UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2022.~~March 31, 2023.


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 1-12273

ROPER TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)


Delaware		51-0263969
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6901 Professional Parkway, Suite 200
Sarasota,	Florida	34240
(Address of principal executive offices)		(Zip Code)

(941) 556-2601

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange On Which Registered

Common Stock, $0.01 Par Value

ROP

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


☒	Large accelerated filer	☐	Accelerated filer

☐	Non-accelerated filer	☐	Smaller reporting company

		☐	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares outstanding of the registrant’s common stock as of ~~October~~April 28, ~~2022~~2023 was ~~106,052,054.~~106,592,234.

ROPER TECHNOLOGIES, INC.

REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER 30, 2022~~MARCH 31, 2023

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Roper Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (unaudited)

(in millions, except per share data)


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2022		2021		2022		2021				2023		2022
Net revenues	Net revenues	$	1,350.3	$	1,232.1	$	3,940.9	$	3,577.2	Net revenues		$	1,469.7	$	1,279.8
Cost of sales	Cost of sales	408.5		360.4		1,190.4		1,050.0		Cost of sales		451.1		382.6
Gross profit	Gross profit	941.8		871.7		2,750.5		2,527.2		Gross profit		1,018.6		897.2

Selling, general and administrative expenses	Selling, general and administrative expenses	548.6		524.8		1,638.5		1,546.5		Selling, general and administrative expenses		617.6		541.3
Income from operations	Income from operations	393.2		346.9		1,112.0		980.7		Income from operations		401.0		355.9

Interest expense, net	Interest expense, net	41.3		58.2		138.6		178.2		Interest expense, net		37.4		52.6

Other income (expense), net		3.6		(2.1)		0.2		25.0
Equity investment activity, net										Equity investment activity, net		(1.2)		—
Other expense, net										Other expense, net		(2.3)		(2.1)

Earnings before income taxes	Earnings before income taxes	355.5		286.6		973.6		827.5		Earnings before income taxes		360.1		301.2

Income taxes	Income taxes	78.6		75.8		235.3		189.3		Income taxes		75.8		64.8

Net earnings from continuing operations	Net earnings from continuing operations	276.9		210.8		738.3		638.2		Net earnings from continuing operations		284.3		236.4

Earnings from discontinued operations, net of tax		49.0		78.7		170.3		226.6
Earnings (loss) from discontinued operations, net of tax										Earnings (loss) from discontinued operations, net of tax		(1.2)		66.8
Gain on disposition of discontinued operations, net of tax	Gain on disposition of discontinued operations, net of tax	1.1		—		1,707.7		—		Gain on disposition of discontinued operations, net of tax		—		1,717.3
Net earnings from discontinued operations		50.1		78.7		1,878.0		226.6
Net earnings (loss) from discontinued operations										Net earnings (loss) from discontinued operations		(1.2)		1,784.1

Net earnings	Net earnings	$	327.0	$	289.5	$	2,616.3	$	864.8	Net earnings		$	283.1	$	2,020.5

Net earnings per share from continuing operations:	Net earnings per share from continuing operations:									Net earnings per share from continuing operations:
Basic	Basic	$	2.61	$	2.00	$	6.97	$	6.07	Basic		$	2.67	$	2.24
Diluted	Diluted	$	2.59	$	1.97	$	6.91	$	6.00	Diluted		$	2.66	$	2.22

Net earnings per share from discontinued operations:
Net earnings (loss) per share from discontinued operations:										Net earnings (loss) per share from discontinued operations:
Basic	Basic	$	0.47	$	0.75	$	17.74	$	2.15	Basic		$	(0.01)	$	16.89
Diluted	Diluted	$	0.47	$	0.74	$	17.59	$	2.13	Diluted		$	(0.01)	$	16.72

Net earnings per share:	Net earnings per share:									Net earnings per share:
Basic	Basic	$	3.08	$	2.75	$	24.71	$	8.22	Basic		$	2.66	$	19.13
Diluted	Diluted	$	3.06	$	2.71	$	24.50	$	8.13	Diluted		$	2.65	$	18.94

Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	106.0		105.4		105.9		105.2		Basic		106.3		105.6
Diluted	Diluted	106.8		106.7		106.8		106.4		Diluted		107.0		106.7

See accompanying notes to Condensed Consolidated Financial Statements.

Roper Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (unaudited)

(in millions)


		Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
		2022		2021		2022		2021				2023		2022
Net earnings	Net earnings	$	327.0	$	289.5	$	2,616.3	$	864.8	Net earnings		$	283.1	$	2,020.5

Other comprehensive loss, net of tax:
Other comprehensive income (loss), net of tax:										Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	Foreign currency translation adjustments	(180.9)		(35.4)		(285.6)		(3.5)		Foreign currency translation adjustments		24.1		(22.9)
Total other comprehensive loss, net of tax		(180.9)		(35.4)		(285.6)		(3.5)
Total other comprehensive income (loss), net of tax										Total other comprehensive income (loss), net of tax		24.1		(22.9)

Comprehensive income	Comprehensive income	$	146.1	$	254.1	$	2,330.7	$	861.3	Comprehensive income		$	307.2	$	1,997.6

See accompanying notes to Condensed Consolidated Financial Statements.

Roper Technologies, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

(in millions)


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
ASSETS:	ASSETS:					ASSETS:

Cash and cash equivalents	Cash and cash equivalents	$	1,894.5	$	351.5	Cash and cash equivalents	$	1,181.6	$	792.8
Accounts receivable, net	Accounts receivable, net	630.3		687.6		Accounts receivable, net	629.1		724.5
Inventories, net	Inventories, net	101.0		69.2		Inventories, net	115.0		111.3
Income taxes receivable	Income taxes receivable	33.5		16.8		Income taxes receivable	25.5		61.0
Unbilled receivables	Unbilled receivables	98.8		81.9		Unbilled receivables	100.9		91.5
Other current assets	Other current assets	138.6		136.1		Other current assets	180.1		151.3
Current assets held for sale		1,094.7		1,078.0

Total current assets	Total current assets	3,991.4		2,421.1		Total current assets	2,232.2		1,932.4

Property, plant and equipment, net	Property, plant and equipment, net	83.2		82.7		Property, plant and equipment, net	86.3		85.3
Goodwill	Goodwill	13,672.8		13,476.3		Goodwill	15,962.8		15,946.1
Other intangible assets, net	Other intangible assets, net	6,243.5		6,509.1		Other intangible assets, net	7,871.7		8,030.7
Deferred taxes	Deferred taxes	47.2		50.0		Deferred taxes	59.3		55.9
Equity investment						Equity investment	535.0		535.0
Other assets	Other assets	359.1		369.8		Other assets	387.5		395.4
Assets held for sale		—		804.9

Total assets	Total assets	$	24,397.2	$	23,713.9	Total assets	$	27,134.8	$	26,980.8

LIABILITIES AND STOCKHOLDERS' EQUITY:	LIABILITIES AND STOCKHOLDERS' EQUITY:					LIABILITIES AND STOCKHOLDERS' EQUITY:

Accounts payable	Accounts payable	$	121.2	$	98.3	Accounts payable	$	134.0	$	122.6
Accrued compensation	Accrued compensation	225.6		261.9		Accrued compensation	154.2		228.8
Deferred revenue	Deferred revenue	1,048.8		1,106.3		Deferred revenue	1,303.8		1,370.7
Other accrued liabilities	Other accrued liabilities	365.6		398.7		Other accrued liabilities	413.4		454.6
Income taxes payable	Income taxes payable	159.9		117.3		Income taxes payable	70.5		16.6
Current portion of long-term debt, net	Current portion of long-term debt, net	698.9		799.2		Current portion of long-term debt, net	699.5		699.2
Current liabilities held for sale		220.4		340.1

Total current liabilities	Total current liabilities	2,840.4		3,121.8		Total current liabilities	2,775.4		2,892.5

Long-term debt, net of current portion	Long-term debt, net of current portion	5,960.6		7,122.6		Long-term debt, net of current portion	5,964.4		5,962.5
Deferred taxes	Deferred taxes	1,365.0		1,466.2		Deferred taxes	1,652.9		1,676.8
Other liabilities	Other liabilities	373.4		390.1		Other liabilities	409.4		411.2
Liabilities held for sale		—		49.4

Total liabilities	Total liabilities	10,539.4		12,150.1		Total liabilities	10,802.1		10,943.0

Commitments and contingencies (Note 11)
Commitments and contingencies (Note 9)						Commitments and contingencies (Note 9)

Common stock	Common stock	1.1		1.1		Common stock	1.1		1.1
Additional paid-in capital	Additional paid-in capital	2,467.9		2,307.8		Additional paid-in capital	2,570.4		2,510.2
Retained earnings	Retained earnings	11,874.8		9,455.6		Retained earnings	13,941.2		13,730.7
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(468.7)		(183.1)		Accumulated other comprehensive loss	(162.9)		(187.0)
Treasury stock	Treasury stock	(17.3)		(17.6)		Treasury stock	(17.1)		(17.2)
Total stockholders' equity	Total stockholders' equity	13,857.8		11,563.8		Total stockholders' equity	16,332.7		16,037.8

Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	24,397.2	$	23,713.9	Total liabilities and stockholders' equity	$	27,134.8	$	26,980.8

See accompanying notes to Condensed Consolidated Financial Statements.

Roper Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

(in millions)


		Nine months ended September 30,					Three months ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net earnings from continuing operations	Net earnings from continuing operations	$	738.3	$	638.2	Net earnings from continuing operations	$	284.3	$	236.4
Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities:	Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities:					Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities:
Depreciation and amortization of property, plant and equipment	Depreciation and amortization of property, plant and equipment	28.0		33.9		Depreciation and amortization of property, plant and equipment	8.6		9.6
Amortization of intangible assets	Amortization of intangible assets	438.4		429.0		Amortization of intangible assets	175.1		145.7
Amortization of deferred financing costs	Amortization of deferred financing costs	9.2		10.1		Amortization of deferred financing costs	2.6		3.1
Non-cash stock compensation	Non-cash stock compensation	90.8		93.5		Non-cash stock compensation	29.6		33.0

Gain on sale of assets, net of tax		—		(21.6)

Income tax provision, excluding tax associated with gain on sale of assets	Income tax provision, excluding tax associated with gain on sale of assets	235.3		183.8		Income tax provision, excluding tax associated with gain on sale of assets	75.8		64.8
Changes in operating assets and liabilities, net of acquired businesses:	Changes in operating assets and liabilities, net of acquired businesses:					Changes in operating assets and liabilities, net of acquired businesses:
Accounts receivable	Accounts receivable	48.3		(0.3)		Accounts receivable	98.0		85.6
Unbilled receivables	Unbilled receivables	(21.7)		(22.9)		Unbilled receivables	(8.7)		(10.4)
Inventories	Inventories	(33.6)		—		Inventories	(3.8)		(13.0)
Accounts payable	Accounts payable	24.7		14.6		Accounts payable	11.2		10.1
Other accrued liabilities	Other accrued liabilities	(59.0)		10.8		Other accrued liabilities	(103.7)		(106.6)
Deferred revenue	Deferred revenue	(15.2)		26.5		Deferred revenue	(61.4)		28.4
Cash tax payments related to disposal of businesses		(534.6)		—

Cash income taxes paid	Cash income taxes paid	(397.5)		(223.8)		Cash income taxes paid	(16.0)		(22.3)
Other, net	Other, net	(1.2)		(29.2)		Other, net	(26.7)		(23.1)
Cash provided by operating activities from continuing operations	Cash provided by operating activities from continuing operations	550.2		1,142.6		Cash provided by operating activities from continuing operations	464.9		441.3
Cash provided by operating activities from discontinued operations		112.7		289.8
Cash provided by (used in) operating activities from discontinued operations						Cash provided by (used in) operating activities from discontinued operations	(1.2)		34.0
Cash provided by operating activities	Cash provided by operating activities	662.9		1,432.4		Cash provided by operating activities	463.7		475.3

Cash flows from (used in) investing activities:	Cash flows from (used in) investing activities:					Cash flows from (used in) investing activities:
Acquisitions of businesses, net of cash acquired	Acquisitions of businesses, net of cash acquired	(580.9)		(19.4)		Acquisitions of businesses, net of cash acquired	(1.1)		(53.2)
Capital expenditures	Capital expenditures	(30.0)		(19.9)		Capital expenditures	(9.8)		(5.4)
Capitalized software expenditures	Capitalized software expenditures	(21.9)		(22.2)		Capitalized software expenditures	(9.9)		(7.5)

Proceeds from sale of assets		—		27.1

Other, net	Other, net	(1.8)		(1.5)		Other, net	(2.8)		—
Cash used in investing activities from continuing operations	Cash used in investing activities from continuing operations	(634.6)		(35.9)		Cash used in investing activities from continuing operations	(23.6)		(66.1)
Proceeds from disposition of discontinued operations		2,997.1		—
Proceeds from (used in) disposition of discontinued operations						Proceeds from (used in) disposition of discontinued operations	(3.2)		3,006.2
Cash used in investing activities from discontinued operations	Cash used in investing activities from discontinued operations	(4.9)		(6.5)		Cash used in investing activities from discontinued operations	—		(1.9)
Cash provided by (used in) investing activities	Cash provided by (used in) investing activities	2,357.6		(42.4)		Cash provided by (used in) investing activities	(26.8)		2,938.2

Cash flows from (used in) financing activities:	Cash flows from (used in) financing activities:					Cash flows from (used in) financing activities:
Payments on senior notes		(800.0)		—

Borrowings (payments) under revolving line of credit, net	Borrowings (payments) under revolving line of credit, net	(470.0)		(1,240.0)		Borrowings (payments) under revolving line of credit, net	—		(470.0)
Debt issuance costs		(3.9)		—

Cash dividends to stockholders	Cash dividends to stockholders	(196.2)		(176.9)		Cash dividends to stockholders	(72.3)		(65.3)
Proceeds from stock-based compensation, net	Proceeds from stock-based compensation, net	57.0		63.9		Proceeds from stock-based compensation, net	15.1		21.0
Treasury stock sales	Treasury stock sales	11.6		11.8		Treasury stock sales	4.7		5.5

Other		(0.3)		—

Cash flows used in financing activities from continuing operations	Cash flows used in financing activities from continuing operations	(1,401.8)		(1,341.2)		Cash flows used in financing activities from continuing operations	(52.5)		(508.8)
Cash flows provided by (used in) financing activities from discontinued operations		(11.3)		0.3
Cash flows used in financing activities from discontinued operations						Cash flows used in financing activities from discontinued operations	—		(11.4)
Cash flows used in financing activities	Cash flows used in financing activities	(1,413.1)		(1,340.9)		Cash flows used in financing activities	(52.5)		(520.2)
(Continued)	(Continued)					(Continued)

Roper Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited) - Continued

(in millions)


		Nine months ended September 30,					Three months ended March 31,
		2022		2021			2023		2022

Effect of foreign currency exchange rate changes on cash	Effect of foreign currency exchange rate changes on cash	(64.4)		(4.9)		Effect of foreign currency exchange rate changes on cash	4.4		(7.3)

Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	1,543.0		44.2		Net increase in cash and cash equivalents	388.8		2,886.0

Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	351.5		308.3		Cash and cash equivalents, beginning of period	792.8		351.5

Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	1,894.5	$	352.5	Cash and cash equivalents, end of period	$	1,181.6	$	3,237.5

See accompanying notes to Condensed Consolidated Financial Statements.

Roper Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

(in millions)


		Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Treasury stock		Total stockholders’ equity			Common stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Treasury stock		Total stockholders’ equity
Balances at June 30, 2022		$	1.1	$	2,417.1	$	11,613.5	$	(287.8)	$	(17.4)	$	13,726.5

Balances at December 31, 2022														Balances at December 31, 2022	$	1.1	$	2,510.2	$	13,730.7	$	(187.0)	$	(17.2)	$	16,037.8

Net earnings	Net earnings	—		—		327.0		—		—		327.0		Net earnings	—		—		283.1		—		—		283.1
Stock option exercises	Stock option exercises	—		17.9		—		—		—		17.9		Stock option exercises	—		33.7		—		—		—		33.7

Treasury stock sold	Treasury stock sold	—		3.0		—		—		0.1		3.1		Treasury stock sold	—		4.6		—		—		0.1		4.7
Currency translation adjustments	Currency translation adjustments	—		—		—		(180.9)		—		(180.9)		Currency translation adjustments	—		—		—		24.1		—		24.1
Stock-based compensation	Stock-based compensation	—		31.7		—		—		—		31.7		Stock-based compensation	—		31.4		—		—		—		31.4
Restricted stock activity	Restricted stock activity	—		(1.8)		—		—		—		(1.8)		Restricted stock activity	—		(9.5)		—		—		—		(9.5)
Dividends declared ($0.62 per share)		—		—		(65.7)		—		—		(65.7)
Balances at September 30, 2022		$	1.1	$	2,467.9	$	11,874.8	$	(468.7)	$	(17.3)	$	13,857.8
Dividends declared ($0.6825 per share)														Dividends declared ($0.6825 per share)	—		—		(72.6)		—		—		(72.6)
Balances at March 31, 2023														Balances at March 31, 2023	$	1.1	$	2,570.4	$	13,941.2	$	(162.9)	$	(17.1)	$	16,332.7

Balances at December 31, 2021	Balances at December 31, 2021	$	1.1	$	2,307.8	$	9,455.6	$	(183.1)	$	(17.6)	$	11,563.8	Balances at December 31, 2021	$	1.1	$	2,307.8	$	9,455.6	$	(183.1)	$	(17.6)	$	11,563.8

Net earnings	Net earnings	—		—		2,616.3		—		—		2,616.3		Net earnings	—		—		2,020.5		—		—		2,020.5
Stock option exercises	Stock option exercises	—		80.8		—		—		—		80.8		Stock option exercises	—		38.7		—		—		—		38.7
Cash settlement of share-based awards in connection with disposition of discontinued operations	Cash settlement of share-based awards in connection with disposition of discontinued operations	—		(11.1)		—		—		—		(11.1)		Cash settlement of share-based awards in connection with disposition of discontinued operations	—		(11.1)		—		—		—		(11.1)
Treasury stock sold	Treasury stock sold	—		11.3		—		—		0.3		11.6		Treasury stock sold	—		5.4		—		—		0.1		5.5
Currency translation adjustments	Currency translation adjustments	—		—		—		(285.6)		—		(285.6)		Currency translation adjustments	—		—		—		(22.9)		—		(22.9)
Stock-based compensation	Stock-based compensation	—		102.9		—		—		—		102.9		Stock-based compensation	—		40.8		—		—		—		40.8
Restricted stock activity	Restricted stock activity	—		(23.8)		—		—		—		(23.8)		Restricted stock activity	—		(17.7)		—		—		—		(17.7)
Dividends declared ($1.86 per share)		—		—		(197.1)		—		—		(197.1)
Balances at September 30, 2022		$	1.1	$	2,467.9	$	11,874.8	$	(468.7)	$	(17.3)	$	13,857.8

Balances at June 30, 2021		$	1.1	$	2,217.9	$	9,003.1	$	(115.1)	$	(17.8)	$	11,089.2

Net earnings		—		—		289.5		—		—		289.5
Stock option exercises		—		20.7		—		—		—		20.7
Treasury stock sold		—		3.5		—		—		0.1		3.6
Currency translation adjustments		—		—		—		(35.4)		—		(35.4)
Stock-based compensation		—		36.1		—		—		—		36.1
Restricted stock activity		—		(2.0)		—		—		—		(2.0)
Dividends declared ($0.5625 per share)		—		—		(59.4)		—		—		(59.4)
Balances at September 30, 2021		$	1.1	$	2,276.2	$	9,233.2	$	(150.5)	$	(17.7)	$	11,342.3

Balances at December 31, 2020		$	1.1	$	2,097.5	$	8,546.2	$	(147.0)	$	(18.0)	$	10,479.8

Net earnings		—		—		864.8		—		—		864.8
Stock option exercises		—		81.8		—		—		—		81.8
Treasury stock sold		—		11.5		—		—		0.3		11.8
Currency translation adjustments		—		—		—		(3.5)		—		(3.5)
Stock-based compensation		—		103.3		—		—		—		103.3
Restricted stock activity		—		(17.9)		—		—		—		(17.9)
Dividends declared ($1.6875 per share)		—		—		(177.8)		—		—		(177.8)
Balances at September 30, 2021		$	1.1	$	2,276.2	$	9,233.2	$	(150.5)	$	(17.7)	$	11,342.3
Dividends declared ($0.62 per share)														Dividends declared ($0.62 per share)	—		—		(65.7)		—		—		(65.7)
Balances at March 31, 2022														Balances at March 31, 2022	$	1.1	$	2,363.9	$	11,410.4	$	(206.0)	$	(17.5)	$	13,551.9

See accompanying notes to Condensed Consolidated Financial Statements.

Roper Technologies, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

All currency and share amounts are in millions, except per share data

1. Basis of Presentation

The accompanying Condensed Consolidated Financial Statements for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ are unaudited. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the financial position, results of operations, comprehensive income and cash flows of Roper Technologies, Inc. and its subsidiaries (“Roper,” the “Company,” “we,” “our” or “us”) for all periods presented. The December 31, ~~2021~~2022 financial position data included herein was derived from the audited consolidated financial statements included in the Company’s ~~2021~~2022 Annual Report on Form 10-K (“Annual Report”) filed on February ~~22, 2022~~27, 2023 with the Securities and Exchange Commission (“SEC”) but does not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”).

Roper’s management has made estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these Condensed Consolidated Financial Statements in conformity with GAAP. Actual results could differ from those estimates.

The results of operations for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 are not necessarily indicative of the results to be expected for the full year. You should read these unaudited Condensed Consolidated Financial Statements in conjunction with Roper’s audited consolidated financial statements and the notes thereto included in its Annual Report. Certain prior period amounts have been reclassified to conform to current period presentation.

Discontinued Operations

~~During~~Roper has completed the ~~second quarter~~divestitures of ~~2022,~~TransCore, Zetec, CIVCO Radiotherapy (“2021 Divestitures”), and the ~~Company entered into a definitive agreement to sell a~~ majority ~~equity~~ stake in ~~our~~its industrial businesses including its entire historical Process Technologies reportable segment and the industrial businesses within its historical Measurement & Analytical Solutions reportable segment, to affiliates of Clayton, Dubilier & Rice, LLC. The transaction, which is expected to close in the fourth quarter of 2022, is subject to customary closing conditions, including regulatory approvals. The businesses included in this transaction are Alpha, AMOT, CCC, Cornell, Dynisco, FTI, Hansen, Hardy, Logitech, Metrix, PAC, Roper Pump, Struers, Technolog, Uson, and Viatran (collectively the “Industrial Businesses”).

~~During 2021, the Company entered into definitive agreements to divest our TransCore, Zetec and CIVCO Radiotherapy businesses~~ (“~~2021 Divestitures”~~Indicor”). ~~As of March 31, 2022, Roper had completed the 2021 Divestitures.~~

The financial results for these businesses are ~~presented~~reported as discontinued operations for all periods presented. Unless otherwise noted, discussion within these notes to the Condensed Consolidated Financial Statements ~~relate~~relates to continuing operations. Refer to Note 54 for additional information on discontinued operations.

~~Update to Segment Reporting Structure~~

During the second quarter of 2022, we updated our reportable segment structure following the announcement of the transaction to sell a majority stake in our Industrial Businesses. The Company’s new reporting segment structure is classified based on business model and delivery of performance obligations. The three updated reportable segments (and businesses within each) are as follows:

~~–Application Software~~ ~~- Aderant, CBORD, CliniSys, Data Innovations, Deltek, IntelliTrans, PowerPlan, Strata, Vertafore~~

~~–Network Software~~ ~~- ConstructConnect, DAT, Foundry, iPipeline, iTradeNetwork, Loadlink, MHA, SHP, SoftWriters~~

~~–Technology Enabled Products~~ ~~- CIVCO Medical Solutions, FMI, Inovonics, IPA, Neptune, Northern Digital, rf IDEAS, Verathon~~

~~The day-to-day operations of our businesses, our organizational structure, and our strategy remain unchanged. All prior periods have been recast to reflect the changes noted above.~~

2. Recent Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) establishes changes to accounting principles under GAAP in the form of accounting standards updates (“ASUs”) to the Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs. Any recent ASUs were assessed and determined to be either not applicable or are expected to have an immaterial impact on the Company’s results of operations, financial position or cash flows.

3. Weighted Average Shares Outstanding

Basic earnings per share were calculated using net earnings and the weighted average number of shares of common stock outstanding during the respective period. Diluted earnings per share were calculated using net earnings and the weighted average number of shares of common stock and potential common stock outstanding during the respective period. Potentially dilutive common stock consisted of stock options based upon the trading price of Roper’s common stock. The effects of potential common stock were determined using the treasury stock method.

Weighted average shares outstanding are shown below:


		Three months ended September 30,		Nine months ended September 30,			Three months ended March 31,
		2022	2021	2022	2021			2023	2022
Basic shares outstanding	Basic shares outstanding	106.0	105.4	105.9	105.2	Basic shares outstanding		106.3	105.6
Effect of potential common stock:	Effect of potential common stock:					Effect of potential common stock:
Common stock awards	Common stock awards	0.8	1.3	0.9	1.2	Common stock awards		0.7	1.1
Diluted shares outstanding	Diluted shares outstanding	106.8	106.7	106.8	106.4	Diluted shares outstanding		107.0	106.7

For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, there were ~~0.832 and 0.829~~1.150 outstanding stock options, respectively, that were not included in the determination of diluted earnings per share because doing so would have been antidilutive, as compared to ~~0.502 and 0.530~~0.840 outstanding stock options that would have been antidilutive in the respective ~~2021 periods.~~2022 period.

4. ~~Business Acquisitions and Disposition~~

On January 3, 2022, Roper acquired the outstanding membership interests of Horizon Lab Systems, LLC, a provider of laboratory information management systems in the toxicology, environmental, public health and agricultural markets for an aggregate purchase price of $49.8.

On April 6, 2022, Roper acquired the issued and outstanding shares of Common Cents Systems, Inc. (“ApolloLIMS”) for a purchase price of $25.5, net of cash acquired and debt assumed. ApolloLIMS is a provider of laboratory information management systems in the toxicology and public health markets.

~~Both of these acquisitions have been integrated into our CliniSys business and their results are reported in the Application Software reportable segment.~~

On June 27, 2022, Roper acquired the issued and outstanding shares of MGA Systems Holdings, Inc., (“MGA”) for a purchase price of $180.1, net of cash acquired and debt assumed. MGA is a leading provider of purpose-built insurance software for managing general agents. This acquisition has been integrated into our Vertafore business and its results are reported in the Application Software reportable segment.

On August 19, 2022, Roper acquired substantially all of the assets of viDesktop Inc., (“viGlobal”) for a purchase price of $286.5, net of cash acquired and debt assumed. viGlobal is a leading provider of end-to-end human resources management software used for recruiting and integration, productivity management, resource allocation, performance management, learning and development, and diversity and inclusion to primarily law firms. This acquisition will be operated by and integrated with our Aderant business and its results are reported in the Application Software reportable segment.

During the third quarter of 2022, Roper also completed two business acquisitions, TIP Technologies Inc. and Common Sense Solutions Inc., for an aggregate purchase price of $36.9 which will be operated by and integrated with our Deltek business and their results are reported in the Application Software reportable segment.

The Company recorded $361.5 in goodwill, $9.5 assigned to trade names that are not subject to amortization and $239.3 of other identifiable intangibles in connection with these acquisitions. The amortizable intangible assets include customer relationships of $223.4 (18.2 year weighted average useful life) and technology of $15.9 (4.9 year weighted average useful life).

The results of operations of the acquired businesses are included in Roper’s Condensed Consolidated Financial Statements since the date of acquisition. Pro forma results of operations and the revenue and net income subsequent to the acquisition date has not been presented because the effects of the acquisitions were not material to our financial results.

On October 4, 2022, Roper completed its previously announced acquisition of Frontline Technologies Parent, LLC, a Delaware limited liability company and the parent company of Frontline Technologies (“Frontline Education”), pursuant to an Equity Purchase and Merger Agreement dated as of August 30, 2022 for a purchase price of $3,738, net of cash acquired and debt assumed. Frontline Education is a leading provider of school administration software, connecting solutions for human capital management, student and special programs, and business operations with powerful analytics to empower educators. Frontline Education will be reported in the Application Software reportable segment beginning in the fourth quarter of 2022. Roper funded the transaction using its cash on hand and revolving credit facility.

~~Disposition~~

On March 17, 2021, Roper completed the sale of a minority investment in Sedaru, Inc. for $27.1. The pretax gain on the sale was $27.1, which is reported in “Other income (expense), net” in the Condensed Consolidated Statements of Earnings.

5. Discontinued Operations

The Company concluded that ~~both~~ the 2021 Divestitures and the sale of ~~the Industrial Businesses~~a majority 51% stake in Indicor each represented a strategic shift that ~~will have~~had a major effect on the Company’s operations and financial results. ~~These transactions will greatly reduce the cyclicality and asset intensity of the Company. In addition, the Company will have an improved recurring revenue and higher margin profile.~~ Accordingly, the financial results related to ~~the 2021 Divestitures and Industrial Businesses~~these transactions are presented in the Condensed Consolidated Financial Statements as discontinued operations for all periods presented. Current and non-current assets and liabilities of the 2021 Divestitures and Industrial Businesses are presented in the Condensed Consolidated Balance Sheets as assets and liabilities of discontinued operations classified as held for sale for both periods presented, as applicable.

~~2021 Divestitures -~~ ~~During 2021,~~The following transactions closed in the ~~Company signed definitive agreements to divest our TransCore, Zetec and CIVCO Radiotherapy businesses as described below.~~first quarter of 2022:

•On March 17, 2022, Roper closed on the divestiture of our TransCore business to an affiliate of Singapore Technologies Engineering Ltd., for approximately $2,680.0 in cash. The sale resulted in a pretax gain of $2,073.7 and income tax expense of $550.5, which are reported within ~~“Gain/(loss)~~“Gain on disposition of discontinued operations, net of tax” in the Condensed Consolidated Statements of Earnings. TransCore was previously included in the historical Network Software & Systems reportable segment.

•On January 5, 2022, Roper closed on the divestiture of our Zetec business to Eddyfi NDT Inc. for approximately $350.0 in cash. The sale resulted in a pretax gain of $255.3 and income tax expense of $60.9, which are reported within ~~“Gain/(loss)~~“Gain on disposition of discontinued operations, net of tax” in the Condensed Consolidated Statements of Earnings. Zetec was previously included in the historical Process Technologies reportable segment.

•On November 1, 2021, Roper closed the divestiture of our CIVCO Radiotherapy business to an affiliate of Blue Wolf Capital Partners LLC. CIVCO Radiotherapy business was previously included in the historical Measurement & Analytical Solutions reportable segment.

1110

The following table summarizes the major classes of assets and liabilities related to the discontinued operations of the TransCore, Zetec and CIVCO Radiotherapy businesses, as reported in the Condensed Consolidated Balance Sheets at December 31, 2021:


	~~December 31, 2021~~
~~Accounts receivable, net~~	$	~~74.7~~
~~Inventories, net~~	~~47.8~~
~~Unbilled receivables~~	~~158.2~~

~~Goodwill~~	~~405.5~~
~~Other intangible assets, net~~	~~31.0~~
~~Other current assets~~	~~71.4~~
~~Current assets held for sale~~	$	~~788.6~~






~~Accounts payable~~	$	~~40.3~~
~~Accrued compensation~~	~~27.0~~
~~Deferred taxes~~	~~29.5~~
~~Other current liabilities~~	~~62.3~~
~~Current liabilities held for sale~~	$	~~159.1~~

The following table summarizes the major classes of revenue and expenses constituting net income from discontinued operations attributable to the TransCore ~~Zetec~~ and ~~CIVCO Radiotherapy~~Zetec businesses:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Net revenues $ — $ 158.6 $ 100.4 $ 472.1
Cost of sales — 91.3 71.2 280.2
Gross profit — 67.3 29.2 191.9
Selling, general and administrative expenses (1)
— 25.6 19.9 87.8
Income from operations — 41.7 9.3 104.1
Other income (expense), net — 0.2 0.1 1.4
Earnings before income taxes (2)
— 41.9 9.4 105.5
Income taxes — 12.2 (6.2) 23.4
Earnings from discontinued operations, net of tax — 29.7 15.6 82.1
Gain on disposition of discontinued operations, net of tax 1.1 — 1,707.7 —
Net earnings from discontinued operations $ 1.1 $ 29.7 $ 1,723.3 $ 82.1


	Three Months Ended March 31,
		2022
Net revenues		$	100.4
Cost of sales		71.2
Gross profit		29.2

Selling, general and administrative expenses (1)		19.9
Income from operations		9.3

Other income, net		0.1

Earnings before income taxes		9.4

Income taxes		(6.2)

Earnings from discontinued operations, net of tax		15.6

Gain on disposition of discontinued operations, net of tax (2)		1,717.3

Net earnings from discontinued operations		$	1,732.9

(1) Includes stock-based compensation expense of ~~$1.4 for the three months ended September 30, 2021, and $0.9 and $3.2 for the nine months ended September 30, 2022 and 2021, respectively.~~$0.9. Stock-based compensation for discontinued operations was previously reported as a component of unallocated corporate general and administrative expenses. ~~In connection with the sale of TransCore and Zetec, we recognized~~

(2) Includes expense of $4.5 associated with accelerated vesting of share-based awards for the nine months ended September 30, 2022. The charges associated with accelerated vesting were recorded as a component of “Gain on disposition of discontinued operations, net of tax” within the Condensed Consolidated Statements of Earnings.awards.

~~(2)~~ During the three and nine months ended September 30, 2022, there was no depreciation of property, plant and equipment or amortization of intangible assets given the asset classification as held for sale during the period. During the three and nine months ended September 30, 2021 depreciation and amortization was $1.7 and $5.2, respectively.

1211

~~Industrial Businesses~~Indicor - On ~~May 29,~~November 22, 2022, Roper ~~entered into~~completed the divestiture of a ~~definitive agreement to sell a~~majority 51% ~~majority~~ stake in ~~the Industrial Businesses~~Indicor to ~~affiliates of~~ Clayton, Dubilier & Rice, LLC (“CD&R”). In connection with the transaction, Roper ~~will receive total upfront, pre-tax cash proceeds of approximately $2,600 while retaining a~~retained an initial 49% minority equity interest in a new standalone entity, RIPIC Equity LLC (“RIPIC TopCo”). Roper will receive a distribution of $1,775 from RIPIC TopCo, which will be funded by third-party indebtedness of $1,950 on RIPIC TopCo, and $829 of purchase price proceeds related to the 51% majority stake obtained by CD&RIndicor (described further in RIPIC TopCo. In addition, Roper shall be entitled to an earnout payment from CD&R of up to $51 million if RIPIC TopCo exceeds a threshold level of earnings before interest, taxes, depreciation and amortization for the year ended December 31, 2022. Roper will also be required to make quarterly payments, directly or indirectly to CD&R, either (i) in cash, with total payments initially equaling approximately $29 million per year on a pre-tax basis, or (ii) in kind through the transfer of Roper’s equity interests in RIPIC TopCo to CD&R, initially representing approximately a 1.7% ownership interest of RIPIC TopCo on an annual basis.Note 8).

~~The transaction, which is expected to close in the fourth quarter of 2022, is subject to customary closing conditions, including regulatory approvals.~~

The following table summarizes the major classes of assets and liabilities related to the discontinued operations of the Industrial Businesses, as reported in the Condensed Consolidated Balance Sheets:

September 30,
2022 (1)
December 31,
2021
Accounts receivable, net $ 163.0 $ 151.8
Inventories, net 146.2 106.9
Deferred taxes 45.3 —
Goodwill 569.0 —
Other intangible assets, net 69.3 —
Other current assets 101.9 30.7
Current assets held for sale $ 1,094.7 $ 289.4
Goodwill — 618.2
Other intangible assets, net — 79.4
Deferred taxes — 51.1
Other assets — 56.2
Assets held for sale $ — $ 804.9
Accounts payable $ 64.7 $ 52.5
Accrued compensation 39.0 47.9
Deferred revenue 19.7 23.9
Deferred taxes 12.7 —
Income taxes payable 10.1 14.7
Operating lease liabilities 34.4 —
Other current liabilities 39.8 42.0
Current liabilities held for sale $ 220.4 $ 181.0
Deferred taxes $ — $ 13.3
Noncurrent operating lease liabilities — 24.1
Other liabilities — 12.0
Liabilities held for sale $ — $ 49.4

~~(1)~~ ~~All assets and liabilities held for sale were classified as current as it is probable the sale of the Industrial Businesses will be completed within one year.~~

The following table summarizes the major classes of revenue and expenses constituting net income from discontinued operations attributable to ~~the Industrial Businesses:~~Indicor:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022 (1)
Net revenues	Net revenues	$	269.0	$	230.7	$	770.9	$	688.3	Net revenues		$	—	$	246.8
Cost of sales	Cost of sales	126.3		106.3		361.6		316.1		Cost of sales		—		113.9
Gross profit	Gross profit	142.7		124.4		409.3		372.2		Gross profit		—		132.9

Selling, general and administrative expenses ~~(1)~~	Selling, general and administrative expenses ~~(1)~~	78.9		67.8		213.4		193.3		Selling, general and administrative expenses ~~(1)~~		1.2		67.7
Income from operations	Income from operations	63.8		56.6		195.9		178.9		Income from operations		(1.2)		65.2

Other income (expense), net		2.5		0.4		3.6		(0.1)
Other income, net										Other income, net		—		0.2

Earnings before income taxes (2)		66.3		57.0		199.5		178.8
Earnings (loss) before income taxes										Earnings (loss) before income taxes		(1.2)		65.4

Income taxes	Income taxes	17.3		8.0		44.8		34.3		Income taxes		—		14.2

Earnings from discontinued operations, net of tax		$	49.0	$	49.0	$	154.7	$	144.5
Earnings (loss) from discontinued operations, net of tax										Earnings (loss) from discontinued operations, net of tax		$	(1.2)	$	51.2

(1) ~~Certain costs~~Includes depreciation and amortization expense of $3.9 and stock-based compensation expense of $2.9. Stock-based compensation was previously reported as a component of unallocated corporate general and administrative expenses have been reclassified to discontinued operations. These costs primarily include stock-based compensation expense of $2.6 and $3.4 for the three months ended September 30, 2022 and 2021, respectively, and $8.1 and $9.4 for the nine months ended September 30, 2022 and 2021, respectively.

~~(2)~~ During the three months ended September 30, 2022, there was no depreciation of property, plant and equipment or amortization of intangible assets given the asset classification as held for sale during the period. There was depreciation and amortization expense of $4.4 for the three months ended September 30, 2021 and $6.4 and $14.2 for the nine months ended September 30, 2022 and 2021, respectively.expenses.

6.5. Stock Based Compensation

The Roper Technologies, Inc. 2021 Incentive Plan is a stock-based compensation plan used to grant incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights or equivalent instruments to Roper’s employees, officers, directors and consultants.

The following table provides information regarding the Company’s stock-based compensation expense:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Stock-based compensation	Stock-based compensation	$	29.6	$	32.0	$	90.8	$	93.5	Stock-based compensation		$	30.2	$	33.0
Tax effect recognized in net earnings from continuing operations	Tax effect recognized in net earnings from continuing operations	6.2		6.7		19.1		19.6		Tax effect recognized in net earnings from continuing operations		5.2		7.0

Stock Options - In the ~~nine~~three months ended ~~September 30, 2022, 0.379~~March 31, 2023, 0.353 options were granted with a weighted average fair value of ~~$115.91~~$128.89 per option. During the same period in ~~2021, 0.513~~2022, 0.365 options were granted with a weighted average fair value of ~~$95.04~~$115.83 per option. All options were issued with an exercise price equal to the closing price of Roper’s common stock on the date of grant, as required by the Company’s stock-based compensation plans.

Roper records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. Historical data is used to estimate the expected price volatility, the expected dividend yield, the expected option life and the expected forfeiture rate. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option.

1412

The following weighted average assumptions were used to estimate the fair value of options granted during current and prior year periods using the Black-Scholes option-pricing model:


		Nine months ended September 30,			Three months ended March 31,
		2022	2021		2023	2022
Risk-free interest rate (%)	Risk-free interest rate (%)	2.09	0.94	Risk-free interest rate (%)	3.73	2.05
Expected option life (years)	Expected option life (years)	5.63	5.61	Expected option life (years)	5.65	5.63
Expected volatility (%)	Expected volatility (%)	24.54	25.15	Expected volatility (%)	26.02	24.52
Expected dividend yield (%)	Expected dividend yield (%)	0.55	0.56	Expected dividend yield (%)	0.64	0.54

Cash received from option exercises for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 was $24.6 and ~~2021 was $80.8 and $81.8,~~$38.7, respectively.

Restricted Stock Grants - During both the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, the Company granted ~~0.239~~0.219 shares with a weighted average grant date fair value of ~~$450.49~~$428.20 and $455.84 per restricted ~~share. During the same period in 2021, the Company granted 0.225 shares with a weighted average grant date fair value of $408.07 per restricted share.~~share, respectively. All grants were issued at grant date fair value.

During the ~~nine~~three months ended ~~September 30, 2022, 0.163~~March 31, 2023, 0.082 restricted shares vested with a weighted average grant date fair value of ~~$345.79~~$376.74 per restricted share and a weighted average vest date fair value of ~~$449.67~~$435.75 per restricted share.

Employee Stock Purchase Plan - Roper’s employee stock purchase plan (“ESPP”) allows employees in the U.S. and Canada to designate up to 10% of eligible earnings to purchase Roper’s common stock at a 10% discount on the lower of the closing price of the stock on the first and last day of each quarterly offering period. Common stock sold to employees pursuant to the ESPP may be either treasury stock, stock purchased on the open market, or newly issued shares.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ participants in the ESPP purchased ~~0.031~~0.012 and ~~0.031~~0.013 shares of Roper’s common stock for total consideration of ~~$11.6~~$4.7 and ~~$11.8,~~$5.5, respectively. All shares were purchased from Roper’s treasury shares.

7.6. Inventories

The components of inventory were as follows:


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Raw materials and supplies	Raw materials and supplies	$	52.9	$	36.4	Raw materials and supplies	$	63.0	$	60.6
Work in process	Work in process	25.3		19.1		Work in process	26.9		24.9
Finished products	Finished products	29.6		18.4		Finished products	32.1		31.3
Inventory reserves	Inventory reserves	(6.8)		(4.7)		Inventory reserves	(7.0)		(5.5)
Inventories, net	Inventories, net	$	101.0	$	69.2	Inventories, net	$	115.0	$	111.3

8.7. Goodwill and Other Intangible Assets

The carrying value of goodwill by segment was as follows:

Application Software Network Software Technology Enabled Products Total
Balances at December 31, 2021 $ 8,889.3 $ 3,655.3 $ 931.7 $ 13,476.3
Additions 361.5 — — 361.5
Other (0.2) (0.7) — (0.9)
Currency translation adjustments (59.6) (102.8) (1.7) (164.1)
Balances at September 30, 2022 $ 9,191.0 $ 3,551.8 $ 930.0 $ 13,672.8


	Application Software		Network Software		Technology Enabled Products		Total
Balances at December 31, 2022	$	11,417.5	$	3,598.3	$	930.3	$	15,946.1


Other	0.1		—		—		0.1
Currency translation adjustments	5.9		10.9		(0.2)		16.6
Balances at March 31, 2023	$	11,423.5	$	3,609.2	$	930.1	$	15,962.8

Other relates primarily to purchase accounting adjustments for ~~acquisitions.~~acquisitions completed in 2022.

1513

Other intangible assets were comprised of:


		Cost		Accumulated amortization		Net book value			Cost		Accumulated amortization		Net book value
Assets subject to amortization:	Assets subject to amortization:							Assets subject to amortization:
Customer related intangibles	Customer related intangibles	$	7,379.6	$	(1,989.8)	$	5,389.8	Customer related intangibles	$	9,300.7	$	(2,437.7)	$	6,863.0
Unpatented technology	Unpatented technology	886.4		(414.6)		471.8		Unpatented technology	954.6		(506.9)		447.7
Software	Software	149.5		(122.4)		27.1		Software	149.0		(134.0)		15.0
Patents and other protective rights	Patents and other protective rights	8.5		(1.0)		7.5		Patents and other protective rights	10.3		(1.2)		9.1
Trade names	Trade names	12.1		(5.6)		6.5		Trade names	9.7		(3.1)		6.6
Assets not subject to amortization:	Assets not subject to amortization:							Assets not subject to amortization:
Trade names	Trade names	606.4		—		606.4		Trade names	689.3		—		689.3

Balances at December 31, 2021		$	9,042.5	$	(2,533.4)	$	6,509.1
Balances at December 31, 2022								Balances at December 31, 2022	$	11,113.6	$	(3,082.9)	$	8,030.7

Assets subject to amortization:	Assets subject to amortization:							Assets subject to amortization:
Customer related intangibles	Customer related intangibles	$	7,500.0	$	(2,289.9)	$	5,210.1	Customer related intangibles	$	9,310.5	$	(2,576.2)	$	6,734.3
Unpatented technology	Unpatented technology	872.7		(475.3)		397.4		Unpatented technology	959.3		(539.4)		419.9
Software	Software	148.5		(130.5)		18.0		Software	149.1		(136.8)		12.3
Patents and other protective rights	Patents and other protective rights	10.3		(1.2)		9.1		Patents and other protective rights	10.3		(1.2)		9.1
Trade names	Trade names	15.8		(8.4)		7.4		Trade names	9.7		(3.8)		5.9
Assets not subject to amortization:	Assets not subject to amortization:							Assets not subject to amortization:
Trade names	Trade names	601.5		—		601.5		Trade names	690.2		—		690.2

Balances at September 30, 2022		$	9,148.8	$	(2,905.3)	$	6,243.5
Balances at March 31, 2023								Balances at March 31, 2023	$	11,129.1	$	(3,257.4)	$	7,871.7

Amortization expense of other intangible assets was ~~$429.7~~$170.4 and ~~$424.3~~$143.3 during the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

An evaluation of the carrying value of goodwill and indefinite-lived intangibles is required to be performed on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. There have been no events or changes in circumstances which indicate an interim impairment review is required in ~~2022.~~2023. The Company will perform the annual analysis during the fourth quarter of ~~2022.~~2023.

~~9. Debt~~8. Fair Value

~~On June 23, 2022,~~Financial assets and liabilities are valued using market prices on active markets (Level 1), less active markets (Level 2) and little or no market activity (Level 3). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from readily available pricing sources for comparable instruments, identical instruments in less active markets, or models using market observable inputs. Level 3 instrument valuations typically reflect management’s estimate of assumptions that market participants would use in pricing the Company elected to exercise its optional redemption rights to redeem all of its outstanding 3.125% Notes due 2022 (the “Notes”) in the original aggregate principal amount of $500.0, and Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as trustee under the indenture governing the Notes (the “Indenture”), issued redemption notices to registered holders of the Notes. The date fixed for the redemption of the Notes was August 15, 2022 (the “Redemption Date”). The Notes were redeemed at 100% of the aggregate principal amount of the Notes, plus accrued and unpaid interest thereon to, but not including, the Redemption Date in accordance with the terms and conditions set forth in the Indenture.

~~On August 15, 2022, $300.0 of 0.450% senior notes due 2022 were repaid at maturity using cash on hand.~~

On July 21, 2022, the Company entered into a new five-year unsecured credit facility (the “Credit Agreement”) among Roper, the financial institutions from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A. and Wells Fargo Bank, N.A., as syndication agents, and Mizuho Bank, Ltd., MUFG Bank, Ltd., PNC Bank, National Association, TD Bank, N.A., Truist Bank and U.S Bank, National Association, as documentation agents, which replaced the existing $3,000.0 unsecured credit facility, dated as of September 2, 2020, as amended. The new facility comprises a five-year $3,500.0 revolving credit facility, which includes availability of up to $150.0 for letters of credit. Loans under the facility will be available in dollars, and letters of credit will be available in dollars and other currencies to be agreed. The Company may also, subject to compliance with specified conditions, request additional term loansasset or ~~revolving credit commitments in an aggregate amount not to exceed $500.0.~~

liability.

1614

The Company will have the right to add foreign subsidiaries as borrowers under the Credit Agreement, subject to the satisfaction of specified conditions. The Company will guarantee the payment and performance by the foreign subsidiary borrowers of their obligations under the Credit Agreement. The Company’s obligations under the Credit Agreement are not guaranteed by any of its subsidiaries. However, the Company has the right, subject to the satisfaction of certain conditions set forth in the Credit Agreement, to cause any of its wholly-owned domestic subsidiaries to become guarantors.

Loans under the Credit Agreement can be borrowed as term SOFR loans or ABR Loans, at the Company’s option. Each term SOFR loan will bear interest at a rate per annum equal to the applicable Adjusted Term SOFR rate plus a spread ranging from 0.795% to 1.300%, as determined by the Company’s senior unsecured long-term debt rating at such time. Based on the Company’s current rating, the spread for SOFR loans would be 0.910%. Each ABR Loan will bear interest at a rate per annum equal to the Alternate Base Rate plus a spread ranging from 0.000% to 0.300%, as determined by the Company’s senior unsecured long-term debt rating at such time. Based on the Company’s current rating, the spread for ABR Loans would be 0.000%.

Outstanding letters of credit issued under the Credit Agreement will be charged a quarterly fee depending on the Company’s senior unsecured long-term debt rating. Based on the Company’s current rating, the quarterly fee would be payable at a rate of 0.910% per annum, plus a fronting fee of 0.125% per annum on the undrawn and unexpired amount of all letters of credit.

Additionally, the Company will pay a quarterly facility fee on the used and unused portions of the revolving credit facility depending on the Company’s senior unsecured long-term debt rating. Based on the Company’s current rating, the quarterly fee would accrue at a rate of 0.090% per annum.

~~Amounts outstanding under the Credit Agreement may be accelerated upon the occurrence of customary events of default. The Credit Agreement requires the Company to maintain a Total~~ Debt ~~to Total Capital Ratio of 0.65 to 1.00 or less. Borrowings under the Credit Agreement are prepayable at Roper’s option at any time in whole or in part without premium or penalty.~~

~~10. Fair Value of Financial Instruments~~

Roper’s debt ~~at September 30, 2022~~ included $6,700 of fixed-rate senior notes with the following fair values:


~~$700 3.650% senior notes due 2023~~			~~691~~
~~$500 2.350% senior notes due 2024~~			~~476~~
~~$300 3.850% senior notes due 2025~~			~~287~~
~~$700 1.000% senior notes due 2025~~			~~621~~
~~$700 3.800% senior notes due 2026~~			~~662~~
~~$700 1.400% senior notes due 2027~~			~~579~~
~~$800 4.200% senior notes due 2028~~			~~748~~
~~$700 2.950% senior notes due 2029~~			~~590~~
~~$600 2.000% senior notes due 2030~~			~~461~~
~~$1,000 1.750% senior notes due 2031~~			~~740~~


Fixed-rate senior notes			Fair Value
Principal Amount	Interest rate	Year of maturity	As of March 31, 2023
$700	3.650%	2023	$	695
$500	2.350%	2024	$	482
$300	3.850%	2025	$	295
$700	1.000%	2025	$	641
$700	3.800%	2026	$	679
$700	1.400%	2027	$	609
$800	4.200%	2028	$	788
$700	2.950%	2029	$	629
$600	2.000%	2030	$	497
$1,000	1.750%	2031	$	803

The fair values of the senior notes are based on the trading prices of each series of notes, which the Company has determined to be Level 2 in the FASB fair value hierarchy.

Indicor Investment - Following the sale of a majority stake in its industrial businesses to CD&R, Roper now holds a minority 48.6% equity interest in Indicor. We elected to apply the fair value option as we believe this is the most reasonable method to value the equity investment. The fair value of Roper’s equity investment in Indicor is updated on a quarterly basis and its impact is reported as "Equity investment activity, net." There was no change in fair value between December 31, 2022 and March 31, 2023.

~~11.~~

The assessment of fair value for the equity investment requires significant judgments to be made by management. Although our assumptions are considered reasonable and are consistent, there is significant judgment applied. Changes in estimates or the application of alternative assumptions could produce significantly different results. The fair value of the investment reflects management’s estimate of assumptions that market participants would use in pricing the equity interest, which the Company has determined to be Level 3 in the FASB fair value hierarchy.

On April 26, 2023, Indicor announced its planned divestiture of its Compressor Controls business unit to Honeywell International Inc. for approximately $670. This transaction will be contemplated in our assessment of the fair value of our equity investment in the second quarter.

9. Contingencies

Roper, in the ordinary course of business, is party to various pending or threatened legal actions, including product liability, intellectual property, antitrust, data privacy and employment practices that, in general, are of a nature consistent with those over the past several years. After analyzing the Company’s contingent liabilities on a gross basis and, based upon past experience with resolution of such legal claims and the availability and limits of the primary, excess, and umbrella liability insurance coverages with respect to pending claims, management believes that adequate provision has been made to cover any potential liability not covered by insurance, and that the ultimate liability, if any, arising from these actions should not have a material adverse effect on Roper’s consolidated financial position, results of operations or cash flows. However, no assurances can be given in this regard.

Roper’s subsidiary, Vertafore, Inc., ~~was~~had been named in three putative class actions, all of which are now dismissed: two in the U.S. District Court for the Southern District of Texas (Allen, et al. v. Vertafore, Inc., Case 4:20-cv-4139, filed December 4, 2020) and Masciotra, et al. v. Vertafore, Inc., (originally filed on December 8, 2020 as Case 1:20-cv-03603 in the U.S. District Court for the District of Colorado and subsequently transferred)), and one in the U.S. District Court for the Northern District of Texas (Mulvey, et al. v. Vertafore, Inc., Case 3:21-cv-00213-E, filed January 31, 2021). In July 2021, the court granted Vertafore’s motion to dismiss the Allen ~~Case. In March 2022,~~Case, with the dismissal affirmed by the U.S. Fifth Circuit Court of Appeals, ~~affirmed the lower court’s dismissal of the Allen case, and in September 2022 the U.S. Supreme Court declined to hear plaintiffs’ appeal,~~ effectively concluding the litigation. In July 2021, the plaintiff in the Masciotra case voluntarily dismissed his action without prejudice. In ~~June 2022, Vertafore filed a~~February 2023, the court granted Vertafore’s motion to dismiss the Mulvey case, ~~on similar grounds as~~and Plaintiff failed to appeal the dismissal ofeffectively concluding the matter. Both the Allen ~~case. The Allen case~~and Mulvey cases purported ~~and the Mulvey case purports~~ to represent approximately 27.7 million individuals who held Texas driver’s licenses prior to February 2019. In November 2020, Vertafore announced that as a result of

human error, three data files were inadvertently stored in an unsecured external storage service that appears to have been accessed without authorization. The files, which included driver information for licenses issued before February 2019, contained Texas driver license numbers, as well as names, dates of birth, addresses and vehicle registration histories. The files did not contain any Social Security numbers or financial account information. ~~Like the Allen case, which is concluded, the Mulvey case seeks~~These cases sought recovery under the Driver’s Privacy Protection Act, 18 U.S.C. § 2721. ~~In addition, Roper was advised that the Texas Attorney General is investigating the data event.~~As set forth above, all of these matters have now been dismissed.

Roper’s subsidiary, Verathon, Inc. (“Verathon”), ~~is defending~~was a defendant in a patent infringement action pending in the United States District Court for the Western District of Washington (Berall v. Verathon, Inc., Case No. 2:2021mc00043). ~~Plaintiff claims~~The plaintiff claimed that video laryngoscopes and certain accessories sold by Verathon and other manufacturers from approximately ~~2006~~2004 through 2016 ~~infringe~~infringed U.S. Patent 5,827,178 (the ~~“‘178~~“178 Patent”). ~~The complaint seeks an unspecified amount of damages, enhanced damages, attorneys’ fees, costs,~~Verathon and ~~pre-~~the plaintiff agreed to settle the matter for $45.0 which was fully concluded and ~~post-judgment interest. The allegations~~cash settled in the complaint are not covered by insurance. Verathon contends that the products at issue do not infringe the ‘178 Patent and that the ‘178 Patent is invalid. Verathon is vigorously defending the matter. Trial is currently scheduled forfirst quarter of 2023.

Roper or our subsidiaries have been named defendants along with numerous industrial companies in asbestos-related litigation claims in certain U.S. states. To date, no significant resources have been required by Roper to respond to asbestos claims. In the first quarter of 2022, Roper completed a transaction in which it transferred the remainder of our exposure for asbestos claims to a third party. In connection with this transaction, Roper incurred a one-time charge of $4.1, which is recorded as a component of “Other income (expense), net” within the Condensed Consolidated Statements of Earnings for the nine months ended September 30, 2022.

~~12.~~10. Business Segments

The following table presents selected financial information by reportable segment:


		Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
		2022		2021		Change %		2022		2021		Change %			2023		2022		Change %
Net revenues:	Net revenues:													Net revenues:
Application Software	Application Software	$	644.0	$	600.2	7.3	%	$	1,899.7	$	1,761.2	7.9	%	Application Software	$	761.4	$	628.2	21.2	%
Network Software	Network Software	346.6		316.0		9.7	%	1,028.0		901.3		14.1	%	Network Software	354.5		338.5		4.7	%
Technology Enabled Products	Technology Enabled Products	359.7		315.9		13.9	%	1,013.2		914.7		10.8	%	Technology Enabled Products	353.8		313.1		13.0	%

Total	Total	$	1,350.3	$	1,232.1	9.6	%	$	3,940.9	$	3,577.2	10.2	%	Total	$	1,469.7	$	1,279.8	14.8	%
Gross profit:	Gross profit:													Gross profit:
Application Software	Application Software	$	440.2	$	418.5	5.2	%	$	1,306.5	$	1,223.0	6.8	%	Application Software	$	520.5	$	435.4	19.5	%
Network Software	Network Software	293.9		267.5		9.9	%	867.9		757.1		14.6	%	Network Software	299.4		284.9		5.1	%
Technology Enabled Products	Technology Enabled Products	207.7		185.7		11.8	%	576.1		547.1		5.3	%	Technology Enabled Products	198.7		176.9		12.3	%

Total	Total	$	941.8	$	871.7	8.0	%	$	2,750.5	$	2,527.2	8.8	%	Total	$	1,018.6	$	897.2	13.5	%
Operating profit*:	Operating profit*:													Operating profit*:
Application Software	Application Software	$	173.8	$	164.2	5.8	%	$	511.4	$	471.2	8.5	%	Application Software	$	193.2	$	172.3	12.1	%
Network Software	Network Software	148.1		126.5		17.1	%	422.0		343.3		22.9	%	Network Software	147.5		136.8		7.8	%
Technology Enabled Products	Technology Enabled Products	126.5		104.1		21.5	%	337.6		312.0		8.2	%	Technology Enabled Products	115.5		99.7		15.8	%

Total	Total	$	448.4	$	394.8	13.6	%	$	1,271.0	$	1,126.5	12.8	%	Total	$	456.2	$	408.8	11.6	%
Long-lived assets:	Long-lived assets:													Long-lived assets:
Application Software	Application Software	$	145.1	$	129.8	11.8	%							Application Software	$	153.3	$	135.8	12.9	%
Network Software	Network Software	27.6		25.0		10.4	%							Network Software	30.7		26.2		17.2	%
Technology Enabled Products	Technology Enabled Products	26.9		26.2		2.7	%							Technology Enabled Products	29.2		27.0		8.1	%

Total	Total	$	199.6	$	181.0	10.3	%							Total	$	213.2	$	189.0	12.8	%

*Segment operating profit is before unallocated corporate general and administrative and enterprise-wide stock-based compensation expenses. These expenses were $55.2 and ~~$47.9~~$52.9 for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $159.0 and $145.8 for the nine months ended September 30, 2022 and 2021,~~ respectively.

1916

~~13.~~11. Revenues from Contracts

Disaggregated Revenue - We disaggregate our revenues by reportable segment into four categories: (i) recurring revenue comprised of ~~SaaS~~Software-as-a-Service (“SaaS”) licenses and software maintenance; (ii) reoccurring revenue comprised of transactional and volume-based fees related to software licenses; (iii) non-recurring revenue comprised of term and perpetual software licenses, professional services associated with software products and hardware sold with our software licenses; and (iv) product revenue. See details in the table below.


		Three months ended September 30, 2022								Three months ended September 30, 2021									Three months ended March 31, 2023								Three months ended March 31, 2022
		Application Software		Network Software		Technology Enabled Products		Total		Application Software		Network Software		Technology Enabled Products		Total			Application Software		Network Software		Technology Enabled Products		Total		Application Software		Network Software		Technology Enabled Products		Total
Revenue Stream	Revenue Stream																	Revenue Stream
Software related	Software related																	Software related
Recurring	Recurring	$	471.1	$	247.5	$	3.2	$	721.8	$	431.3	$	213.4	$	2.1	$	646.8	Recurring	$	580.6	$	255.9	$	3.8	$	840.3	$	461.5	$	237.2	$	2.6	$	701.3
Reoccurring	Reoccurring	30.0		62.0		—		92.0		28.9		68.4		—		97.3		Reoccurring	35.4		64.2		—		99.6		31.7		60.5		—		92.2
Non-recurring	Non-recurring	142.9		37.1		0.3		180.3		140.0		34.2		0.1		174.3		Non-recurring	145.4		34.4		0.4		180.2		135.0		40.8		0.3		176.1
Total Software Revenues	Total Software Revenues	644.0		346.6		3.5		994.1		600.2		316.0		2.2		918.4		Total Software Revenues	761.4		354.5		4.2		1,120.1		628.2		338.5		2.9		969.6

Product Revenue	Product Revenue	—		—		356.2		356.2		—		—		313.7		313.7		Product Revenue	—		—		349.6		349.6		—		—		310.2		310.2
Total Revenue	Total Revenue	$	644.0	$	346.6	$	359.7	$	1,350.3	$	600.2	$	316.0	$	315.9	$	1,232.1	Total Revenue	$	761.4	$	354.5	$	353.8	$	1,469.7	$	628.2	$	338.5	$	313.1	$	1,279.8

Nine months ended September 30, 2022 Nine months ended September 30, 2021
Application Software Network Software Technology Enabled Products Total Application Software Network Software Technology Enabled Products Total
Revenue Stream
Software related
Recurring $ 1,390.5 $ 729.2 $ 8.6 $ 2,128.3 $ 1,272.4 $ 612.8 $ 5.5 $ 1,890.7
Reoccurring 90.3 184.5 — 274.8 82.5 186.6 — 269.1
Non-recurring 418.9 114.3 0.9 534.1 406.3 101.9 0.5 508.7
Total Software Revenues 1,899.7 1,028.0 9.5 2,937.2 1,761.2 901.3 6.0 2,668.5
Product Revenue — — 1,003.7 1,003.7 — — 908.7 908.7
Total Revenue $ 1,899.7 $ 1,028.0 $ 1,013.2 $ 3,940.9 $ 1,761.2 $ 901.3 $ 914.7 $ 3,577.2

Remaining performance obligations - Remaining performance obligations represent the transaction price of firm orders for which work has not been performed and excludes unexercised contract options. As of ~~September 30, 2022,~~March 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was ~~$3,621.1.~~$4,203.0. We expect to recognize revenue of ~~$2,420.9,~~$2,872.5, or approximately ~~67%~~68% of our remaining performance obligations over the next 12 months (“Backlog”), with the remainder to be recognized thereafter.

Contract balances


Balance Sheet Account	Balance Sheet Account	September 30, 2022		December 31, 2021		Change		Balance Sheet Account	March 31, 2023		December 31, 2022		Change
Unbilled receivables	Unbilled receivables	$	98.8	$	81.9	$	16.9	Unbilled receivables	$	100.9	$	91.5	$	9.4
Deferred revenue - current	Deferred revenue - current	(1,048.8)		(1,106.3)		57.5		Deferred revenue - current	(1,303.8)		(1,370.7)		66.9
Deferred revenue - non-current (1)	Deferred revenue - non-current (1)	(89.0)		(69.9)		(19.1)		Deferred revenue - non-current (1)	(121.4)		(111.5)		(9.9)
Net contract assets/(liabilities)	Net contract assets/(liabilities)	$	(1,039.0)	$	(1,094.3)	$	55.3	Net contract assets/(liabilities)	$	(1,324.3)	$	(1,390.7)	$	66.4

(1) The non-current portion of deferred revenue is included in “Other liabilities” in our Condensed Consolidated Balance Sheets.

The change in our net contract assets/(liabilities) from December 31, ~~2021~~2022 to ~~September 30, 2022~~March 31, 2023 was due primarily to the timing of payments and invoicing relating to ~~Software-as-a-Service (“SaaS”)~~SaaS and post contract support (“PCS”) ~~renewals, and~~contracts, driven largely by the ~~increase~~renewal cycle of our Frontline business which primarily occurs in ~~unbilled receivables due to~~ the ~~timing of invoicing primarily related to software milestone billings associated with multi-year term license renewals and software implementations.~~third quarter.

Most of the Company’s project-based contracts where the input method of revenue recognition is utilized are billed as work progresses in accordance with the contract terms and conditions, either at periodic intervals or upon achievement of certain milestones. Often this results in unbilled receivables where billing occurs after revenue recognition. The Company records deferred revenue when cash payments are received or due in advance of the Company’s performance relating primarily to SaaS and PCS renewals. Revenue recognized from the deferred revenue balance on December 31, 2022 and 2021 was $589.9 and ~~2020 was $181.5 and $153.9~~$489.3 for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $958.2 and $858.3 for the nine months ended September 30, 2022 and 2021,~~ respectively.

In order to determine revenues recognized in the period, we allocate revenue to the individual deferred revenue balance outstanding at the beginning of the year until the revenue exceeds that balance.

The current and non-current portions of deferred commissions are included in “Other current assets” and “Other assets,” respectively, in our Condensed Consolidated Balance Sheets. At ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we had ~~$59.8~~$64.5 and ~~$56.7~~$64.8 of total deferred commissions, respectively.

2117

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on form 10-K for the year ended December 31, ~~2021~~2022 (“Annual Report”) as filed on February ~~22, 2022~~27, 2023 with the U.S. Securities and Exchange Commission (“SEC”) and the Notes to Condensed Consolidated Financial Statements included elsewhere in this report.

Information About Forward-Looking Statements

This report includes “forward-looking statements” within the meaning of the federal securities laws. In addition, we, or our executive officers on our behalf, may from time to time make forward-looking statements in reports and other documents we file with the SEC or in connection with oral statements made to the press, potential investors or others. All statements that are not historical facts are “forward-looking statements.” Forward-looking statements may be indicated by words or phrases such as “anticipate,” “estimate,” “plans,” “expects,” “projects,” “should,” “will,” “believes” or “intends” and similar words and phrases. These statements reflect management’s current beliefs and are not guarantees of future performance. They involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in any forward-looking statement. Such risks and uncertainties include any ongoing impacts of the COVID-19 pandemic on our business, operations, financial results and liquidity, which will depend on numerous evolving factors that we cannot accurately predict or assess, including: ~~the duration and scope of the pandemic, new variants of the virus and the distribution and efficacy of vaccines; the impact of vaccine mandates on our workforce in certain jurisdictions;~~ any negative impact on global and regional markets, economies and economic ~~activity; actions governments, businesses and individuals take in response to the pandemic; the effects of the pandemic, including all of the foregoing, on~~activity, our ~~employees,~~ customers, suppliers, and business partners, and how quickly and whether economies and demand for our products and services ~~recover following the pandemic.~~recover.

Examples of forward-looking statements in this report include but are not limited to statements regarding operating results, the success of our operating plans, our expectations regarding our ability to generate cash and reduce debt and associated interest expense, profit and cash flow expectations, the prospects for newly acquired businesses to be integrated and contribute to future growth and our expectations regarding growth through ~~acquisitions and the ability to complete announced divestitures.~~acquisitions. Important assumptions relating to the forward-looking statements include, among others, demand for our products, the cost, timing and success of product upgrades and new product introductions, raw material costs, expected pricing levels, expected outcomes of pending litigation, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include but are not limited to:

•general economic conditions;

•difficulty making acquisitions and successfully integrating acquired businesses;

•any unforeseen liabilities associated with future acquisitions;

•~~limitations on our business imposed by our indebtedness;~~

•~~unfavorable changes in foreign exchange rates;~~

•failure to effectively mitigate cybersecurity threats, including any litigation arising therefrom;

•failure to comply with new data privacy laws and regulations, including any litigation arising therefrom;

•~~difficulties associated with exports/imports and risks of changes to tariff rates;~~

•risks and costs associated with our international sales and operations;

•rising interest rates;

•~~product liability and insurance risks;~~limitations on our business imposed by our indebtedness;

•~~increased warranty exposure;~~product liability, litigation, and insurance risks;

•future competition;

•the cyclical nature of some of our markets;

•reduction of business with large customers;

•risks associated with government contracts;

•changes in the supply of, or price for, labor, energy, raw materials, parts and components, including as a result of impacts from the current inflationary environment, ~~ongoing~~ supply chain constraints or additional or ongoing ~~outbreaks~~impacts of ~~COVID-19;~~

•~~environmental compliance costs and liabilities;~~the COVID-19 pandemic;

•potential write-offs of our goodwill and other intangible assets;

•our ability to successfully develop new products;

•failure to protect our intellectual property;

22•unfavorable changes in foreign exchange rates;

•difficulties associated with exports/imports and risks of changes to tariff rates;

•increased warranty exposure;

•environmental compliance costs and liabilities;

•the effect of, or change in, government regulations (including tax);

•economic disruption caused by armed conflicts (such as the war in Ukraine), terrorist attacks, health crises (such as the COVID-19 pandemic) or other unforeseen geopolitical events; and

•the factors discussed in other reports we file with the SEC from time to time.

You should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update any of these statements in light of new information or future events.

Overview

Roper is a diversified technology company. Roper has a proven, long-term, successful track record of compounding cash flow and shareholder value. We operate market leading businesses that design and develop vertical software and technology enabled products for a variety of defensible niche markets.

We pursue consistent and sustainable growth in revenue, earnings and cash flow by ~~emphasizing~~enabling continuous improvement in the operating performance of our ~~businesses. In addition,~~businesses and by acquiring other businesses that offer high value-added software, services, technology-enabled products and solutions that we ~~utilize a disciplined, analytical~~believe are capable of achieving growth and ~~process-driven approach to redeploy our excess free cash flow toward high-quality acquisitions.~~maintaining high margins.

Discontinued Operations

~~During 2021, the Company signed definitive agreements to divest our TransCore, Zetec and CIVCO Radiotherapy businesses~~ (“~~2021 Divestitures”~~Indicor” or “Indicor Transaction”). ~~As of March 31, 2022, Roper had completed the 2021 Divestitures.~~

The financial results offor these businesses are ~~presented~~reported as discontinued operations ~~and certain prior period amounts have been reclassified~~for all periods presented. Unless otherwise noted, discussion within these notes to ~~conform to current period presentation. Information regarding discontinued operations is included in Note 5 of~~ the ~~Notes to~~ Condensed Consolidated Financial ~~Statements.~~

~~Update~~Statements relates to ~~Segment Reporting Structure~~

~~During the second quarter of 2022, we updated our reportable segment structure following the announcement of the transaction~~continuing operations. Refer to ~~sell a majority stake in our Industrial Businesses. The Company’s new reporting segment structure is classified based~~Note 4 for additional information on ~~business model and delivery of performance obligations. The three updated reportable segments (and businesses within each) are as follows:~~

~~–Application Software~~ ~~- Aderant, CBORD, CliniSys, Data Innovations, Deltek, IntelliTrans, PowerPlan, Strata, Vertafore~~

~~–Network Software~~ ~~- ConstructConnect, DAT, Foundry, iPipeline, iTradeNetwork, Loadlink, MHA, SHP, SoftWriters~~

~~–Technology Enabled Products~~ ~~- CIVCO Medical Solutions, FMI, Inovonics, IPA, Neptune, Northern Digital, rf IDEAS, Verathon~~

~~The day-to-day operations of our businesses, our organizational structure, and our strategy remain unchanged. All prior periods have been recast to reflect the changes noted above.~~discontinued operations.

Critical Accounting Policies

There were no material changes during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 to the items that we disclosed as our critical accounting policies and estimates in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

Recently Issued Accounting Standards

Information regarding new accounting pronouncements is included in Note 2 of the Notes to Condensed Consolidated Financial Statements.

~~Impact of COVID-19 on our Business~~

The extent to which the COVID-19 pandemic impacts our business, results of operations and financial condition will depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the duration and spread of the outbreak and its severity, the actions to contain the virus and its variants including the distribution, administration and efficacy of available vaccines, the impact of vaccine mandates on our workforce, and how quickly and to what extent normal economic and operating conditions can resume. As a result of the effects of the COVID-19 global pandemic our ability to obtain products or services from certain suppliers and to operate at certain locations has been and could again in the future be impacted. If COVID-19 and its variants continue to spread, particularly in countries with low vaccination rates, certain countries may experience more severe and lasting impacts from the pandemic. To the extent we have operations and/or customers in these countries, we may experience adverse impacts on our businesses located in such countries.

2419

Results of Continuing Operations

All currency amounts are in millions, percentages are of net revenues

Percentages may not sum due to rounding.

The following table sets forth selected information for the periods indicated.


		Three months ended September 30,						Nine months ended September 30,							Three months ended March 31,
		2022			2021			2022			2021					2023			2022
Net revenues:	Net revenues:													Net revenues:
Application Software	Application Software	$	644.0		$	600.2		$	1,899.7		$	1,761.2		Application Software		$	761.4		$	628.2
Network Software	Network Software	346.6			316.0			1,028.0			901.3			Network Software		354.5			338.5
Technology Enabled Products	Technology Enabled Products	359.7			315.9			1,013.2			914.7			Technology Enabled Products		353.8			313.1

Total	Total	$	1,350.3		$	1,232.1		$	3,940.9		$	3,577.2		Total		$	1,469.7		$	1,279.8
Gross margin:	Gross margin:													Gross margin:
Application Software	Application Software	68.4		%	69.7		%	68.8		%	69.4		%	Application Software		68.4		%	69.3		%
Network Software	Network Software	84.8			84.7			84.4			84.0			Network Software		84.5			84.2
Technology Enabled Products	Technology Enabled Products	57.7			58.8			56.9			59.8			Technology Enabled Products		56.2			56.5

Total	Total	69.7			70.7			69.8			70.6			Total		69.3			70.1
Selling, general and administrative expenses:	Selling, general and administrative expenses:													Selling, general and administrative expenses:
Application Software	Application Software	41.4		%	42.4		%	41.9		%	42.7		%	Application Software		43.0		%	41.9		%
Network Software	Network Software	42.1			44.6			43.4			45.9			Network Software		42.8			43.8
Technology Enabled Products	Technology Enabled Products	22.6			25.9			23.5			25.7			Technology Enabled Products		23.5			24.7

Total	Total	36.5			38.7			37.5			39.2			Total		38.3			38.2
Segment operating margin:	Segment operating margin:													Segment operating margin:
Application Software	Application Software	27.0		%	27.4		%	26.9		%	26.8		%	Application Software		25.4		%	27.4		%
Network Software	Network Software	42.7			40.0			41.1			38.1			Network Software		41.6			40.4
Technology Enabled Products	Technology Enabled Products	35.2			33.0			33.3			34.1			Technology Enabled Products		32.6			31.8

Total	Total	33.2			32.0			32.3			31.5			Total		31.0			31.9
Corporate administrative expenses	Corporate administrative expenses	(4.1)			(3.9)			(4.0)			(4.1)			Corporate administrative expenses		(3.8)			(4.1)
Income from operations	Income from operations	29.1			28.2			28.2			27.4			Income from operations		27.3			27.8
Interest expense, net	Interest expense, net	(3.1)			(4.7)			(3.5)			(5.0)			Interest expense, net		(2.5)			(4.1)

Other income (expense), net		0.3			(0.2)			—			0.7
Equity investment activity, net														Equity investment activity, net		(0.1)			—
Other expense, net														Other expense, net		(0.2)			(0.2)
Earnings before income taxes	Earnings before income taxes	26.3			23.3			24.7			23.1			Earnings before income taxes		24.5			23.5
Income taxes	Income taxes	(5.8)			(6.2)			(6.0)			(5.3)			Income taxes		(5.2)			(5.1)
Net earnings from continuing operations	Net earnings from continuing operations	20.5		%	17.1		%	18.7		%	17.8		%	Net earnings from continuing operations		19.3		%	18.5		%

Three months ended ~~September 30, 2022~~March 31, 2023 compared to three months ended ~~September 30, 2021~~March 31, 2022

Net revenues for the three months ended ~~September 30, 2022~~March 31, 2023 increased by ~~9.6%~~14.8% as compared to the three months ended ~~September 30, 2021.~~March 31, 2022. The components of revenue growth for the three months ended ~~September 30, 2022~~March 31, 2023 were as follows:


		Application Software		Network Software		Technology Enabled Products		Roper			Application Software		Network Software		Technology Enabled Products		Roper
Total Revenue Growth	Total Revenue Growth	7.3	%	9.7	%	13.9	%	9.6	%	Total Revenue Growth	21.2	%	4.7	%	13.0	%	14.8	%
Less Impact of:	Less Impact of:									Less Impact of:
Acquisitions/Divestitures	Acquisitions/Divestitures	2.2		1.2		—		1.4		Acquisitions/Divestitures	16.2		—		—		8.0
Foreign Exchange	Foreign Exchange	(1.7)		(1.9)		(1.2)		(1.6)		Foreign Exchange	(0.9)		(1.3)		(0.7)		(1.1)
Organic Revenue Growth										Organic Revenue Growth	5.9	%	6.0	%	13.7	%	7.9	%

Organic Revenue Growth		6.8	%	10.4	%	15.1	%	9.8	%

In our Application Software segment, revenues were ~~$644.0~~$761.4 in the ~~third quarter of 2022~~three months ended March 31, 2023 as compared to ~~$600.2~~$628.2 in the ~~third quarter of 2021.~~three months ended March 31, 2022. The growth of ~~6.8%~~5.9% in organic revenues was broad-based across the segment led by our businesses serving ~~the acute healthcare,~~government contracting, higher education, legal and property and casualty insurance ~~higher education and government contracting~~ markets. Gross margin decreased to 68.4% in the ~~third quarter of 2022~~three months ended March 31, 2023 as compared to ~~69.7%~~69.3% in the ~~third quarter of 2021~~three months ended March 31, 2022 due primarily to ~~increased~~ headcount to support growth, and a higher mix of SaaS and professional service revenue across a number of businesses. ~~Selling, general~~SG&A expenses increased as a percentage of revenue to 43.0% in the three months ended March 31, 2023 as compared to 41.9% in the three months ended March 31, 2022 due primarily to higher amortization of acquired intangibles from the Frontline acquisition. The resulting operating margin was 25.4% in the three months ended March 31, 2023 as compared to 27.4% in the three months ended March 31, 2022.

In our Network Software segment, revenues were $354.5 in the three months ended March 31, 2023 as compared to $338.5 in the three months ended March 31, 2022. The growth of 6.0% in organic revenues was led by our network software businesses serving the freight match, life insurance and ~~administrative (“~~alternate site healthcare markets. Gross margin increased to 84.5% in the three months ended March 31, 2023 as compared to 84.2% in the three months ended March 31, 2022 due to operating leverage on higher organic revenues. SG~~&A”)~~&A expenses decreased as a percentage of revenues at 42.8% in the three months ended March 31, 2023 as compared to 43.8% in the three months ended March 31, 2022 due to operating leverage on higher organic revenues combined with revenue mix. As a result, operating margin was 41.6% in the three months ended March 31, 2023 as compared to 40.4% in the three months ended March 31, 2022.

In our Technology Enabled Products segment, revenues were $353.8 in the three months ended March 31, 2023 as compared to $313.1 in the three months ended March 31, 2022. The growth of 13.7% in organic revenues was led by our water meter technology and medical products businesses. Gross margin decreased to 56.2% in the three months ended March 31, 2023 as compared to 56.5% in the three months ended March 31, 2022 due primarily to revenue mix partially offset by operating leverage on higher organic sales. SG&A expenses as a percentage of revenues decreased to ~~41.4%~~23.5% in the ~~third quarter of 2022~~three months ended March 31, 2023 as compared to ~~42.4%~~24.7% in the ~~third quarter of 2021~~three months ended March 31, 2022 due primarily to operating leverage on higher organic revenues. The resulting operating margin was ~~27.0%~~32.6% in the ~~third quarter of 2022~~three months ended March 31, 2023 as compared to ~~27.4%~~31.8% in the ~~third quarter of 2021.~~

In our Network Software segment, revenues were $346.6 in the third quarter of 2022 as compared to $316.0 in the third quarter of 2021. The growth of 10.4% in organic revenues was led by our network software businesses serving the freight match, media and entertainment and life insurance markets. Gross margin of 84.8% in the third quarter of 2022 was consistent with 84.7% in the third quarter of 2021. SG&A expenses as a percentage of revenues decreased to 42.1% in the third quarter of 2022 as compared to 44.6% in the third quarter of 2021 due primarily to operating leverage on higher organic revenues. As a result, operating margin was 42.7% in the third quarter of 2022 as compared to 40.0% in the third quarter of 2021.

In our Technology Enabled Products segment, revenues were $359.7 in the third quarter of 2022 as compared to $315.9 in the third quarter of 2021. The growth of 15.1% in organic revenues was primarily due to our water meter technology business and medical products businesses. Gross margin decreased to 57.7% in the third quarter of 2022 as compared to 58.8% in the third quarter of 2021 as operating leverage and price were offset by higher material and freight costs. SG&A expenses as a percentage of revenues decreased to 22.6% in the third quarter of 2022 as compared to 25.9% in the third quarter of 2021 primarily due to operating leverage on higher organic revenues. The resulting operating margin was 35.2% in the third quarter of 2022 as compared to 33.0% in the third quarter of 2021.three months ended March 31, 2022.

Corporate expenses increased to $55.2, or 3.8% of revenues, in the three months ended March 31, 2023 as compared to $52.9, or 4.1% of revenues, in the ~~third quarter of 2022 as compared to $47.9, or 3.9% of revenues, in the third quarter of 2021.~~three months ended March 31, 2022. The dollar increase was due primarily to higher professional ~~service and acquisition related expenses~~services expense partially offset by lower compensation expense.

Net interest expense decreased to ~~$41.3~~$37.4 for the ~~third quarter of 2022~~three months ended March 31, 2023 as compared to ~~$58.2~~$52.6 for the ~~third quarter of 2021~~three months ended March 31, 2022 due to ~~lower weighted average debt balances and~~ higher interest income earned on our cash and cash ~~equivalents.~~equivalents and lower weighted average debt balances.

Equity investment activity, net was $1.2 for the three months ended March 31, 2023 due to non-cash stock compensation runoff expenses for Indicor employees which will not recur.

Other ~~income,~~expense, net, of ~~$3.6~~$2.3 for the ~~third quarter~~three months ended March 31, 2023 was composed primarily of foreign exchange losses at our non-U.S. based subsidiaries. Other expense, net, of $2.1 for the three months ended March 31, 2022 was composed primarily of a one-time charge associated with a transaction to transfer the remainder of our exposure related to asbestos claims within the Indicor parameter to a third party, partially offset by foreign exchange gains at our non-U.S. based subsidiaries. ~~Other expense, net, for the third quarter of 2021 of $2.1 was composed primarily of asset disposals and foreign exchange losses at our non-U.S. based subsidiaries.~~

Income taxes as a percent of pretax earnings ~~decreased to 22.1% in~~were 21.0% for the ~~third quarter of 2022~~three months ended March 31, 2023 as compared to ~~26.4% in~~21.5% for the ~~third quarter of 2021.~~three months ended March 31, 2022. The rate was ~~favorably~~primarily impacted by ~~the recognition of~~an increase in research and development (R&D) tax credit utilization and a ~~net tax~~ benefit ~~related to a reduction in certain state income tax rates.~~from foreign-derived intangible income.

Backlog is equal to our remaining performance obligations expected to be recognized within the next 12 months as discussed in Note 1311 of the Notes to Condensed Consolidated Financial Statements. Backlog increased ~~23%~~17% to ~~$2,420.9~~$2,872.5 at ~~September 30, 2022~~March 31, 2023 as compared to ~~$1,974.2~~$2,455.6 at ~~September 30, 2021.~~March 31, 2022. Organic growth in backlog was ~~21%~~13% and acquisitions contributed 2%5% which was partially offset by foreign exchange impact of 1%.

Backlog as of
September 30,
2022 2021
Application Software $ 1,416.4 $ 1,305.8
Network Software 438.9 403.2
Technology Enabled Products 565.6 265.2
Total $ 2,420.9 $ 1,974.2

~~Nine months ended September 30, 2022 compared to nine months ended September 30, 2021~~

Net revenues for the nine months ended September 30, 2022 increased by 10.2% as compared to the nine months ended September 30, 2021. The components of revenue growth for the nine months ended September 30, 2022 were as follows:

Application Software Network Software Technology Enabled Products Roper
Total Revenue Growth 7.9 % 14.1 % 10.8 % 10.2 %
Less Impact of:
Acquisitions/Divestitures 1.5 1.3 — 1.1
Foreign Exchange (1.2) (1.1) (0.8) (1.1)
Organic Revenue Growth 7.6 % 13.9 % 11.6 % 10.2 %

In our Application Software segment, revenues were $1,899.7 in the nine months ended September 30, 2022 as compared to $1,761.2 in the nine months ended September 30, 2021. The growth of 7.6% in organic revenues was broad-based across the segment led by our businesses serving property and casualty insurance, government contracting, and acute healthcare markets. Gross margin decreased to 68.8% in the nine months ended September 30, 2022 as compared to 69.4% in the nine months ended September 30, 2021 due primarily to increased headcount to support growth and a higher mix of SaaS and professional services revenue. SG&A expenses decreased as a percentage of revenue to 41.9% in the nine months ended September 30, 2022 as compared to 42.7% in the nine months ended September 30, 2021 due primarily to operating leverage on higher organic revenues. The resulting operating margin was 26.9% in the nine months ended September 30, 2022 as compared to 26.8% in the nine months ended September 30, 2021.

In our Network Software segment, revenues were $1,028.0 in the nine months ended September 30, 2022 as compared to $901.3 in the nine months ended September 30, 2021. The growth of 13.9% in organic revenues was led by our network software businesses serving the freight match, life insurance and media and entertainment markets. Gross margin increased to 84.4% in the nine months ended September 30, 2022 as compared to 84.0% in the nine months ended September 30, 2021 due to favorable revenue mix. SG&A expenses decreased as a percentage of revenues at 43.4% in the nine months ended September 30, 2022 as compared to 45.9% in the nine months ended September 30, 2021 due to operating leverage on higher organic revenues combined with revenue mix. As a result, operating margin was 41.1% in the nine months ended September 30, 2022 as compared to 38.1% in the nine months ended September 30, 2021.

In our Technology Enabled Products segment, revenues were $1,013.2 in the nine months ended September 30, 2022 as compared to $914.7 in the nine months ended September 30, 2021. The growth of 11.6% in organic revenues was primarily due to our water meter technology business and medical products businesses. Gross margin decreased to 56.9% in the nine months ended September 30, 2022 as compared to 59.8% in the nine months ended September 30, 2021 due primarily to higher material, component and freight costs as our businesses navigate the widespread global supply chain challenges and unfavorable revenue mix. SG&A expenses as a percentage of revenues decreased to 23.5% in the nine months ended September 30, 2022 as compared to 25.7% in the nine months ended September 30, 2021 due to operating leverage on higher organic revenues and favorable revenue mix. The resulting operating margin was 33.3% in the nine months ended September 30, 2022 as compared to 34.1% in the nine months ended September 30, 2021.

Corporate expenses increased to $159.0, or 4.0% of revenues, in the nine months ended September 30, 2022 as compared to $145.8, or 4.1% of revenues, in the nine months ended September 30, 2021. The dollar increase was due primarily to higher professional service and acquisition related expenses partially offset by lower compensation expense.

Net interest expense decreased to $138.6 for the nine months ended September 30, 2022 as compared to $178.2 for the nine months ended September 30, 2021 due to lower weighted average debt balances and higher interest income earned on our cash and cash equivalents.

Other income, net, of $0.2 for the nine months ended September 30, 2022 was composed primarily of foreign exchange gains at our non-U.S. based subsidiaries partially offset by a one-time charge associated with a transaction to transfer the remainder of our exposure related to asbestos claims to a third party. Other income, net, of $25.0 for the nine months ended September 30, 2021 was composed primarily of a gain on sale of minority investment.

Income taxes as a percent of pretax earnings were 24.2% for the nine months ended September 30, 2022 as compared to 22.9% for the nine months ended September 30, 2021. The rate was unfavorably impacted by the recognition of a net tax expense associated with an internal restructuring plan related to the pending sale of the Industrial Businesses.


	Backlog as of
	March 31,
	2023		2022
Application Software	$	1,706.3	$	1,567.5
Network Software	523.1		450.4
Technology Enabled Products	643.1		437.7
Total	$	2,872.5	$	2,455.6

Financial Condition, Liquidity and Capital Resources

All currency amounts are in millions

Selected cash flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows:


		Nine months ended September 30,					Three months ended March 31,
Cash provided by/(used in):		2022		2021
Cash provided by (used in):						Cash provided by (used in):	2023		2022
Continuing operations:	Continuing operations:					Continuing operations:
Cash provided by operating activities	Cash provided by operating activities	$	550.2	$	1,142.6	Cash provided by operating activities	$	464.9	$	441.3
Cash used in investing activities	Cash used in investing activities	(634.6)		(35.9)		Cash used in investing activities	(23.6)		(66.1)
Cash used in financing activities	Cash used in financing activities	(1,401.8)		(1,341.2)		Cash used in financing activities	(52.5)		(508.8)
Cash provided by discontinued operations		3,093.6		283.6
Cash provided by (used in) discontinued operations						Cash provided by (used in) discontinued operations	(4.4)		3,026.9

Operating activities - Net cash provided by operating activities from continuing operations ~~decreased~~increased by ~~52%~~5% to ~~$550.2~~$464.9 in the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 as compared to ~~$1,142.6~~$441.3 in the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, due ~~primarily~~ to (i) the timing of cash taxes paid in connection with the 2021 Divestitures, (ii) higher cash taxes associated with changes to Internal Revenue Code Section 174 and (iii) less cash provided by working capital primarily associated with higher incentive compensation payments in the first quarter of 2022 associated with 2021 performance. These cash outflows were partially offset by higher net income from continuing operations net of non-cash expenses. These cash inflows were partially offset by less cash provided by working capital primarily due to the timing of SaaS renewals primarily associated with Frontline and cash payment of $45.0 million related to the settlement of the Berall v. Verathon patent litigation matter.

Investing activities - Cash used in investing activities from continuing operations during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 is primarily due to ~~business acquisitions~~capitalized software expenditures and capital expenditures. Cash used in investing activities from continuing operations during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 was due primarily to ~~capital expenditures and~~ business ~~acquisitions, partially offset by proceeds from the sale of a minority investment.~~acquisitions.

Financing activities - Cash used in financing activities from continuing operations for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 was primarily due to dividend payments. Cash used in financing activities for the three months ended March 31, 2022 was primarily due to ~~repayments on maturities of certain senior notes,~~ repayments on our unsecured credit facility and dividend payments, partially offset by net proceeds from stock based compensation. Cash used in financing activities for the nine months ended September 30, 2021 was primarily due to net repayments on our unsecured credit facility and dividend payments, partially offset by net proceeds from stock based compensation.payments.

Discontinued operations - Cash provided by discontinued operations ~~for~~during the ~~nine~~three months ended ~~September 30,~~March 31, 2022 was primarily due to proceeds received from the sale of TransCore and Zetec slightly offset by less cash provided by discontinued operations which was impacted by the timing of our divestiture activity. Cash provided by discontinued operations during the nine months ended September 30, 2021 was primarily due to net income net of non-cash expenses.Zetec.

Effect of foreign currency exchange rate changes on cash - Cash and cash equivalents decreased during the nine months ended September 30, 2022 by $64.4 due primarily to the strengthening of the U.S. dollar against the functional currencies of our European and United Kingdom subsidiaries. Cash and cash equivalents decreased during the nine months ended September 30, 2021 by $4.9 due primarily to the strengthening of the U.S. dollar against the functional currencies of our European subsidiaries.

2822

Total debt ~~at September 30, 2022~~ consisted of the following:


	~~$700 3.650% senior notes due~~As of March 31, 2023		~~700.0~~
~~$500 2.350%~~Fixed-rate senior notes ~~due 2024~~	~~500.0~~
$~~300 3.850% senior notes due 2025~~	~~300.0~~
~~$700 1.000% senior notes due 2025~~	~~700.0~~
~~$700 3.800% senior notes due 2026~~	~~700.0~~
~~$700 1.400% senior notes due 2027~~	~~700.0~~
~~$800 4.200% senior notes due 2028~~	~~800.0~~
~~$700 2.950% senior notes due 2029~~	~~700.0~~
~~$600 2.000% senior notes due 2030~~	~~600.0~~
~~$1,000 1.750% senior notes due 2031~~	~~1,000.0~~6,700.0
Unsecured credit facility	—
Deferred finance costs	~~(40.9)~~(36.4)
Other	~~0.4~~0.3
Total debt, net of deferred finance costs	~~6,659.5~~6,663.9
Less current portion	~~698.9~~699.5
Long-term debt, net of deferred finance costs	$	~~5,960.6~~5,964.4

The interest rate on borrowings under the $3,500.0 unsecured credit facility is calculated based upon various recognized indices plus a margin as defined in the credit ~~facility which replaced our previous credit facility on July 21, 2022.~~facility. At ~~September 30, 2022,~~March 31, 2023, we had no outstanding borrowings under our unsecured credit facility and ~~$20.8~~$19.1 of outstanding letters of credit.

Cash at our foreign subsidiaries at ~~September 30, 2022~~March 31, 2023 increased to ~~$321~~$277.9 as compared to ~~$311~~$234.0 at December 31, ~~2021~~2022 due primarily to the cash generated at our foreign subsidiaries during the ~~nine~~three months ended ~~September 30, 2022, partially offset by the repatriation of $169 during the nine months ended September 30, 2022.~~March 31, 2023. We intend to repatriate substantially all historical and future earnings.

We expect existing cash balances, together with cash generated by our operations and amounts available under our credit facility, will be sufficient to fund our operating requirements for the foreseeable future.

We were in compliance with all debt covenants related to our unsecured credit facility throughout the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023.

Net working capital (total current assets, excluding cash ~~and current assets held for sale,~~ less total current liabilities, excluding ~~debt and current liabilities held for sale) increased to~~debt) was negative ~~$918.9~~$1,025.3 at ~~September 30, 2022~~March 31, 2023 as compared to negative ~~$990.9~~$1,053.7 at December 31, ~~2021~~2022 primarily driven by ~~a decrease in~~payments for accrued compensation, reduction in deferred revenue due to ~~software renewal~~the timing of Frontline renewals, and ~~greater inventory build in response~~the cash payment related to the ~~widespread global supply chain challenges partially~~settlement of the Berall v. Verathon patent litigation matter which were offset by ~~a decrease~~collections on accounts receivable and an increase in ~~accounts receivable.~~income taxes payable. Total debt, net of deferred finance costs was ~~$6,659.5~~$6,663.9 at ~~September 30, 2022~~March 31, 2023 as compared to ~~$7,921.8~~$6,661.7 at December 31, ~~2021, due primarily to repayments on certain senior notes and net repayments under our unsecured credit facility.~~2022. Our leverage on a continuing operations basis is shown in the following table:


		September 30, 2022			December 31, 2021				March 31, 2023			December 31, 2022
Total debt		$	6,659.5		$	7,921.8
Total debt, net of deferred finance costs								Total debt, net of deferred finance costs	$	6,663.9		$	6,661.7
Cash	Cash	(1,894.5)			(351.5)			Cash	(1,181.6)			(792.8)
Net debt	Net debt	4,765.0			7,570.3			Net debt	5,482.3			5,868.9
Stockholders’ equity	Stockholders’ equity	13,857.8			11,563.8			Stockholders’ equity	16,332.7			16,037.8
Total net capital	Total net capital	$	18,622.8		$	19,134.1		Total net capital	$	21,815.0		$	21,906.7

Net debt / total net capital	Net debt / total net capital	25.6		%	39.6		%	Net debt / total net capital	25.1		%	26.8		%

Capital expenditures were ~~$30.0~~$9.8 for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 as compared to ~~$19.9~~$5.4 for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. Capitalized software expenditures were ~~$21.9~~$9.9 for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 as compared to ~~$22.2~~$7.5 for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. We expect the aggregate of capital expenditures and capitalized software expenditures for the balance of the year to be comparable to prior years as a percentage of revenues.

On June 23, 2022, the Company elected to exercise its optional redemption rights to redeem all of its outstanding 3.125% Notes due 2022 (the “Notes”) in the original aggregate principal amount of $500.0, and Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as trustee under the indenture governing the Notes (the “Indenture”), issued redemption notices to registered holders of the Notes. The date fixed for the redemption of the Notes was August 15, 2022 (the “Redemption Date”). The Notes were redeemed at 100% of the aggregate principal amount of the Notes, plus accrued and unpaid interest thereon to, but not including, the Redemption Date in accordance with the terms and conditions set forth in the Indenture.

~~On August 15, 2022, $300.0 of 0.450% senior notes due 2022 were repaid at maturity using cash on hand.~~

On July 21, 2022, the Company entered into a new five-year unsecured credit facility (the “Credit Agreement”) among Roper, the financial institutions from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A. and Wells Fargo Bank, N.A., as syndication agents, and Mizuho Bank, Ltd., MUFG Bank, Ltd., PNC Bank, National Association, TD Bank, N.A., Truist Bank and U.S Bank, National Association, as documentation agents, which replaced the existing $3,000.0 unsecured credit facility, dated as of September 2, 2020, as amended. The new facility comprises a five-year $3,500.0 revolving credit facility, which includes availability of up to $150.0 for letters of credit. Loans under the facility will be available in dollars, and letters of credit will be available in dollars and other currencies to be agreed. The Company may also, subject to compliance with specified conditions, request additional term loans or revolving credit commitments in an aggregate amount not to exceed $500.0.

Off-Balance Sheet Arrangements

At ~~September 30, 2022,~~March 31, 2023, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Outlook

Current geopolitical and economic uncertainties, including the current inflationary environment, supply chain disruptions and labor ~~shortage,~~shortages, could adversely affect our business prospects. ~~The COVID-19 pandemic has had, and may continue to have, an adverse impact on our business.~~ An armed conflict (such as the ongoing war in Ukraine), significant terrorist attack, other global conflict, or new or ongoing public health crisis (such as the COVID-19 pandemic) could cause changes in world economies that would adversely affect us. It is impossible to isolate each of these potential factor’s future effects on current economic conditions or any of our businesses. It is also impossible to predict with any reasonable degree of certainty what or when any additional events may occur that also would similarly disrupt the economy and have an adverse impact on our businesses.

We maintain an active acquisition program; however, future acquisitions will be dependent on numerous factors and it is not feasible to reasonably estimate if or when any such acquisitions will occur and what the impact will be on our business, financial condition and results of operations. Such acquisitions may be financed by the use of existing credit ~~lines,~~agreements, future cash flows from operations, ~~announced divestitures,~~ future divestitures, the proceeds from the issuance of new debt or equity securities or any combination of these methods, the terms and availability of which will be subject to market and economic conditions generally.

We anticipate that our businesses will generate positive cash flows from operating activities, and that these cash flows will permit the reduction of currently outstanding debt in accordance with the repayment schedule. However, the rate at which we can reduce our debt (and reduce the associated interest expense) will be affected by, among other things, the financing and operating requirements of any new acquisitions, the financial performance of our existing companies and the impact of the ~~COVID-19 pandemic on our business prospects~~aforementioned geopolitical and economic uncertainties and the financial markets generally. None of these factors can be predicted with certainty.

3024

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report. There were no material changes during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023.

ITEM 4. CONTROLS AND PROCEDURES

As required by SEC rules, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q (“Evaluation Date”). This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer. Based on this evaluation as of the Evaluation Date, these officers have concluded that the design and operation of our disclosure controls and procedures are effective.

Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes to our internal controls during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

3125

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information pertaining to legal proceedings can be found in Note 119 of the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q and is incorporated by reference herein.

ITEM 1A. RISK FACTORS

Information regarding risk factors can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Information About Forward-Looking Statements,” in Part 1 - Item 2 of this Form 10-Q and in Part 1 - Item 1A of our ~~2021~~2022 Annual Report on Form 10-K. ~~Other than as supplemented in Item 1A of~~There have been no material changes during the ~~Company’s Quarterly Report on Form 10-Q for the quarter~~three months ended March 31, ~~2022, there have been no other material changes~~2023 to our risk factors previously disclosed in the ~~2021~~2022 Annual Report on Form 10-K.

3226

ITEM 6. EXHIBITS


~~2.1~~						Equity Purchase and Merger Agreement by and among the Company, Roper T2 LLC, Project Franklin Merger Sub LLC, Frontline Technologies Parent LLC, Roper Operations Company II LLC, the Blocker Sellers and the Representative, dated as of August 30, 2022 (incorporated herein by reference to Exhibit 2.1 to the Roper Technologies, Inc. Current Report on Form 8-K filed August 30, 2022).*

~~10.1~~						Credit Agreement dated as of July 21, 2022, among Roper, the foreign subsidiary borrowers from time to time party thereto, the financial institutions party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A. and Wells Fargo Bank, N.A., as syndication agents, and Mizuho Bank, Ltd., MUFG Bank, Ltd., PNC Bank, National Association, TD Bank, N.A., Truist Bank and U.S Bank, National Association, as documentation agents (incorporated herein by reference to Exhibit 10.1 to the Roper Technologies, Inc. Current Report on Form 8-K filed July 22, 2022).

~~10.2~~						First Amendment to Roper Technologies, Inc. Employee Stock Purchase Plan (As Amended and Restated effective July 1, 2020) (incorporated herein by reference to Exhibit 10.2 to the Roper Technologies, Inc. Quarterly Report on Form 10-Q filed August 3, 2022).†

31.1						Rule 13a-14(a)/15d-14(a), Certification of the Chief Executive Officer, filed herewith.

31.2						Rule 13a-14(a)/15d-14(a), Certification of the Chief Financial Officer, filed herewith.

32.1						Section 1350 Certification of the Chief Executive and Chief Financial Officers, furnished herewith.

101.INS						XBRL Instance Document.

101.SCH						XBRL Taxonomy Extension Schema Document.

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB						XBRL Taxonomy Extension Label Linkbase Document.

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* The related exhibits and schedules are not being filed herewith. The Company agrees to furnish supplementally a copy of any such exhibits and schedules to the Securities and Exchange Commission upon request.

~~† Management contract or compensatory plan or arrangement.~~

3327

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Roper Technologies, Inc.


/S/ L. Neil Hunn	President and Chief Executive Officer	~~November 2, 2022~~May 3, 2023
L. Neil Hunn	(Principal Executive Officer)


/S/ ~~Robert C. Crisci~~Jason P. Conley	Executive Vice President and Chief Financial Officer	~~November 2, 2022~~May 3, 2023
~~Robert C. Crisci~~Jason P. Conley	(Principal Financial Officer)


/S/ ~~Jason Conley~~Brandon Cross	Vice President and ~~Chief Accounting Officer~~Corporate Controller	~~November 2, 2022~~May 3, 2023
~~Jason Conley~~Brandon Cross	(Principal Accounting Officer)

3428


		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited):

	Condensed Consolidated Statements of Earnings	3

	Condensed Consolidated Statements of Comprehensive Income	4

	Condensed Consolidated Balance Sheets	5

	Condensed Consolidated Statements of Cash Flows	6

	Condensed Consolidated Statements of Changes in Stockholders' Equity	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2218

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3125

Item 4.	Controls and Procedures	3125

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	3226

Item 1A.	Risk Factors	3226

Item 6.	Exhibits	3327

	Signatures	3428


	September 30, 2022 (1)		December 31, 2021
Accounts receivable, net	$	163.0	$	151.8
Inventories, net	146.2		106.9
Deferred taxes	45.3		—
Goodwill	569.0		—
Other intangible assets, net	69.3		—
Other current assets	101.9		30.7
Current assets held for sale	$	1,094.7	$	289.4


Goodwill	—		618.2
Other intangible assets, net	—		79.4
Deferred taxes	—		51.1
Other assets	—		56.2
Assets held for sale	$	—	$	804.9

Accounts payable	$	64.7	$	52.5
Accrued compensation	39.0		47.9
Deferred revenue	19.7		23.9
Deferred taxes	12.7		—
Income taxes payable	10.1		14.7
Operating lease liabilities	34.4		—
Other current liabilities	39.8		42.0
Current liabilities held for sale	$	220.4	$	181.0

Deferred taxes	$	—	$	13.3
Noncurrent operating lease liabilities	—		24.1
Other liabilities	—		12.0
Liabilities held for sale	$	—	$	49.4


	Nine months ended September 30, 2022								Nine months ended September 30, 2021
	Application Software		Network Software		Technology Enabled Products		Total		Application Software		Network Software		Technology Enabled Products		Total
Revenue Stream
Software related
Recurring	$	1,390.5	$	729.2	$	8.6	$	2,128.3	$	1,272.4	$	612.8	$	5.5	$	1,890.7
Reoccurring	90.3		184.5		—		274.8		82.5		186.6		—		269.1
Non-recurring	418.9		114.3		0.9		534.1		406.3		101.9		0.5		508.7
Total Software Revenues	1,899.7		1,028.0		9.5		2,937.2		1,761.2		901.3		6.0		2,668.5

Product Revenue	—		—		1,003.7		1,003.7		—		—		908.7		908.7
Total Revenue	$	1,899.7	$	1,028.0	$	1,013.2	$	3,940.9	$	1,761.2	$	901.3	$	914.7	$	3,577.2


	Backlog as of
	September 30,
	2022		2021
Application Software	$	1,416.4	$	1,305.8
Network Software	438.9		403.2
Technology Enabled Products	565.6		265.2
Total	$	2,420.9	$	1,974.2