurance premium that is going through that independent agency channel is only growing over time. In '21, it was 63%, up from about 56% several years prior to that. So all trends that are favorable to continue to support our growth. So I'm going to switch gears a little bit and talk about building the business with Roper. We were acquired by Roper just a little bit more than 2.5 years ago. And I can honestly tell you that the journey has been super positive for our business. Very early on after our acquisition, we spent a tremendous amount of time with the Roper team, kind of deep diving into our strategy to figure out and make sure that we are fundamentally aligned for long-term growth. And 3 things became clear to me during that process, right? One was fundamentally, there's a high expectation at Roper to have a data-driven strategy that drives long-term growth, very important. Second is that we need to be building the business from a capability perspective to drive good growth, right? Consistent long-term growth and make our business better each and every day. And third, is we need to have a talent plan in place to fundamentally make sure that we can support that growth. And through that exercise, we kind of built all 3 of those things. And it was actually a super helpful exercise. It drove a lot of alignment in our business. And what I thought I could do today is just kind of highlight 3 of the initiatives from that work to help you get a sense of the type of work that we did there. A lot of good things came out, but I'm at least going to highlight 3 for you. So the first one I'm going to highlight is the shift that we are making at Vertafore from enhancing the way we work with our customers, moving more from a transactional software vendor model to more of a partnership to more of a consultative engagement model. There's 2 market drivers that are impacting that decision. I think one, large agencies, MGAs and carriers. They're getting more sophisticated in their technology decisions and their use of technology on a go-forward basis. And at the same time, M&A activity in our industry is growing. And that means there's more complexity around our service model needs. If you think about those 2 things, you can very quickly say that this segment of the market is actually growing faster than the rest of the market, and their needs from us or shifting. And if you think about our market position, it became crystal clear that we needed to shift from being a transactional provider to being a partner provider to drive long-term growth. And through that exercise that's taken investment, we've had great support from Roper to do it, but it's more people, new roles, upskilling our talent, changing our incentive model, all sorts of operational things that go through actually making that capability shift in our business. It's still early days. We're not where we want to be just yet, but I will tell you it is absolutely making a positive impact already. I think the second one I wanted to highlight for you is increased product investment. And so there are 3 core areas where we are driving investment in our core products. The first is user experience, so simplifying the workflows and actually modernizing that user experience for our end user. The second is around advancing technology with the migration of our solutions to Amazon Web Services, which has been very successful for us thus far. And the third is bringing new capabilities to market. Probably the most notable is last year, we launched a new solution to change the way that small commercial quoting works in the industry. We are a leader in personal lines quoting and automating that. I'm super excited to actually bring this new capability out to our customers. It's been terrific. And while Roper hasn't necessarily shifted our strategy around our investment, they have 100% absolutely been pushing us to invest more and accelerate investment as we think about our continued growth and our scalability. And then the third thing that I would like to highlight for you is driving strategic M&A for growth. So since we've been part of the Roper team, we have done 2 add-on acquisitions. So 2 bolt-on acquisitions, both of which have been very successful. The first was called AgencyZoom, the small product line that we acquired in '21. It's actually still a gap for us in the small agency and the mid-agency space. And the second, we did mid last year, it's called MGA Systems. It was a new platform for us to actually help accelerate innovation for that MGA market segment that I described earlier. Both acquisitions have exceeded the financial cases that we put forth, which I'm super proud of. AgencyZoom has delivered 50% growth since acquisition and MGA Systems delivered 30% more in net new sales in the first 6 months under our ownership. So what I will tell you is that our partnership with Roper, Tim, Seth and the team have been just honestly terrific as part of this acquisition. They were great start partners to us on doing the acquisition. They provided additional resources to help us do the diligence process. And probably most importantly, once we had conviction on the acquisitions, they were very, very quick to execute these transactions, which I can't tell you how much I appreciate because I think our ability to execute quickly. It really put us in a position to win on both of those acquisitions. Now the Vertafore team has led the value creation. And so the biggest lever that we were going to pull was to actually leverage the Vertafore sales engine, kind of unleash it with these 2 new products, which we've clearly done, but what I think is really important to note is the best of Vertafore and the best of Roper kind of coming together, we've really built a really solid motion, and I look forward to the opportunity to do more of these in the future. So in closing for me, I would just tell you that it's been a terrific couple of years with Roper. And I think Vertafore has definitely become stronger as a business under Roper guidance. Revenues are up 15% since the time of acquisition while still maintaining our top-notch EBITDA margins at 49%, 50%. One thing I'm very proud of is that our development productivity in the last few years has increased significantly, which I definitely attribute to the fact that our gross and net retention rates are both going up as well. They were already good at 91 and 105, but now they're sitting at 92 and 108. So I'm excited to see that, and I think that's going to continue to go in a positive direction. And I have to tell you that my employee engagement scores have never been higher in my 6.5 years in leading and running Vertafore. So that was exciting. So where I sit and how I feel about it, it has been a terrific foundation that we have built. We are very committed to building the business, making it better. I think we've got a terrific long-term strategy in place, and I'm pretty excited for the future. So thanks for being here today, and thanks for letting me tell my story. I appreciate it.

All right. Thank you, Amy, and we're going to start our first -- first of 2 Q&A sessions. So I'd like to welcome Neil, the group executives and our business presidents back up on stage. If you'd like to ask a question, we'd ask you, please raise your hand, and we'll bring the microphone to you. And additionally, if you could please state your name and your firm before asking your question for those that aren't in the room. And then finally, any question is, of course, a fair game. But this is a great opportunity given the folks that are up on stage to ask about our operating model and our businesses. So I'll go -- start in the middle and go here.

It's Deane Dray with RBC. I appreciate all the detail this morning and the showcase of leadership team. And my question is around bolt-on M&A. We heard from all of the presenters this morning on how their growth has been augmented through bolt-on acquisitions. But the Roper model is decentralized management but centralized capital allocation. So just give us a sense about that competition for capital within the businesses, part of their growth destiny is being able to allocate capital to grow, but it's still -- the purse strings are mostly at the headquarters level. So just what's -- what are the dynamics, competition for capital, maybe a little more insight into Tim's role, he got referenced a whole bunch of time. So just would love to hear about that. And I appreciate it.

Yes. So why don't -- So Chris, why don't you just talk about the process and then I'll say a couple of things at the end.

So I would even tell you one of the reasons I'm here in New York that we have something going on at the roads here is called Legal Week. And at Legal Week, there's a lot of different businesses and things that are here, servicing other clients. And so it's a chance for me to go up there and meet with some of these other companies. The idea is that you're looking for these other companies that really kind of fit what we do, where we play, how we think we can kind of add value and bring it to market. And from there, then the conversation really does, it goes back where we work with Tim and Tim's team to really create relationship, whether it's go meet somebody, talk to them about the Roper story, how it's a little bit different sometimes in the private equity world that many of them are in today. And then really it's more of a collaborative conversation. Our job is pitching and selling them on the business and helping them understand operationally what it will be like, but then the Roper team in the center basically take care of everything else. So...

Yes, I think the -- first, the incentive that the operators have for bolt-ons is the litmus test is does it help improve the organic growth outlook, right? That's the incentive. So they only want to do something to the extent that's true. They're sourced through a combination of things like Chris said or just, I mean, all of our companies are intimate with their end markets. They know their competitors or the adjacencies left to right that are likely candidates. So they'll have some knowledge there, might serve 1 or 2 up occasionally. Also, we'll get ideas that come through Tim and our corporate team, and we'll sort of work with the group executives in terms of process. In terms of diligence, it's very much a collaborative process. So you have, as Amy just mentioned, you got the best of Vertafore and the best of Roper pitching in and working on the diligence. In the case of this, the operational work will generally principally reside with the business, the risk items will reside with Roper. But at the end of the day, the return thresholds and the ultimate decision is made at the center through our Board, right, we take every bolt-on, every transaction through our Board and there's not really competition for capital because they tend to be smaller over the long or last 10 or 15 years adjacent and about 10% of our capital deployed spend to bolt-ons. They've been, as you'd imagine, because we -- they carry with them capitalized synergies. They're the best returning deals that we have done and can do. So we'd love to see a larger allocation of that going forward.

All right. We'll try and move it around a room a little bit.

It's Joe Giordano from TD Cowen. I guess this is for any of the business leaders that we heard from this morning, but you mentioned you're buying not fixer or upper companies, right? You're buying good companies that are inherently successful that are leaders in their markets. So when you show the slides of here's where we were at acquisition and here's how we are now, like how much of that were you on that path anyway? You're a good company like you would have gotten there anyway how much -- how do you parse out how much is really attributable to Roper specifically owning you and maybe how is that ownership been different than under maybe fee ownership previously?

Sure. So -- while we were partially on the journey, I think the durability of our growth, the durability of the capabilities underlying the business because Roper is a permanent home. I'll speak for Deltek. Roper a permanent home for Deltek, incredibly galvanizing for our team, for our customers and there's a long-term strategy that we're investing in as opposed to when owned with a different source of capital, more of a short-term focus that doesn't have the durable investment relative to building long-term business capabilities. So I think we're on -- we're in a different place than we otherwise would be. It was a great business, right? And it was going to continue to grow, and it was going to continue to thrive. It's done so in a more durable and meaningful way since we've been part of Roper, and we've got a better foundation in place as a result of our time with Roper than I can say we otherwise would have and we had historically.

Yes. I would say with Verathon, I mentioned this earlier. I think in 2009, right, at the time of acquisition, we're about $120 million company, but it was really 2 inventors that came up with 2 leading product categories and grew it to [ $120 ] million. But I think the key to the growth up to now in the accelerated pace has been all of the capability building that starts with regulatory, quality, our operational capability, especially navigating COVID for our business, our product generation journey and product generation excellence, our talent journey. That's really all happened under Roper. And if I just take a look at our leadership team today, we have a leadership team that's just wired for continuous improvement and capability building. So I think these 2 inventors invented incredible product categories. And we inherited a real business. Neil, you can probably comment because you were here, but I really think it's the capability building it under Roper that's unlocked Verathon and accelerated the growth today and in the future.

And just to wrap that up. I think in -- their prior owners, they would have all gotten bigger, right? That's -- they would have. I'd questioned the level of better underneath, like the durability, the repeatability, the process-driven nature, the principal difference to with a long-term ownership model versus a more interim ownership model.

[ Clifford Ransom, Ransom Research ]. Neil, you and I had a chance to talk about this a couple of months ago. So I'd like to address it to the other folks, please. I think of strategy deployment is kind of Roperised [indiscernible] economy. Now the key to me is that process-driven mentality has in it the learning component of the Japanese the Yokoten horizontal dissemination of best practices. If you look at the SaaS conversion at 1 company, you look at the new products conversion at another company, how do you share that amongst yourselves to maximize the impact on the system?

That's a great question. There is a fine line between socratically helping the business and doing exactly what you just said. First, I think you're looking at the group executives who are able to take learning lessons and encourage that translation of that skill set across companies. We do this in the cadence. We talked about earlier in my chat. There are other forms beyond that. I was not able to comment on the cloud and cybersecurity form, for example. We tried this just before COVID, took a couple of year hiatus, for obvious reasons. Last September, we had another forum, which was a total opt-in and it's culturally super important to make sure that it's not a Roper conference. So therefore, you're forced to come and do something. We're super sensitive about that, but this was an opt-in forum for the C-suite within each of our operating companies and it was oversubscribed to come and learn, and it is companies sharing their best practices with other companies, not something that Roper is doing or through a third party preaching how we do this. And that has a tremendous amount of runway and more we could do to encourage that without actually preaching down from a Roper perspective. And then last, but not the least, the form that Harold and the team ran last a couple of 2, 3 weeks ago that Neil referenced in Phoenix, where each of the CEOs spent talking about TedTalk style formats, now sharing their best practices and on the topic of the day. And those are the forums that organically develop as opposed to us putting a program around it and still gives the socratic balance.

Yes. Just a real quick comment. And you mentioned the use of Hoshin Kanri construct. And I would say most companies that we acquire at that $200 million mark don't have that kind of record capability. And they can see that well deployed through examples like Verathon, where they use a very rigorous Hoshin Kanri process. So when we talk strategy deployment inside of Roper with a new company, we've got tools, we've got benchmarks inside the portfolio where they can build that muscle oftentimes for the first time ever.

Julian Mitchell at Barclays. Maybe just a couple of quick questions. One is on CRI. Neil, you mentioned it almost in passing at the beginning, but I hate to say that because it's sort of core to Roper, but maybe help us understand how much do each of the businesses think about CRI versus it being a sort of concept at the center? What's the interplay on that? And then maybe also for Neil and Satish around the group executive sort of layer is only a few years old in a way, how has the role itself, the expectations around it evolved since inception?

Sure. So let's let the operating team talk about CRI and then we can take the group executive one. So...

All right. So I would tell you, CRI is definitely front and center for the companies. And we think about it, we talk about it. We report on metrics that are leading indicators in and around it. At Vertafore, in particular, a big initiative for us is to move to Amazon Web Services and out of our own data center that has a direct impact on improving our position across the board. I will tell you that, that was -- that initiative was started prior to Roper. So it was something that we were doing that was ultimately good for our business, and ultimately good for our customers in driving scalability and performance, but now has front and center view because of the CRI impact.

Maybe you could give [indiscernible]

Yes. The hardware company, CRI is front and center. How do we, how do we drive a hardware business in Roper in a CRI-accretive way? And it turns out you can, and it is front and center to everything we do strategically. So when we enter that single-use bronchoscope market. We do that in a way with key strategic partnerships that help us. We do that in a very really asset-light, asset-efficient, capital-efficient way with key sourcing partners, development partners, manufacturing partners. So you really can build kind of a high-volume hardware business in a CRI-accretive way but that's front and center to us every day.

So the second question.

Yes. On the evolution of the group executive role, it's been pretty material over the course of the last few years as we have gotten more process-oriented and brought to bear the experience across the group executive group, particularly in the areas of strategy, strategy deployment and the running of the talent offense, developing common constructs and frameworks that we share with the businesses. So -- and I would also say, just from an expectations setting point of view, the performance bar and performance expectations have gone up, and they've gone up. And again, in a pretty material way over the course of that 5-year span of time.

[indiscernible]

Yes, I would just add, it actually -- my introduction to the Board, I was put on the spot by one of the Board members to say what's wrong with Roper and how can we fix it? And Neil alluded to this a little bit before. And when we talk about businesses not going backwards, they don't worry as much about going forward either. So I think the group executive role having seasoned operators, we've kind of been there. We've benefited from all the scars that we want to vicariously pass on to all of the people that we work with and support. Just thinking about that notion of you're not on defense, it's not a prevent defense, right? We've got to go on offense. We've got to take share. So that's all part of expanding and raising that bar. And I think that, that was, I think, very well received, and I think very deliberate on Neil's part and the other part as they think about from caretaker to coach, right? So how do the players get better? And that's where we're focused on each and every day, how do we support them and invert the org chart, right? We are meant to be and strive to be everyday servant leaders to these folks because there were we meet the markets.

Yes, please, go ahead.

So I'll give it to you from somebody that's not the group executive. So I'm actually in Mike's group, and there are 2 other CEOs and what's really good about this is you have this opportunity to literally the talk, the collaboration, the things that you're going through, like when you're in a software company anywhere, we all go through very similar things. Things are different, but then they're also very similar. And so for me, personally, I've worked in large corporations before, one of your fears is you can end up with these layers that can actually impact decision making. And I think that's 1 of the things that we found a really good balance of. I meant, when I said in my talk, like literally it is a text to Neil. It is a text to Mike as far as when we need like certain decisions or things that we're wanting to do. And so having that group exact still keeps us whole as far as running our business, but you now have somebody that you're speaking to on a regular basis. It's really kind of helping you just think through some of the bigger decisions that you make as a CEO.

And final thing I'd say in the evolution, [ Julian ], is 5 years ago, we embarked on this notion of improving the organic growth outlook of the enterprise. At that moment, we were the few group executives we have are sort of independent operators, right? Today, we're a team, like it's a cohesive team that learns from each other that teach each other that supports each other. And so it's -- the team orientation at the corporate is fundamentally a night and day different than what it was just 5 years ago.

Just 1 last comment on this. Doing all of that by still preserving the culture and not introducing complexity is a fine walk and we debate this all the time about how much to do without introducing more complexity. So just -- sorry.

Thanks. That was a passionate one for us. Sorry about that.

Brendan Luecke from Bernstein. A quick question around bolt-ons. We heard a lot about bolt-on acquisitions to drive growth this morning. How do you think about technical debt over time as you add those to your operating companies either post acquisition or if you acquire firms that have had quite a few bolt-ons prior to joining the Roper family?

[indiscernible]

No, that's right. Yes. Absolutely not. But I think -- so for example, that will be a filtering criteria for us, right? So when we look at a bolt-on acquisition, it has to be something that is either in the cloud or can be quickly brought into the cloud. So we're not looking to weigh down the R&D velocity and the innovation velocity with tech, that could filter something out, frankly. So I think we're looking at things that are going to propel us from an innovation perspective as opposed to be a step backwards. And I think each individual business will have an individual filtering criteria based upon where they may be in their innovation journey in that regard. So I'll just speak specifically for Deltek. That's how we think about it.

Yes. I would agree with Mike. And the 1 thing I might add is that when you think about product investment in R&D into your software business, you're constantly thinking about the things that you have to do compared to the things that you want to do. And the things that you have to do or you have to keep up with maintenance, you have to keep up with technical debt you have to keep up with regulatory changes across the board, so we all navigate that. And the goal is keeping up with it as you go through things and never letting it build up. But I agree with Mike, as we look at new M&A, we're constantly weighing the benefit of having something that we're bringing to market versus the work that we would have to do on it. The 1 thing I would say Roper does a really nice job of forcing us to do though is actually commit to cleaning up any technical debt if we see it during the diligence process. So we have a real plan in place before we actually make that acquisition.

This is Terrell Tillman from Truist Securities. I had a single question. Unfortunately, it's 3 parts. So as it relates to the software businesses in the portfolio, I'd be curious a little bit more in terms of as the customers, whether the new customers are long-standing customers, they get on board and they're moving to the cloud and that kind of architecture, what's their propensity to buy the adjacent capabilities and how frictionless is that? And then -- the second part is, does that provide structural improvement opportunities in NRR. I saw some solid stats, but some SaaS companies can get into 120%-plus NRR. So can that help with that as they move to cloud? And then lastly, and I've exhausted my free part question. What about the sales side, the go-to-market? How well are you able to then farm and really go after those existing customers that are on that journey and get on the cloud?

[indiscernible]

No, I think fundamentally, the journey to the cloud is super powerful, and it's powerful because it provides scalability for the systems, but it also allows us to take advantage of tools and solutions that allow us to upgrade our existing platforms across the board. And as we do that, you can simplify the technology underneath. So the short answer to your question of does it actually allow us to drive incremental adoption in a faster, more frictionless way? The short answer is yes, right? The longer answer is, there's a lot of work to do to get to that fundamental point. What I'll also tell you, Vertafore, I gave you great facts about our market penetration. But I think what's important to note is that our customers still only own a small percentage of our overall portfolio. And so a big sales and marketing motion that we have in place regardless of the cloud or not the cloud, it's cross-selling into our existing or customer base and driving and delivering more value.

Yes, I think you can see it in our businesses that a large percentage of our bookings are to our existing customers and through cloud conversion. I guess speaking for Deltek, we have a sales team similar to Amy that does nothing but convert customers to the cloud. We've got sales teams that do nothing but mind the base because of the breadth of our solution set. So in terms of being frictionless might be a bit strong, but I think that we've got a really good motion to continue to grow the penetration of solutions. And again, the ability to -- as we innovate keep some of the new functionality aside that is the incentive for them to go to the cloud to get access to that is also a big part of that as well.

And from our side, I'd just say that's a major part of our entire strategy. So from a sales piece, our salespeople, I mean, literally, when you're only working with large and medium law firms, like they better know everybody by name. So the reality is, as we introduce new applications, the customers have already vetted us. They know we've been through all of SOC 2 audits. We've had all this pen testing, other things that we're bringing in. So they expect that next solution to be something that's of that quality or of that caliber. And so that's really kind of help us. Like we -- I would say we have probably developed our muscles on the cross-sell probably more so than anything else, and it's really kind of carried us with our growth over the last few years.

And just a couple of capstones on that. So we take for granted, but just to make it clear, the vast majority of the customer base of Roper enterprises, right? So it's not SMB. So it's through the velocity, almost all the sales motion has some human touch to it, right? So it's how do you make that more efficient, but frictionless is only shows up in a couple of our SMB-oriented businesses as totally e-commerce-enabled channel and product promote, things like that. Certainly, in SaaS, it's super informative for us because we get more telemetry of use. So the product management team can figure out sort of road map. So that's certainly helpful, but it's a large migration or a large tailwind for us and excited to go to unfold for the next decade.

Right. Anybody on that side in the room? Okay, yes, go ahead.

Yes. It's sort of a question and it's not really relevant to just Roper, but one of you mentioned -- of course, you have to keep up on bug fixes and maintenance and regulatory. Can you talk about that being in your R&D budget? I mean all that matters really your EBITDA margins, but some of that is really just cost of goods sold, especially in a SaaS environment. So how much money are you spending on true new product development versus keeping the lights running on the platforms? And then to Amy, just a quick question. You mentioned moving to AWS several times. How much of that was lift and shift versus a whole rewrite of the applications?

So just to certainly, you can talk about -- well, first, the amount of -- as I said, the amount of every strategic planning cycle and every AOP, the answer to your question by company can be slightly different. But with that as a context, want to just give a general sense of how we lock out AOP, the use and the evolution of -- or the allocation of R&D dollars. I want to just go down the line. I want to start with Amy.

Yes, sure. So when we think about it, at Vertafore, we spend about 30% to 40% at any given time on maintenance, regulatory, technical debt and the rest of it is on enhancements and investment for the future and new solutions. And while we're on that question, your question on AWS, since I've got the mic, right, your question for us is the way we're approaching it is a bit of a lift and shift first and an enhancement second. And we're doing that because we service a pretty complex market with complex products. And so to derisk that for our customer, it is clearly the best approach for us.

One thing I was -- I mentioned as part of Deltek's journey, better quality, right? So if you think about that [ affection ] in terms sustaining engineering, right, which is the bug fixes, the regulatory stuff again, Amy she said that the half [ two ] stuff. Better quality means you can squeeze more hours out of the sustaining engineering and put it into new work. And I think that's been a quest that we've been on. So you've got an inventory, this is all about how many hours can you put against development effort, right? If you can squeeze more hours out of that sustaining effort into new work, that's going to propel your innovation velocity. And that's been one of the big things that we try to do with the better quality, and we've seen no tangible evidence of that of pushing between 5% and 10% of the hours across the business into new work out of sustaining, which has been pretty powerful. And Aderant has been on that same journey. Chris, you may want to speak to that relative to quality...

Yes, I would say from a stat standpoint, we're right in line with what Amy said. But I would tell you that like when we -- we have some fun things that we're looking forward to doing as we go forward. And my COO right now is just back from traveling around, we have a, what we will classify, as a workforce strategy is our big thing that we're focused on this year, trying to think about what we're trying to do, where we want to go the next 2 or 3 years and what that's going to mean for how kind of the mix of R&D, where we're able to find certain talent that has certain steels for things we're looking to bring to the market. So our goal, obviously, is to always drive up that we can spend on new innovation. And so that's very much a part of our -- like that is our big thing this year is how we kind of set ourselves up for what are going to be some fun times in the days to come. So...

Yes. Last thing I'd say, in any software company that has more than 2 customers has been around for 2 years, you have tech debt. And so one of the -- I mean I think Amy said it, it's a real thing in our planning cycle where we're looking for commitments to stay on top of it, right? So it's easy to sort of pull back from that for a few years and then put it into new products or new things that you can monetize in a short run. As a long-term owner, that is not the strategy to play, right? You've got to stay on top of the tech debt. And as a result, you heard how we do it today.

Allison Poliniak from Wells Fargo. Neil and Satish, you both had talked about the importance of trust in this decentralized model. The businesses here are in different stages of the length of ownership. Can you maybe talk about how quickly that trust evolved from either side of it? And if there were any challenges that you certainly had overcome to kind of get to this relationship?

You're directing this to the operating team. Well, we let them sort of talk through it. So first of all, I think it starts in the relationship you build when -- before we buy the company, right? So we're explaining what we are. And then do we actually are we that once they join the company, but I would start there.

Let me start since I'm probably the newest, right, company in the fold. I was going to say exactly what Neil did, which it actually starts during the diligence process, it starts from the first time we meet. I remember the first time I met with Neil, he spent more time talking to me about me and my background and who I was and even about the company at that time. And so I think for me, where our company was going to end up, it mattered a lot when I met Neil and team during the process to really understand who they are, how they approach things, that humble kind of belief. And then in all honesty, I tell people all the time, post acquisition, it was as advertised, right? So as we met in the discussions, right, you never quite know how it's going to come out until you're on the other side, but it's been completely advertised.

Yes. I think it's in viral or bad news travel faster than good news, which I think, again, is back to the high level of trust that we've got. And I think as Amy's point, just as advertised, right? That was the interactions during the really active sale process, right? There's a lot of different alternatives, but it was clear that it was just different in that regard. I can speak for myself. I trust my group executive intimately, but yes, it's been -- again, I think that's the biggest thing is that the speed at which news needs to travel does travel. I remember the first meeting with Neil and at the time, Brian, where it's like, the only thing we're ever going to ask is just do you tell us the truth. That's the thing that we want, and we want to know quickly and that's the way that we operate.

One more?

[ Will Harrow ] with Capco. In all the list of growth initiatives, I'm struck by the fact that I don't think anybody could price a single time. And so I wonder if you could speak to that philosophically and maybe in doing so, address if or how that might be different if we have some protracted inflation?

Sure. So we'll ask a couple of software leaders to talk about price as it relates to our model and Earl relative to a product business.

So we do drive price increases year-over-year. The way we think about it at Vertafore is it's largely as part of our customer expectations and as part of our contracts. At the same time, we believe in value-based pricing at Vertafore. And so we spend a tremendous amount of time and put the onus on ourselves to deliver incremental value in the insurance distribution channel, but actually supports our ability to continue to drive those price increases. So that's how we think about it.

Yes, being a hardware company, we've been managing through a pretty complex supply chain environment the last couple of years, and everybody knows what has been going on with pricing in the supply chain environment. But first and foremost, our growth is really market-based and market driven. We've got really strong growth markets. And the majority -- the vast majority of our growth comes from those markets, combined with our share gain in saying that we do price increases every year. We've been even more intentional on those the last 2 or 3 years to ensure we're covering those increases in our key commodities and key parts costs.

Yes. I think the last thing I'd say, when you see us talk about gross to net retention on the software side and in terms of revenue. Part of that motion is getting priced, right? And so it's a matter of how much price we get. Again, it's in an annual event based upon cost, value delivery and whatnot, but that is something that we do each and every year is go get price and do that across all of our software businesses.

Great. Well, that was 1 of 2s. So if you didn't get a chance to ask your question, there'll be another session. We're going to take a quick 15-minute break. There'll be a timer on the screen to keep you on schedule, and we'll come back in about 15 minutes, and Jason will talk about capital deployment. [Break]

Good morning, everyone. I'm Jason Conley, I'm the newly appointed CFO for Roper Technologies. I've been with Roper 16 years now, which is about half our life as a public company. We went public in 1992 with about $14 million of EBITDA, which is pretty amazing. But what's more amazing is this is our first Investor Day in our 30-year history, so better late than never, I guess. So this strategy, I mean, I think we've had the same strategy around since I started at least. This is a much more elegant version of the slide. But I think it's been very consistent and simple throughout the years, and that's really enabled focus for Roper. And there's something very powerful about that. So I'm really excited to double-click on a very important part of our growth algorithm historically and in the future, which is capital deployment. I promise I'll go into detail, but I'll try not to be as excruciating as Neil had suggested. So it really breaks down into 6 elements that I'm going to go into in further detail. First of all, it's really led by corporate. And as we talked about earlier, we're more business pickers than market pickers. We don't try to time a market trend or anything like that. We really pick the best businesses available. And because we were able to pick the best businesses, we really do this through a low-risk lens. And that's really enabled by our highly disciplined and analytical processes that I'll talk about. And it just continues to get better like everything you do through a learning culture that just makes it even better. And once our businesses invest in organic growth and we pay a little bit of a dividend, we deploy all that back using our free cash flow plus investment-grade leverage to enhance our compounding, which is a little bit different than a lot of software companies out there. So as we talked about, as passionate as we are about decentralized operations, and you've heard about that today. We're just as passionate to centralized capital deployment. We really have a small team in place. It's myself, John Neil, Tim Haddock, you've heard about, Shannon O'Callaghan is part of our team. I think with having a small team, it allows us to be super focused, we can agree -- we can commit on things quickly, allows us to be nimble in a fast-based marketplace. We don't have an army of people to make decisions, which we've seen divesting 40% of our portfolio, we certainly saw that a lot of other companies, it takes them a long time to come to consensus that we don't have that issue here. And really being centrally led, we enable us to deploy capital to the best ideas out there in the marketplace, right? Because we're not tethered to any end market, we really see a lot of great assets. And so we love bolt-ons. We have heard the conversation about bolt-ons there. They've been some of our best value assets. But it can come with an opportunity cost. So there's always -- there is that tension and that conflict, but you will see more -- us do more bolt-ons in the future. It's been about 11% of our capital historically, we'd like to see that go up. And I think for us, sort of the governor is really around the price we're willing to pay for something, right? We've seen a lot of great bolt-ons. Some have gotten away from us in the last 6 months. We're just not willing to pay some of the prices that were out there because there's just better opportunity costs for the platform deals that are out there. And lastly, I think we have a really strong reputation in the marketplace, especially with private equity. We have a 20-year track record doing this, right? And I think it really matters in the private equity markets, that speed and certainty are really important, right? And with speed, we've seen so many great software companies over time. We can quickly -- through our criteria, we can understand we really want to buy the business. We have good pattern recognition that informs that, and that just gets us to a decision quicker. And really, we do what we say, right? We're in a process we're going to commit to the other counterparty. And that really does matter in the markets. You heard Amy talk about that in a recent bolt-on that speed really does matter in an M&A process. And I would just say that it can't be stated enough that reputation really does matter. It ensures our access and ability to win in the market. And the reason we can be so quick, and we've talked about this before, but -- it's no coincidence that the acquisition criteria you see here are the businesses that we own today, right? We're ultimately business pickers. We pick businesses that have the lowest amount of risk for us and for the shareholders. And so that just gives us it's been a consistent strategy, and it allows us to really focus on businesses that are attractive in the marketplace. CRI, as we've talked about has always been our north star, the quality of the cash flow is the quality of the business model, and that's where it all starts for us. Neil hammered on market leadership. It is so important, especially in a niche market and allows you to grow with your customers, learn from your customers, key filter for us. Increasingly, it's been about durable organic recurring revenue growth. And not only does that help from a resiliency standpoint, but it really helps us compound, right? If you think about a business that's cyclical, you're not getting the same compounding returns if we continue to get cash flow, especially when you get into tougher market conditions that allows you to compound even faster because you can redeploy that capital. And then we obviously have very strong margins that goes without saying with the value that we provide to our customers. But then strong management team is another huge capability for us that we look for a criteria we look for. And for us, it's about the things you've heard about today. We've really defined what a great leader looks like inside of the Roper family, and that's what we look for in our diligence process. But we don't want to ignore the market. We're market agnostic, but obviously, we want to pick really good markets that have really good structural characteristics to it. We want to be in a growing niche market or a vertical market, very important to us. I think you've heard today about these growing -- these markets that we're in, they're really stable, we're leaders in those, and that allows us to grow. Very favorable competitive landscape. We don't want to be in a brand new market where we don't really know sort of where the puck is going. We want to be in an established market with a favorable competitive landscape. We've obviously removed a lot of the cyclicality in our business. And so you won't probably see us getting anything cyclical in the future either. And then lastly, I would just say that we don't want to -- as a forever owner, we don't want to be in a market with existential risk. We're looking -- we were just looking at something this week with forecast out into 2040. I mean that's just how we think about long-term sustainability of the marketplace. So 1 thing I just wanted to highlight, we've -- we get asked the question sometimes, would you buy a business a little earlier in its life cycle and see life cycle? And I would say, based on what you've heard today and the work that we've been doing at corporate, we have the capabilities to be able to do that now. I mean Verathon is a good example, right? It's a business that we bought that probably was a fixer upper, and we didn't intervene fast enough. Today, you would see that happen, right? So I think the only thing that would change in our M&A sort of lens would be probably EBITDA margin, right, if we can get some of the costs out and perhaps management depending on sort of what the situation is. So nothing would fundamentally change other than those and probably our intervention in an asset like that a little faster than we have historically. So next, I just want a deeper dive into our M&A process, right? We've talked about it a lot on one-on-ones and over the years. So I thought we'd want to click in a little bit more. I mean it's highly quantitative and analytical and it's really underpinned by discipline and patience. For us, it's really a core competency and it's a competitive advantage for us in the marketplace. And just picking through it chronologically, it all starts with an effective sourcing and filtering program. As I mentioned, private equity has to convey every 3 to 5 years. We know what that vast universe of private equity assets looks like. And it's a growing asset class as well. And we'll talk about that a little bit later. The second part is we've established really good relationships with private equity firms, not just at the analyst level, but the partners and the MDs, and what that does is it gives us a really good inside track on assets before a process even starts. So we'll have started our diligence maybe before a process even starts or maybe we'll get an early look at something, and that's a competitive advantage for us. And based on our business picker orientation, that really enables us to quickly curate -- filter and curate a deal. And it gives us an ability to focus as well, right? There's a lot of assets out there. This enables focus. And then 1 thing I think the team is all proud of over the last 5 years has really honed our go-to-market capability and process. What do I mean by that? Well, we treat this no different than a sales team motion, right? We track prospects at a very deep level. We use the CRM to manage all of our pipeline or track our information, our notes, our workflow. So this is just a core capability and a motion for Roper today. So next, just I want to go through our diligence process, right? We -- I mean, we operate a little bit like private equity. This is a daily and weekly motion for us. I should say that, like I was asked if M&A is a distraction for the Roper team, I think I got asked that a couple of weeks ago at a conference and nothing to be fed from the truth. This is a big focus for ours, right? We spend a lot of time and energy and mind share against that. And so it all starts on a weekly basis, we'll meet as a team and go through all the deals that are coming in all the opportunities. And from there, we'll make a go and no-go on decision to due diligence, and it's really foundationally set up with got to the here things that have to be true for us to own the business that we need to prove out in diligence. And from that, we're going to go through a litany of diligence items that you could expect, right? We're going to look at market and strategic elements. The nature of the niche, the competitive landscape, disintermediation risk, all the things you saw in criteria, we're going to pressure test the heck out of. We're also going to look at business specific risks, right, go-to-market, product development, product tech debt, things we talked about. That's all part of our M&A flywheel that we look at. Finance and accounting, I mean, it really is about doing the financial modeling, not just doing a P&L and balance sheet forecast, but really going in at the ARR level, doing deep forensics on the customers, really understanding the motion of the business so that we know what we're getting into when we ultimately own it. We're going to do quality of earnings, the tax and the usual sort of risk-related diligence items. And I should say we've got an extended team at corporate. We've got about 70 or so at corporate. A big part of that group is performing that diligence, but we're supplemented importantly by a dedicated advisory team. So this team is available anytime we need them. They really know what our pressure points are, and they really just act as an extension of our team. And that's across strategic, sort of financial and technical. So once we're done with our diligence, we're going to go through and diagnose all the things, the guide believes that we set out to do. And from there, we're going to make a go no-go decision as a team. And again, we can quickly commit based on our rigorous process. And from there, we invite our board in. And sometimes we -- oftentimes, we embed our Board in several weeks in advance of us getting further along. It's a very collaborative process with them. They'll let us know sort of the watch outs and things to think about. So they really act as an extension of our team. They really like an investment committee that is very consultative. So we don't just put something to It's a very sort of interactive process. And so ultimately, they make the optimization. So hopefully, that gives you an appreciation for sort of the breadth and depth of our diligence process. Lastly, it really is underpinned by CRI and our valuation methodology. For us, this has been empirically proven over the years to create value. So we can look at our business as a standalone. We can look at the acquisition and we can understand if it's going to increase market cap to us. We've been doing this for a long time. It prevents bias and objectivity. We don't fall in love in terms of activity. We don't fall in love with the business. We really kind of look at it from a CRI lens. And for us, it's really just -- it's amounting to a 20-year track record of success, and we expect that to continue going forward. As Neil mentioned earlier, we -- after we finish every deal, we go through a post mortem our businesses have to take through their -- when they have a bolt-on, we just had 5 of them 2 weeks ago in our last week in our Board meeting, and we go step by step. What is the value creation plan, how did you do, what capabilities did you build? We do the same thing with all of our platform acquisitions really go through the assumptions, the got to believe what actually happened, what course corrections did we need to make if this didn't happen? Or do some of the watchouts? What are the learnings we had from this deal that we can apply to the next because we always -- we're human, we make mistakes and we always try to learn from those as we go forward. So we walked through the process. I thought in addition to the 4 case studies we had earlier today that I'll walk you through a couple of other companies that we've acquired and sort of how that's turned out. So the first one is our DAT business. Very -- just great business. We acquired DAT in 2004 as part of our TransCore acquisition. So TransCore was basically a transportation roll-up that we had bought out of private equity. A good portion of that revenue was toll and traffic projects and products, which we've sold in 2021 for $2.7 billion. So we still hold what we thought we think now, and we thought definitely then that the acquisition was the crown jewel of that asset, and this was before SaaS was SaaS. And basically with DAT and its sister company in Canada, Loadlink do, is it's a subscription business, right? They marry load supply and demand and match freight in the spot freight market. So they do that between carriers and brokers and shippers in the market. So the first thing -- so I think that played out in terms of our diligence process that this was a great business. It has only gone backwards once in our ownership. And the first thing we did, though, was we don't like roll-ups because then we can't tell what's really going on with all the businesses. So the first thing we did is we created discrete management team, discrete P&L so we could measure the income statement, the balance sheet and the cash flow of that business. And what that did is unlocked new potential for the business, allowed them to be focused and expand their product set. And so -- the first thing we realized is we were sitting on a lot of truckload lane pricing data. So we create an entire business out of that. Today, it's DAT iQ. We have a team of data scientists, and we're basically selling truckloading pricing data. And then beyond that, I would say the last 5 or 6 years, it has really been underpinned by scale. So obviously, we had a very nice run-up in the freight market during COVID and the business had really process-enabled doing e-commerce to sign up new carriers. And so it was a big investment that we underwrote and we're supportive of. And what that's enabled is as the business has grown tremendously over the last few years, they've been able to take their truckers and sign them up. About 80% of truckers now sign up through e-commerce versus 20% 4 or 5 years ago. So a much lower cost of acquisition for that customer and a good unlock from a margin perspective. Meanwhile, I would say we've doubled down on the R&D investment in the business. The R&D as a percent of revenue has gone up about 300 basis points over that time period. So super excited about the business. It's grown 16% over a very long horizon, cash flow compounding. And we're really positioned well to grow in this market. There's a migration -- a slow migration from the contracted spot markets. We'll benefit from that. And then I think we're just excited to be able to continue to tech enable the spot freight market, both between brokers, shippers and carriers. So the next business, next sort of cohort is a business we acquired in 2011 as Northern Digital, we acquired for about $200 million. It is -- the easiest way to think about this is it's the GPS system for noninvasive surgeries, right? So we were -- when a surgeon is trying to go into the body, they use it noninvasive surgery system and we allow all that instrument to know where the instrument is in the body. And so when we acquired this business, it was growing nicely. It had really 3 business units at the time as a medical and also sold into industrial applications, it's sold into physical science and then some other things as well. And then about -- in probably 8 or 9 years ago, they got into AR/VR. They had some major mega cap tech companies come in and say, hey, we've got some great technology. We'd love to put this into AR/VR and the President said, "Well, that's cool" because he's an engineer. So they said that could be a good opportunity. So they got some funded R&D for that. But I think there was a realization from [ Dave Rathe ] President that the business was getting spread too thin. There wasn't great focus, and there was a huge opportunity based on their market analysis that they could double-down in medical. And so about 4 or 5 years ago, they decided to shed about 15% of their revenue, very courageous decision to make a strategic choice there. And what we've seen from that is their growth has accelerated tremendously. Right now, they can do noninvasive surgeries across a number of new modalities and there's just unlock a ton of growth for the business. So another great story also has grown free cash flow 16% since acquisition. So pivoting to enterprise software. So we acquired Strata Decision Technology in 2015 for $140 million, and then we've done now a larger bolt-on a couple of years ago in EPSi. The way I think about Strata is software that enables hospitals to plan and analyze costs and just really kind of like new ways profound ways. They can look at margin at a very detailed level that they couldn't otherwise do with their ERP system or otherwise. So this business really was experiencing really very fast growth when we acquired it, 20-plus percent. And what we said to the management team is, that's great, but you've got tremendous opportunity ahead of you. So we kept margins working with the President kept margins flat in that business for several years so that we could double down on product innovation and go-to-market capabilities. And the result of that is we had landed a lot of really established new logos and health systems in the U.S. as well as just being able to provide new solutions to existing health systems we have sold that and cross-sell that across the installed base. And then the EPSi acquisition happened in 2020, and that's just been a really successful bolt-on for us. And we really put -- that was a very rigorous detailed diligence process. It was a carve-out. We had to have the management really have conviction and sign up to that. I remember going through these calls during COVID and really marinating on it. It was our biggest bolt-on at the time. And I would say it's been a big success for us. Not only do they have a new logo, new logos in their base, but they've been able to convert the EPSi customer over to the strategy as installed base, and that's just had a tremendous uplift and there's a lot of runway ahead for that. So sort of combine all that together, organic growth has been 23% cash flow CAGR over the period we've owned them a little bit higher with the EPSi acquisition. And I'll just end with foundry. Foundries like our -- this is the only business I think my son knows about because it's in Hollywood. So it really is the gold standard in the film industry, right? It enables sort of in post production in film into marry live action with computer-generated graphics, and they really are -- like I said, they're the gold standard that gets trained in colleges and universities. So people know how to be a new person when they get into the workforce. So the business has obviously had tremendous tailwinds sort of leading into COVID with Netflix and other sort of growing. But then when COVID hit, right, a lot of studios shut down. I really didn't know what was going to happen in the marketplace. We kind of thought that there was an opportunity to really double down on R&D investments. So put some money into new products and new extensions for around machine learning and to make the Hollywood end user much more efficient. And coming out of COVID, they've had accelerated growth as a result of that. So the next phase of their journey really is about take there a perpetual license and maintenance business today is moving their customers to a subscription model. So they're starting that out this year. They're going to do it for all new customers and eventually the thought is to bring their installed base over with that. So Neil talked about the $900 million of maintenance we have, that's part of that journey. So we often get asked this question, right? What -- how can Roper continue to meet its growth objectives as you get bigger? And we need to deploy about $3 billion to $4 billion annually on average right now, maybe a little bit more as we grow. But I would just tell you that given the profile businesses we look to acquire, the universe of potential targets is really -- is quite massive. And so what we did is we went back and just looked at 2022 as an example. In 2022, so this represents all the sort of software and technology businesses that went to market. And I think 2022 is actually a pretty light year because the leverage loan market was locked up for some period of time. So this may underrepresent what it normally looks like. But you can see that out of 1,200 targets or 1,200 at best, we looked at 235, right? So this speaks to our filtering criteria. We know and the sponsors know that types of businesses we want to look at, and we know that we get a look at everything that would fit our criteria. There's never been a transaction that's happened that we say, wow, we didn't get a look at that. So we know we're looking at all the things we want to look at. But then you can see, just based on our discipline and the things that we -- our criteria I talked about earlier, we only seriously looked at 93. And as you move down the cycle of management meetings, putting a bid in and doing full diligence, we only closed on 6, right? And we deployed $4.2 billion or $4.3 billion last year. So that just speaks to our discipline and really it just speaks to the universe, right? We only closed 6 on 1,200 targets, so that's about 5 basis points. So we are definitely not running out of inventory in this very growing asset class that is private equity. So another key component for us in how we create value is from a capital allocation framework, we always want to invest in organic growth first. That's like table stakes. We're going to pay a modest dividend we have for a long time. We're going to commit to that. But the balance goes to our acquisitions, right? And this has been the best return for shareholders over time, and we think that's going to continue. Historically, we funded about 2/3 of our deals to -- from free cash flow and the other 1/3 from debt. And that's really been a key enabler for us to continue to compound and enhances returns. But I will say, and this is a steadfast in this, we use leverage cautiously. We're very prudent about it. We are very, very solidly committed to being an investment-grade for a variety of reasons. It limits our risk. It enables us access to the markets, right, enables us to be nimble and opportunistic in deals and having that access is really, really important. And actually, you can see our history, when we lever up, we're always quickly committed to delevering. So very important to us. I mean for us, it's really a structural advantage and how we win in the marketplace, specifically when we get into troubled credit markets as we might be finding here in the future. So CRI has guided our M&A and organic decisions, which has been rooted in shareholder value. So to us, it's really -- it's no coincidence that our share price has inversely correlated over the last 15 years. As Neil mentioned, our asset intensity has gone down. We're now generating our free cash and net working capital as we grow. And this just presents -- position us very well in the future for mid-teens cash flow compounding. So I thought I'd wrap it up to kind of look at a 20-year journey. I think it's instructive for us to look at Roper's free cash flow and capital deployment over the last 20 years as sort of kind of thinking forward to the future. So from 2003 to 2007, we are primarily an industrial company. We had cyclicality in the business. Interest rates were quite high during this time. I think the 10-year averaged around 4.5%. We were not investment-grade credit during this period. We -- I think we met investment grade at the end of this 5-year period. And our former CEO, Brian Jellison, had the wisdom to really invest in 2 leading platforms that took us all through a CRI lens, of course, to take us on a new trajectory. You fast forward the next 5 years from '08 to '12, obviously, the global financial crisis hit. Us as Roper, were not immune to that. We still had some cyclicality in the business. I think in 2009, we might have been down 20% or so. But we didn't -- we were still very asset light at the time even for an industrial business. We didn't have to shut down any factories, and we knew we had stability to cash flow. So we used that plus our leverage to invest through all the sort of the tumult at that time. We acquired Verathon and NDI, which you've heard from me a little bit on NDI and Verathon earlier today, which has been a wonderful acquisition. And I threw this in here too. Just importantly, we acquired CBORD, and it's really was our first pure-play software company, and it introduced us to 2 beautiful words called deferred revenue. And importantly, over this 5 years, our free cash flow and capital deployment doubled over the prior 5-year period. Fast forward to '13 to '17, had more issues in the market, some significant contractions, less so this time for us as we are continuing to build improved portfolio with more recurring revenue, higher margin. And so that really -- that higher cash flow helped us to invest through an incredible era of buying really great vertical market software companies. We acquired Deltek, we acquired Aderant, we acquired Strata and many others. And that just set us on another trajectory in terms of free cash flow and capital deployment. So again, almost roughly doubled again over this next 5-year period. And then just to wrap up the 20-year period, we obviously lived through the pandemic. It was a tough timing of those first couple of months, but we have the confidence based on our recurring revenue and sort of the stability of the markets that we're in. We issued guidance in 2021. We knew that we had mission-critical solutions. Verathon was one of them, and we had a lot of customers that couldn't run without our software. We felt good that coming into summer of 2020 that we could deploy capital. The opportunity for Vertafore came in. And as we talked about, we reacted very quickly. And you can see we've had demonstrable increase in free cash flow and capital deployment during this period, maybe a little bit higher for capital deployment because we just acquired Frontline at the end. Just to call out, so that's the 20-year sort of trajectory and the quality of our business has just increasingly got better. This -- the screen line represents our free cash flow margin. So today, we're hovering around the 30% range. This is sort of the 5-year period. And 20 years ago, we were 15%. So this just better positions us for free cash flow compounded going forward. So I think importantly, through every economic cycle and market interest rate environment, we've been able to drive more cash flow and more capital deployment. We have a proven and repeatable capital deployment process that's resilient in any market environment. And I think this positions us well for mid-teens cash flow compounding going forward. All right. So just to wrap it up, as Neil gets up, give me the hook. We have -- so we think -- we really do think we have a sustainable and low-risk acquisition approach, which is underpinned -- it's underpinned by doing capital allocation at the Roper level, making those trade-offs where we need to, that we've talked about. We're going to buy the best businesses available. We're going to be -- and being agnostic -- end market agnostic certainly helps with that. Hopefully, you got a sense our approach is highly analytical, disciplined, process driven. We continue to get better over time. Hopefully, we've got appreciation for the large universe of acquisition opportunities through our 2022 view, and we're going to continue to use investment grade leverage in addition to our free cash flow to deploy acquisitions. We think it's the best return for shareholders. And I think it differentiates us from other software companies because they don't have the same opportunity set that we do. So thank you so much for your time for letting me talk about capital deployment.

All right. So let's wrap up and then get to the last set of questions. So [indiscernible] perpetual motion machine that is the growth algorithm of Roper. It's the combination of these terrific market-leading businesses that are in defensible niches the way that we deploy this our decentralized operating environment and then take -- collect all the excess free cash flow and deploy it on the very next best thing. So looking at Roper a nutshell, $6 billion enterprise double-digit revenue growth, a rule of 40 business when you combine our revenue growth and our free cash flow margin. The margin profile is quite attractive with 70-plus percent gross margins, 40% plus EBITDA margins and 30-plus percent free cash flow margins. We've talked today that we're 75% software and 25% medical and water products and 80% of our revenue is recurring -- of our software revenue is recurring, 80%, and 70% of total Roper is reoccurring. So the transformation of Roper, what's been the same and consistent, right, CRI, defensible leading niches, market-leading businesses. But the evolution and the quality improvement, not only as we've tripled our business over the last 15 years from $2 billion to $6 billion, the margin profile has gone from 25% to 40%. And we've gone from a growth -- organic growth profile in the low single digit, maybe a hair higher than that 15 years ago to solidly mid-single digits plus. We still work, and we're still chipping away at this, to be able to continue to improve in a few years on our back, hopefully have H in front of the SD, but we're working to do that. Our evolution in terms of software, 15 years ago, 5% of our business was software, today it's 75%. Cyclical, again, the driving force behind our portfolio realignment is beating the cyclicality out of the portfolio. If we can say that we've done that 50% of our revenue, 15 years ago was cyclical, 0%, roughly 0% is today. You can imagine the confidence that gives us to continue to invest, that we're deploying capital, you don't have to manage through cyclical impacts of a business. And then the asset intensity right? We generate cash flow in substantial ways. So not only have we gotten bigger, but the drumbeat of the quality across every dimension, margin structure, growth profile, asset intensity, lower cyclicality, all those quality dimensions have improved. So our long-term growth algorithm, the perpetual motion machine starts with double-digit revenue growth. That's going to be underpinned by our mid-single-digit plus organic plus this process-driven, repeatable disciplined, patient capital deployment process. You saw a slide in the earlier section through 5 years, including COVID, each year was double-digit organic -- excuse me, double-digit revenue growth. Second is layering on 45% operating margin. Leadership allows us -- market leadership allows this. Customer intimacy allows this. Customer value allows this. Terrific operating excellence allows this to where we can post a little bit of operating leverage against our 40% margins. And then when you put that together, it varies solidly, very routinely ever perpetual motion machine free -- mid-teens free cash flow compounding. That's our formula. It's what's worked for the last 20 years, and we have a very high degree of confidence, conviction for the next 20 on that. So pointing together the same 6 things we talked about at the beginning, then we'll get to your questions. So the key message from today. We own and operate a portfolio of 27 super high-quality, market-leading businesses, right? Leadership matters. It matters for competitive advantage. It matters for customer intimacy, it matters for margin profile, it matters for durability, like leadership matters for a multitude of reasons. Second, again, hopefully you saw this today, but we have a clear and demonstrability and collectively with the Roper enablement sort of approach, the excellence of the operators, the innate skills of the operators to improve businesses that we own, right? Third is we have a very disciplined and analytical approach for capital deployment. Again, it's a motion. We take all the free cash flow and deploy it on the single best idea available to us, and we find the best business. Fourth or other culture is a true and authentic competitive advantage, right? You have to have vulnerability-based trust. When you have that, you can have conflict without politics. When you have conflict without politics, it's about conflict with the ideas, not the person. Once that happens, we get commitment. Once you have commitment, you can have accountability and with accountability comes high performance and results. It is truly something special and advantageous for us and for you as shareholders. Fifth is the low risk orientation, right? The small markets provide protection, right? The leadership protection -- leadership position provides protection. The highly recurring revenues are low risk. There's virtually no cyclicality. That's the operating risk, right? As compounders, everything needs to move forward and nothing can go backwards, and then we apply the same set of criteria in the capital deployment. And then finally, we have a very clear and compelling mid-teens cash flow compounding algorithm that is a perpetual motion machine. And so with that, we just have -- it's been an honor to prepare for this presentation for the last couple of months. The team has enjoyed all the preparation. We've enjoyed sharing our story with you, and we'd love to open it up to your questions for the last 35 minutes or so. And our goal here, by the way, is Jason and I are going to be on the stage, but we're really going to try to hand it to our team as much as possible.

We'll do the same setup as last time. Please raise your hands. We'll try and get to everybody in half an hour. Please say your name, I'll try and mix it up a little bit for the folks that haven't asked questions yet.

Chris Glynn, Oppenheimer. Jason, you alluded, I think, directly or a little bit indirectly to broadening the funnel in particular, with more capabilities around managing EBITDA margins and management personnel a little bit. So I just wanted to go a little deeper into the topic of broadening the funnel.

Yes. I don't know if it's necessarily broadening the funnel. It's probably just being a little bit more thoughtful about disregarding things that require a little bit more near-term intervention. So I think it's more of a natural evolution of the company that we've -- I think we've seen that we've been able to do this several times over. We have a process to build -- to hire good leaders thoughtfully, and we know what it looks like. And so I think -- I don't think it's necessarily widening the aperture, it's just maybe saying yes, and let's go a little further on the diligence to those businesses. I hope that answers. I don't know if you want to add anything.

I think it's well said. I mean, I think if you want to just be like super precise, there's 1,200 targets and a cut down. I think it was -- 235 was the number. Natural sort is if something meets all our criteria and it's lower margin profile than mature than it's heretofore been sorted out. It's just going to be sorted in because we now have the very clear and demonstrated capability to make that -- those sorts of improvements. And so by not sorting into our screening process and running through all of our -- the rest of our process around the risks and the opportunity, we're just leaving value on the table for the company and for our shareholders.

Steve Tusa from JPMorgan. Thanks for all the disclosure on these businesses. It's great to dig in a little bit here. But on the topic of disclosure, you guys guide organic growth and then EPS every year. Given that free cash is an important metric, and obviously, with 606 and all the accounting around software companies. Is there any thought to giving maybe ARR or free cash -- actual pinpoint free cash flow guidance for the year, given how those important those are? And then just a follow-up.

Yes. Good question. I think on ARR, for us, it's been a journey, and we want to make sure we give you numbers that sort of represent the right sort of rhythm of a lot of these businesses. Some of them, a small percentage of your selling to SMB. So it's more like MRR, where you've got other businesses that are enterprise software that's ARR. So we're being very thoughtful internally on how we want to do that. I do think at some point, we will disclose that. But as you can imagine, we have a lot of businesses. We want to make sure we get that right. And then on free cash flow, look, I think you're probably right, there's more recurring that we could look at, but that could be something in the future. I'm not sure, we haven't really talked about it internally.

And is 30% a floor on that in any given year, 30% margin for free cash floor?

I think it kind of depends on the interest rates and those types of things, but it's in the area. It's in the 30% area.

And then just one more, maybe, Neil, for you. The huge funnel you guys have, all the deals you look at yet over the last several years, you bought from a few players, a couple of them, you highlighted in videos, complement you guys in your process. How do we kind of reconcile such a -- it should be a little more of a fragmented funnel and such a consolidated seller base, if you will, of your deals.

Yes. I think in the -- if you have an ocean of private equity, they all specialize in what they invest in, right? And so it's software is this, and then you have horizontal you have vertical, you have different private equity investors invest in certain types of verticals. And so when you narrow that down, there's very much an 80/20 rule that's applied. There isn't everything in life. So Tim, I don't know, maybe 30 sort of private equity firms are probably 80% have the assets that are of interest. I'm looking at you to confirm that.

Less.

Less, maybe. Maybe 20 sort of -- they're large. And so while we see a lot of stuff and it is concentrated in terms of the holders of the type of assets that are A list priority. Now as we look at doing things a little bit earlier, like half a click earlier, then that we're going to get a wider array of sponsors that we talk to in that regard.

Thanks so much, Neil. Really enjoyed the presentations. CRI makes a lot of sense and clearly points to good businesses. And I was wondering once you have found something that looks great on CRI and a little bit of problem that the investors face as well. Once you've found a good business, what price to pay for it. So you can pay $100 million for the same business, and you can pay $500 million or $1 billion for the same business and becomes a completely different proposition investment-wise. So how do you -- once you found a good business, how do you approach the price element of it?

Yes. So CRI is fundamental to our valuation methodology. We also know -- we look at everything through our cash flow compounding growth algorithm. And we know for a growth profile of an asset and a margin profile of an asset and then the trajectory of its change to our ownership, what we -- what sort of the year 5 and year 7 performance of that business needs to be, to be able to propel the mid-teens cash flow compounding. And then that informs also what a current multiple would look like our current price would pay. The -- those are 2 sort of valuation frameworks. But then perhaps most importantly, what overlays that is this notion of opportunity cost. So there may be a tremendous -- there have been many assets we've looked at in the past that have met all the -- we could have paid X their CRI, we could have paid X through our sort of forward-looking growth algorithm calculation. But then you look at it and it's just -- it's still a very expensive price relative to what we paid for assets in the past. You just make the judgment that at this moment for that asset, the opportunity cost of our precious capital is too high. And so we filter out a lot of things for valuation, but opportunity cost as well. Anything you want to add to that?

No, I think we're also just mindful of what's happening and we've visibility into everything that's happening in the private market. So that's always just another sort of data point around what we're willing to pay. I mean, if it's an LBO deal where they can't really do -- you can't do anything with the business, and it's large enough, that's a good opportunity for us. So there's other factors that go into that, but that's -- I mean that's the foundation there is the CRI an opportunity cost.

Zack, make sure you're looking at front too. There's a number of -- make sure you get back [indiscernible].

My name is Greg Walsh. I'm an individual shareholder. So I just want to thank you for all the work you and your team do for individual shareholders over the years. . I guess my question is a follow-on to the one about the PE seller group and the M&A side here, deployment is very important to the overall thesis going forward, of course. There's been a multiyear trend now of private equity firms pursuing GP-led recapitalizations and continuation vehicles so that they and their LP basis can continue to own some of their best companies for longer. Recognizing that your overall company universe, target universe is very large, but it's maybe concentrated in the group of firms that are pursuing that kind of strategy, what kind of impact has that had on the actionability of your pipeline? Have you seen that you've been tracking some companies you were very excited about and then that's going to be another 5 years before it gets sold again?

Let me ask Tim Haddock, who looks after our development deployment. So why don't you stand up...

So I would say this. I mean obviously, continuation vehicles and kind of shift to permanent ownership is a phenomenon that has really emerged over the last 3 to 5 years in particular. It's a little bit episodic right now because sometimes LPs are more interested in it, sometimes they're not. Sometimes it's based on the marks and discounts to marks and it's a lot of that. I would say, as a broad matter, it's a competitive situation that we're keeping a very close eye on. We have not seen a material kind of degradation, if you will, in our opportunity set as of this point when you can definitely envision the world where there might be some movement on the edges. And I think that -- we think our aggregate flow or volume is going to be sufficient where it won't be -- we don't foresee it to be a material impact.

Just to put that in scale, I think there's like a dozen-ish of that universe that went into a continuation fund. So it's on the edge, a competitive sort of factor, but in the macro, it's not something that we lose any sleep over. They also appear to be maybe a little trending, fattish trending. So we don't know if it's like a thing. And final thing I'd say is the sponsors who have tried to raise long-dated fund, that product generally hasn't worked, right? So there's a -- the LPs very much want their money out and back.

A quick follow-up on the deal funnel and private equity. If you were to broaden your funnel beyond sort of key sponsors, what would you need to do differently within your M&A processes to sort of continue -- what is seller track record?

So the motion just has to be widened, right? So right now, we have the reputation, I would say at the very top of the funnel. That's where we have to focus on unchanging and adding a few resources, not a tremendous amount. Right now, because of our reputation being somewhat of a prolific vertical software acquirer over the last decade, as Jason said, we see everything of size and scale and it's a very well-known set of criteria that all the sellers and all the intermediaries know we're looking for. And so we don't have to put a tremendous amount of resource against identifying the assets and with all the desk research you can do. We've got a database and we track it. We're not -- we're talking about like literally like a half a click earlier. So we might have to have 1 or 2 people that get into a little bit more of the middle market just to build -- middle market sponsors just to build our reputation and credibility because -- but that's all. Once we've identified the opportunity, the process downhill from there is the exact same. There's no difference to the process.

It's Deane Dray with RBC. Neil, spirit of the question is the law of large numbers. And you talked in your wrap-up about Roper for the next 20 years. And so when we look at Roper today, 27 businesses, you have 4 group executives, and you said there was -- they could handle 6 to 8 businesses and sorry to be an analyst, but if I take the midpoint you're at 28%. And so you still have some headroom. But just what's the gating factor here? Is it as you grow, will you add more group executives? Are -- is there any risk of complexity here that would jeopardize in the decentralized model in any way? Just your thoughts on the longer-term growth algorithm.

So we talk about this with our Board every 3 years. We do a 7-year outlook and to sort of revalidate the elements of the growth algorithm in the perpetual motion machine and then that's the math. And then when you step back to the math, organizationally, are there any constraints or pinch points? And so right now, we have to deploy between -- it all starts with the amount of capital we have to deploy. So it's $3 billion or $4 billion a day, year 7, it's like $6 billion or $7 billion. So with our current sort of staffing resource processes, do we have the ability and funnel and opportunity set in the marketplace? Can we deploy 7 billion versus 3 or 4, 7 years from now? I think it's a resounding, yes. The opportunity set is there. Our current processes will withstand sort of the scalability and extensibility to that. Might have to add some analyst type resources to help with the math and the modeling, but it's a very extensible part. So then once we own them, I think there's no budget or a specific plan because you just don't know in any given year, how many platforms or bolt-ons are going to be. Last year, there were 6 deals, 1 platform, 5 bolt-ons. So generally, call it, 1 or 1.5 new platforms a year, so 7 years, maybe 8 to 10 new platforms. That's a group executive. So then -- so we go from 4 to 5, and then you worry about span. But 5 is no problem. If we get to a point where we have -- go to the next 7 years and maybe we have 7 or 8 group executives, now you might have to talk about like a COO and a little bit of a layering but that's the second 7-year horizon, not the next 7 years. And so for all -- that's a long-winded answer, but for the next planning horizon, our current process, scope, scalability all appears to be well intact.

Two somewhat related questions. First, private equity isn't always known to sell the best businesses. So from your vantage point, how do you lead out the challenged businesses where private equity might be putting lipstick on a pig? And then secondly, in terms of the last 5 years, what 1 or 2 elements of your M&A process in terms of your ability to add value to businesses has really been augmented? What would you highlight? I know you've highlighted a number of things, but what would you really highlight among them.

I'll take the first one, you take the second one. Is that all right?

Sure. Yes.

So this is when Jason went through our process, one of the very first things we do is we outlined the [ got-to-believes ] for each transaction. And these are highly customized. They're not like is it a good market, and is the market growing and is the company a leader. I mean these are more -- much more specific. In Vertafore case, there were 12 got-to-believes, for instance, and that was the diligence model. And a big chunk of that is leading through the risk that you identified, right? Second thing I'd say is there are some undisputable facts. If you're the clear leader in a niche market and you go talk to customers, right? Net Promoter Score is high, propensity to buy is high, we ask about pricing, propensity for pricing to go up as high to accept higher pricing, you can get a sense of the intimacy of the relationship with the customer. So if you're a leader and you have great customer relationships, and then you buy a business and you find out that maybe some of the stability of the operating practices aren't what we like, which we would expect, that's very good work. But you have a tremendous amount of protective -- ability of protection by virtue of the leadership in the niche market with the intimate customer relationships. Do you want to take the second one?

Yes, just on the M&A process and how we've improved businesses over the last several years compared to history, I would say that we are just much more intentional about interacting with management, making sure we have a team that's going to be aligned with higher expectations that's going to have these things. We've talked about in terms of the characteristics of the leader. We look for that quickly and we want to make sure we have alignment. That really does have a lot of power, right? If you have the right leader in the business, our model scales really well. And then I think all the things that we've talked about today that Satish has walked you through. In terms of team and talent and just really all these things, that's the hard work of running a really good business, we install in that a lot earlier. I'd say before, we're much more passive in that, and there were some great businesses such as Verathon that we just let sort of run on their own for 5 years, and we could have had a lot more success a lot earlier. So to us, I think it's just sort of intervening in Roper's way of intervening a little bit faster and then just reinforcing the things, I think, that are just fundamental in running a good business and not something that's really [ forced ] but brought in by the business leadership.

Cliff Ransom from Ransom Research. On the thesis that learning organizations learn more from their mistakes than from their successes, can you talk about -- you sort of touched on it a little bit on the acquisition model. But can you talk a little bit about the process, pick a mistake, you don't have to identify what the mistake was, but tell us how that mistake informed the way you run your business.

Yes. So I toss this. I mean, any of the operating crew want to take a whack at this one? I'll put Mike on the spot, grab a mic.

So I think one of the things that I think back to the specific acquisition is leveraging some of the talent across the portfolio to go a little bit deeper in some business diligence efforts. I think thinking back to one specific instance, Neil, that may be what you were thinking about. There were a couple of things that we may have been able to understand earlier relative to the trajectory of a business that we were bringing on board. There was work to be done just how much work needed to be done and how quickly was the thing that I would point to in one particular instance.

Another learning moment.

[indiscernible] to change the process, so [indiscernible].

Yes. So I think one of the things we've done is we've leveraged people with specific expertise around some of those got-to-believes across the portfolio. So I know a couple of diligence efforts we've had people from existing businesses come in and have a very specific expertise to retire some of that business diligence risk where we wouldn't have necessarily done that previously. That's the one thing that I can tell.

I'll give you a real-time one from last week our postmortems. We had 5 that were on the docket at the year anniversary. 4 I worked really well. One was less good. One of the principal reasons for the less good one was they had 2 very large implementations in flight that ended up going sideways. And so now we've incorporated in our diligence process doing customer channel checks for the in-flight implementations heretofore you take an assumption that somebody just bought something is generally pretty happy. And so that's an example like a real-time learning adjustment.

It's Terry Tillman again at Truist Securities. In terms of the $900 million plus in maintenance revenue across all of the businesses, I'll be curious and I think you said earlier, you're not going to force your customers' hands. These are enterprises. So we may not be ready for the next big thing. But if we look out over the next decade or so, I mean, how would it look? Would it be linear? Or would there be maybe a period of time where it really starts to step up. And the second part of this is, maybe, Neil, related to some of those growth algorithmic comments earlier at the end of the messaging part. As you get that [indiscernible] installed base, the vast majority of it move over. Does that have a some of those long-term financial targets?

Yes. So very hard to predict the pacing. I mean, as good as a guess as any, but it's a guess, would be a linear progression. I would -- the vast majority of the $900 million is product enabled, but not all of it is product enabled today, so there's still product work that has to happen. And then it's on the pace of journey. So for instance, Jason alluded to with Foundry, their arc of moving their customers to the cloud starts with net new. And in this year, their goal is half of net new customers take the cloud adoption. And then next year, it will be a higher percentage. That's just net new. They are beginning to move their base, right? So it's just for Foundry, it's going to be an arc and then you layer on the rest of the company. I'll say it's concentrated in a few businesses, most of which are in the application software segment. So it's not across the entire portfolio. In terms of the growth algorithm impact, I really don't think it has any long-term impact. I mean, it's -- that's 10 years from now. I mean, this transition is a little bit of a -- it's a tailwind, but it's not like a predominant part of the growth algorithm. So I don't think it has a meaningful impact over longer time.

The way we think about it is it's going to have sort of better ultimate EBITDA margins, right, the conversion of the cloud, but probably a little bit lower gross margin because you're trading off cloud margins for perpetual. But relative to the growth algorithm that doesn't -- I don't think it really fundamentally changes it.

It's Joe again from TD Cowen. As you kind of are moving to lever up the organic growth rate, particularly as you get comped against more traditional software companies. Like what is like the evaluation? Does it shift a little bit when you're looking at kind of niche opportunities that have like ironclad growth that might be a little bit slower like -- versus more like, I don't know, maybe this market isn't fully defined yet and it's not fully established who the true leaders are and we're going to back the right horse, like maybe taking on a little bit of a risk for potentially like a faster growth opportunity that maybe you can crystallize.

So we're going to -- we remain committed, like our tooling, our expertise is on this business, [indiscernible] finding very solid industries or niches where the competitive behavior is very well understood. You can observe it, you can survey it, you can analyze it. You can understand the basis of competition. And then we're selecting 1 of the 2 winners in that space. So underwrite like if any of those conditions precedent are understandable, so if there's shifting forces and there's going to be clear winners and clear losers or a tremendous amount of disruption that brings in, on Jason's slide with the 10 boxes in the bottom right-hand corner of the existential risk question. And we're just not -- we're not in a position in any capacity to want to take on that existential risk. Again, with the compounders mindset, we love the defensibility of the niche and the predictability. But just because the smaller market doesn't mean the market is not growing. It doesn't mean you can't grow high single digits, if not low doubles as we showed you in a handful of case studies today. So we're going to -- that's what we do and we're going to stay committed to that. Do you want to add.

No.

Allison Poliniak from Wells Fargo again. Just probably more reflective of the bolt-ons. When you're thinking through that, are there any guardrails in place or concerns about a vertical that you have today getting too big in different [indiscernible] based on the portfolio? Just kind of how you're thinking you're managing that over time.

There are guardrails for sure, I don't believe the one you highlight is one that would be the principal one, right? And so first is, is the platform mature enough with enough processes to be able to onboard and capital integrate a business. So not all 27 of our businesses are in that position today nor do I think they all will be. That's from like a systemic capability point of view. The second one is once we've done a bolt-on, so we did a big bolt-on for Strata and EPSi, they have the capability, but they're out of the game while they're digesting that, right? So there is some -- those are the more of the guardrails and rate limiters. Again, it's all the bolt-on activities, all to drive improved organic growth. So we need to see that manifesting itself before, if you will, Strata open for business again for any sort of meaningful bolt-on. Those are more of the guardrails. Anything...

Yes, that's right. I mean if it was a horizontal bolt-on, that could introduce more large platform players, but it's staying within the vertical. So we typically -- it's just us going deeper with the existing sort of market.

Joseph Vruwink from Baird. Just on M&A diligence and the market assessment that you spoke on. Do you typically underwrite that the TAMs will get bigger, not just a function of buying into a growing market, but as a function of your ownership, so customers might direct you on what they want to do and that feeds product development and that drives market opportunities. So are you underwriting that ultimately you'll be a driver of a bigger TAM? Or are you kind of underwriting that the status flow is what it is today and you work from there? And then I have a follow-up.

I can.

Go ahead.

Yes, I think it really kind of depends on the asset, but we've seen situations where management will make assertions around that. And we will do independent sort of analysis around those market opportunities. So we -- it depends on the situation. And so I think we have underwrote it at certain times and other times and other times, we've sort of said that's a little bit too adjacent or that you don't have the right to win there. So -- but it is -- we kind of take that, we take management's forecast, what their assertions are, we do our independent analysis of that, and then we make the assessment from there.

Yes. I think that it's perfectly well said. So on platforms, we would not underwrite any of that, right, just by virtue of ownership [indiscernible] the bolt-on. Rarely, but occasionally, there might be an application that's sold in adjacency, and that's the TAM and nobody has ever taken that capability into our core. So we would certainly underwrite to bring it into our core but like 2 or 3 adjacencies to the right, just [indiscernible] we don't have a right to win, we would not.

And then just kind of related to the last one, but it gets back to the question on past mistakes or I guess, the batting average with success. So in some of the examples here today, one of your companies maybe veered too far from its core. And so the success was just refocusing them on what was working and they did that better. But then there's other examples where a company got more R&D to go after that adjacency and that was a success. So what kind of defines when one is right and one is wrong and just getting that [indiscernible]?

So you're exactly right to call that out. So at a handful of our companies, it's been retrenching to the core because the prior seller was trying to create a TAM that was larger in allusion of growth that wasn't real. And we do our work, the core TAM is large enough to support the growth that we want to see in the business. And so it's very easy to refocus back to the core. In other cases, once you sort of done with what we want to do there and you have a right to an adjacency like Deltek's done moving from A&E into construction, for instance, and so you're right to point that out. It is -- the answer to your question is bespoke to each company and a strategic arc where they are. There's no common answer. It is -- as Satish said in his slides, every 3-ish years, we're doing a long-range strategic plan with each business unit and answering -- asking and answering these types of questions.

This is Jonathan from Sustainable Growth Advisors. And maybe this question somewhat for the Board, but you guys talk a lot about the opportunity cost of capital, how do you think about like share buybacks? You've gone through this journey to transform into a really great -- a lot of great businesses. So how do you kind of think about that as a potential for the opportunity cost of capital?

Go ahead, Jason.

Yes. No, I think we -- funny you mentioned that. We just updated the Board on that last week. We always look at it every so often. And I think for us, sort of the free cash flow and relevering that and compounding it through acquisitions sort of overwhelms the buyback opportunity. And so that's sort of our current posture now down the road. So would we look at it? Maybe. But we run the math several ways, and that's still to us is a better way to increase our returns overall.

Yes. It's all about the math. We have no ideological leaning one way or another but it's got to be clear and compelling. And the buyback at this moment, it's not clear and compelling versus our current capital deployment.

David Landry, Demesne Investments. You spoke a lot today about how the decentralized autonomous model is so important to what you do. But hearing some of the subsidiary companies, I was kind of surprised to hear that -- or to not hear that some of that hasn't filtered down in some kind of modified way to how they run their businesses creating accountability, clear P&L lines within their businesses. So I don't know to the extent that, that exists, if maybe you could shed some light on that.

Yes, I think it's -- I won't lead the witness. So maybe Mike, you can go and then Amy, if that's okay.

Sure. I mean I don't know. I think there's a pretty clear sense of accountability that we all have in some regard, right? And I think we've -- as we have gone through bolt-on acquisitions, as we've evolved our businesses, I think there has been some filtering down on how we may be organized that we may not have illuminated today in order to get very clear line of sight around the success of those bolt-ons, getting into different lines of business to be able to --. Again, I think the term we use a lot is we have to make sure we're building conviction around what we're trying to get done and then being able to demonstrate that over the longer term. And so I think that there's a lot of that, that has filtered down and we adjust on an ongoing basis to be able to demonstrate that.

You want to take another crack at?

Yes, sure. I will definitely tell you that we run our business as a team of resources that have a tremendous amount of trust in one another and drive a tremendous amount of positive conflict and high accountability. While we run as one P&L, we don't have separate P&Ls inside of our business, we do have separate function, separate roles and people who are accountable to each other for different things. And through that, I think we've built a very cohesive team that is based again in all the same principles that Neil went through around trust and accountability and how that drives results.

Terrific. What I will say is we began our journey of profiling the leaders and onboarding the leaders that run our 27 companies around being learners, competitors, builders and strategic operators that -- those innate skills start flowing through the organization as well. It just takes some time.

Yes, Brian Gesuale from Raymond James. I'd like to ask a little bit about pricing from a historical basis. As private companies, how incremental was pricing in the growth of these businesses? Then maybe the first few years under Roper kind of the pre-inflationary base, how important was it? And then how do you think about it now as part of the accelerated growth rate as you move forward over the next few years?

I direct that right back to Mike and Amy and Chris. So pricing when you're sponsor-owned and pricing when you're Roper-owned [indiscernible].

I wouldn't say it's been that big of a difference either way. I mean we have price increases that are factored into all of our contracts. We try to have long-term agreements with everyone and different price increases are factored in, whether it be a 3-, 5- or 7-year agreement. Obviously, when you're in this inflationary period, there are clients that may have legacy agreements that had CPI or some other index tied to what their increases would have been tied to. That's not really the standard. So I wouldn't say there's been like a major part of the driver, it is something that obviously from a business discipline that we build in to all of our agreements and contracts. So I don't know if you don't want to add anything.

That's it. I will say, as part of the diligence process, we are super dissecting the growth algorithm in each business and price is one of it. So we're testing with customers and prospects through our research around what is your level of interest to accept price that's in bands, and then we bounce that up against where the target company is. And if a company is getting 4% year in, year out, and the customer said they're good with anything less than 7%, then we know we're in a good band. Sometimes, it's reversed. And then you have to worry about if the pricing element of growth algorithm really has durability. But in the case of all of our business, it does.

And that's something we've certainly added to our learning process over time. There -- go back several years ago, we've seen some sponsors take up price significantly and what that's done to the customer base. So we're super mindful about we're going to be forever home. We want our customers to be our partners. And so we just take that long-term approach to our pricing algorithm route.

One more, Zack, do you think?

Yes, if there are any takers.

There's one back there. Great. Last one.

About the culture and identifying the leaders, is that relatively new? And so -- because you said it takes time to filter down, I'm just wondering how you look at that when acquisition is going forward. And then you said you might do something a half click earlier. Does this mean that might replace management right away if you do a deal, and that will allow you to do those things? And then sort of related to that, I've heard we're forever owners and all of that, have you gotten any pushback given all the portfolio moves you made lately?

Appreciate it. Well, if we forget one, then hold us accountable. If you can remember the third one, I think I can do the first two. So the precision of the 4 elements around our leader profile is relatively new. We actually, as a team, did it in the summer of 2020. So it is relatively new. Before that, we talked about it just simply, are you a builder or a transactor, right? So we knew we wanted the best leaders in organization, who are authentically sort of motivated and geeked up to build things for, and those did well with us versus sort of preparing a business to be sold. So we added to precision. And then also -- it's just not the criteria. We have now highly tuned our selection process against those, right? So we have testing, we have interview questions, we have our panels, is the way we discuss all our leadership candidates. So we have the ability to profile against that and then also develop and train against that. So yes, it's relatively new with the level of precision. Buying things half a click earlier, as Jason mentioned, on the 10-panel slide of our criteria, if we're buying something that is a little bit earlier in its stage and the leadership team is not on board for the value creation plan that we're going to want to deploy, then yes, we now have the confidence with this leadership profile that we developed to go select somebody from outside or move somebody from inside into that opportunity to be more focused in the nearer term on the value creation plan.

Then in terms of pushback on our portfolio with forever home sort of I guess, natural conflict there. I think we've been very explicit internally with all of our businesses about where we're going strategically. And so we obviously -- with the TransCore transaction, it was all about getting more asset light. TransCore was project-based business with lots of unbilled receivables. So it was just kind of weighing down our cash profile. So I think that made a lot of sense, and I think that made sense externally as well. We had a lot of volatility in our quarter-to-quarter numbers in addition to the asset intensity. So I think that was well received, candidly. And then on the cyclicality, again, that was another part of just our learning over time how cyclicality informs valuation and then ultimately, how it informs compounding. And so we were pretty explicit about that internally with our leadership team. So I don't think anybody feels like, okay, what's the next shoe to drop? And then externally, I think it sort of made -- it was cohesive in terms of the company we own today versus the industrial and energy assets that we just divested it.

Terrific. Well, thank you. Thanks to Jill and [ Serene ] and Zack for everything to make today happen to the Roper and the operating teams for everything you're doing for us. And everybody who committed a big chunk of your day to learn about our story, I really appreciate it. As you know, we'll be around for the next hour having lunch. Don't forget about our 2 directors, so you can ask them anything you'd like, they'll be at lunch as well. And it's been a terrific day, and really appreciate the time and attention. Thank you.