ROP — Q3 2026 Financial Report Analysis

Organic growth picks up to 7%, and fewer shares turn it into 15% adjusted EPS growth

Roper Technologies' third-quarter 2026 revenue rose 7.6% to $2,171.8 million from $2,017.5 million. This time almost all of it came from businesses Roper already owned. "Organic" growth (sales growth from existing businesses, leaving out companies bought in the last year and currency moves) was 7%. Acquisitions added only 1 point and currency added nothing. That is a clear step up from the 4.9% organic growth of Q2. GAAP net earnings rose 21.6% to $484.7 million and diluted EPS rose 32.6% to $4.88. Both figures are again boosted by a gain on Roper's minority stake in Indicor, its former industrial business. On the company's adjusted basis, EPS rose 15% to $5.89 while adjusted net earnings in dollars rose only 5%. The gap is the share count: diluted shares fell 8.3% after this year's debt-funded buybacks. Management raised full-year adjusted EPS guidance to $22.35-$22.40.

This report is based on the earnings release (8-K Exhibit 99.1) filed October 22, 2026. The full 10-Q is not filed yet, so segment-level organic growth and management's segment commentary are not available.

Key figures

Operating margin is the share of revenue left after running the business, before interest and tax. Adjusted EBITDA is Roper's own measure of earnings before interest, tax, depreciation and amortization, with deal costs and the Indicor effects also removed. Adjusted EPS and adjusted net earnings exclude the Indicor revaluation, deal costs and the amortization of acquired intangible assets. That amortization is a non-cash charge that gradually writes down the value of customer lists and technology Roper paid for when it bought companies.

Segments

Segment operating profit is measured before $84.7 million of corporate costs and company-wide stock compensation, up from $78.3 million.

• Application Software (vertical software built for specific industries, such as insurance agencies, legal, healthcare and education) is 57% of revenue and was the main source of margin gains. Gross margin rose to 69.8% from 69.0% and operating margin rose a full point to 28.8%.
• Network Software (networked platforms such as freight-matching and construction bid networks) grew 7.9%, down from 11.8% in Q2, as the 2025 acquisitions roll into the year-ago comparison. Its operating margin is still down from a year ago, but by 0.6 points instead of the 2.9 points seen in Q2.
• Technology Enabled Products (medical devices, measurement instruments, water meters) grew fastest at 9.7%. Margin slipped to 33.1% from 33.9% even though gross margin was roughly flat at 57.4%.

The release does not split organic growth by segment. With acquisitions adding only 1 point in total, most of each segment's growth is likely organic, but the exact split will only be known when the 10-Q is filed.

What the headline numbers hide

GAAP earnings are inflated again by Indicor. Roper still owns a minority stake in Indicor, and the stake is marked to its current value every quarter. Q3 included a $56.2 million pre-tax gain on it, compared with $12.9 million a year ago. After tax the benefit was $71 million ($0.71 per share). That is more than the pre-tax gain, so the item also came with a tax benefit. The effective tax rate fell to 15.3% from 20.0%. If the Indicor effect is removed, net earnings were about $414 million against about $388 million a year ago, a rise of about 6.5% rather than 22%.

Year-to-date figures are distorted even more. Nine-month GAAP net earnings of $2,162.1 million include a $1,058.7 million pre-tax Indicor gain ($996 million after tax, $9.86 per share). Nine-month GAAP EPS of $21.30 is therefore not a useful measure of the business's earning power.

Most of the adjusted EPS growth came from buybacks. Adjusted net earnings rose 5% ($557 million to $586 million). Adjusted EPS rose 15% because diluted shares fell to 99.4 million from 108.4 million. Roper spent $2,726.7 million on repurchases in the first nine months, nearly all of it in the first half, and partly funded it by borrowing.

Interest costs eat part of the operating gain. Adjusted EBITDA rose 7%, but net interest expense rose 19% to $106.7 million. That is why adjusted net earnings grew more slowly than EBITDA.

Margins are roughly flat. Adjusted EBITDA margin dipped 0.4 points to 39.8%, while GAAP operating margin rose 0.3 points to 28.7%. Gross margin improved, but selling, general and administrative costs grew 8.4%, faster than revenue. Non-cash stock compensation for the nine months rose 27% to $163.9 million.

Cash conversion is solid but slowed in Q3. Nine-month operating cash flow rose 4.4% to $1,882.2 million, more than the $1,166 million of net earnings left after removing the Indicor gain. This is normal for Roper, because amortization is a large non-cash expense. But using the first-half figure of $1,061.6 million from Roper's Q2 10-Q, Q3 operating cash flow alone was about $821 million, down from about $870 million a year ago. Year-to-date working capital explains part of it. Deferred revenue (cash collected in advance from customers) fell $36.9 million, against a $28.5 million rise last year. Unbilled receivables rose $28.2 million, against $7.2 million last year. Receivables did not run ahead of sales: billed receivables fell to $981.1 million from $1,001.0 million at year-end.

The debt is still there. Total debt was $9,719.7 million at September 30, compared with $9,301.0 million at December 31. That includes $1,415.1 million due within a year. Roper received $1,239.2 million from Indicor's sale of its instrumentation businesses, but it also borrowed a net $400 million on its revolving credit line this year and spent $463.2 million on acquisitions. The equity investment on the balance sheet is down to $577.0 million after the cash came in.

Guidance excludes a lot. The outlook leaves out future acquisitions, future buybacks, future Indicor revaluations and the proceeds from Indicor's pending sale of its Cornell Pump and Roper Pump businesses.

Did last time's read hold up?

Mostly, yes. Our Q2 report said the ~6% full-year organic target "implies a pickup from the 4.9% delivered this quarter." Q3 delivered that pickup with 7%. We also expected the Indicor cash to be used to pay down debt or return to acquisitions, and that deal activity would resume. Both happened in part. Roper collected $1.24 billion from Indicor, nearly stopped buybacks in Q3 (about $3 million, based on the first-half total of $2,724.1 million) and spent $436 million on three bolt-on deals, meaning smaller purchases merged into existing businesses (iPipeline, Procare and Strata). Debt is still above its year-end level, though. We flagged Network Software's margin squeeze, and it is smaller now: down 0.6 points year on year, versus 2.9 points in Q2. Whether Network Software's organic growth and the water-meter business improved cannot be judged until the 10-Q is filed.

Takeaway: Q3 was the first quarter this year in which Roper's growth came mostly from its own businesses: 7% organic, compared with 4.9% in Q2. That is the real improvement. The 15% adjusted EPS growth overstates it, because about 60% of that came from an 8% smaller share count bought with borrowed money, and adjusted net earnings in dollars grew only 5%.

Outlook

Management's guidance: full-year 2026 adjusted EPS of $22.35-$22.40, raised from $22.15-$22.30. Q4 adjusted EPS is guided to $5.95-$6.00. The midpoint rose by $0.15, a little more than Q3's $0.09 beat over the top of its own range. Management says it has "more than $6 billion of capital deployment capacity." The release does not update the full-year revenue or organic growth targets (Q2's were 8%+ total and about 6% organic).

Our read:

• Organic growth is the number to watch. A 7% quarter puts the ~6% full-year target within reach, given Q2's 4.9%. Whether 7% holds in Q4 decides whether Roper is a 6-7% organic grower or a 5% one.
• EPS help from buybacks is fading. Q3 had almost no repurchases. Once the share count stops falling, adjusted EPS growth should move closer to adjusted net earnings growth, which was 5% this quarter, unless Roper restarts buybacks or acquisitions start adding meaningfully again.
• Capital use comes next. With $6 billion of stated capacity and about $1.4 billion of debt due within a year, the next few quarters will show whether Roper goes back to larger acquisitions, refinances, or pays debt down. Larger deals would raise the acquisition share of growth again and add amortization and interest costs.
• AI is a claim, not yet a number. The CEO pointed to AI product launches at PowerPlan, Strata and Vertafore. The release gives no revenue figure for them, so for now the evidence is the 7% organic growth, mostly in software.