Today, we're gonna talk to you about six key things. The first one is we have a super high-quality portfolio, market-leading position. We're gonna talk about the importance of leadership, the importance of competency, how you can use that to springboard to the next one. We're gonna hear from four of these companies today, Deltek, Aderant, Vertafore, and Verathon. The second thing we're gonna talk about is our demonstrated ability to help these businesses get better and improve. This is maybe something that's a little less appreciated or less well understood. Well, five or seven years ago, you may have heard the Roper team talk about trying to embark on how do we get this to be a little bit more of a growth-y portfolio. That'll be improving your organic growth output of your portfolio.
All the improvement is targeted against that, and we're gonna talk about methods. We're gonna talk about incentives. We're gonna see it in action with the four case studies today. When Jason comes up towards the end, we're gonna do some A case studies, and we're gonna really show you how to demonstrate our ability to improve businesses. The third is that we have a highly disciplined and analytical approach to the capital deployment process. It's an M&A motion. Just like when you think of the best and the most world-class go-to-market organizations, we model our activities and our discipline, and our toolings and our analytics for M&A motion exactly behind those principles. It is a core to what we do. It's a discipline that's been a big value driver for us for the last 20 years and continuing.
Fourth is our culture is a true and authentic competitive advantage. We're gonna talk about this on a couple of pages, I hope you can just feel it, you can sense it at the Q&A breaks, at the breakouts, at lunch, when you're talking with the team. Really drive in on this, right? What a culture is this ethereal thing. What do you mean? Like, in our case, is this. You'll hear the words of this on repeat. We have this high-trust, autonomous culture. That's the first thing. Then the innate capabilities of our leaders, right? We screen and hire for learners, competitors, builders, and operators. When you have a somebody as hungry and humble and smart as a competitor, they want to learn and get better.
We built this enablement capability where we see pattern recognition across all 27 of our companies and we channel those patterns of thinking through the portfolio to help them get better. It's a combination of autonomous model with high trust, the innate capabilities of leaders, the enable model, and then sort of the wrapper behind that is our incentive system. You've heard us talk about it forever, is perhaps the most important part of the culture is we pay to grow. Because we pay everybody to grow, everybody's focused on a singular thing about how do we improve our growth rate? How do we improve CRI accretive growth? There's no negotiations around budgets.
You know, when we If you pay somebody based on a plan or a budget, you give all of our field operators an incentive to lie to us, and we have a filter not to believe anything they say. How can you have a culture as any amount of trust, right? In that system. Our compensation system ties all this together, and we'll talk about that. Fifth is that we are low risk in our orientation. We filter all of our decisions, whether it's an operating decision, a capital deployment decision, through a long-term compounding lens. Those that have been around a compounding mindset for a long time, if there are rules, the first rule is nothing can go backwards for a compounding sort of organization to work. Risk informs everything we do.
When we're deploying capital, we're not gonna deploy capital if we can see a zero in the Monte Carlo, right? If there's existential risk that we can identify way on the horizon, then we're gonna steer clear from that. You know, leadership and small markets are risk avoiding sort of behaviors and targets. When we go through this, I want you to be listening. I invite you to listen to the risk orientation that we have, 'cause at every turn, operationally and capital deployment, we're low risk. Finally, we have a clear and compelling long-term growth algorithm. I should have said at the beginning, the slides are on the website, some of you can flip through, but they're there for if you wanna peruse and come along with us. Those are the six key themes.
We've organized our day and the agenda, click, around those exact things. We're gonna start. The first half of the agenda is walking through, if you will, the operating rigor and the operating part of this organization. I'm gonna spend a couple more minutes going through the portfolio construct. We're gonna invite Satish Maripuri, who's one of our four group executives, to come up and talk about our decentralized operating model. We're gonna go through these four case studies with Deltek, Aderant, Verathon, and Vertafore. We'll have a Q&A panel. We'll turn the lights up, we'll invite all the speakers up, and we'll spend 30 or the amount of time that's available. We might have a few minutes more than that, and we can address any questions you have.
We'd ask at that point if we can direct them to the operating team. We'll come back. Jason Conley will walk through our capital deployment process and approach and rigor. I'll wrap up with the growth algorithm and pull things back together. We'll open up Q&A again, and then it's a free-for-all for anything you guys wanna talk about. If that makes sense. After that, we'll have lunch. Our team will be stationed outside for about an hour, so you can have some one-on-one conversations. That's the flow of today. We brought a big team, right? How many people thought we didn't have 15 people? We have 15 people here today. I'm gonna generally introduce everybody. Most will be introduced as they come up for their speaking role. First, our operating leaders.
They're scattered throughout the room, but Amy Zupon from Vertafore, Chris Cartrett from Aderant, Mike Corkery from Deltek, and Earl Thompson from Verathon are here. We have our operator Group Executives, Satish Maripuri, Harold Flynn, Jeff Paulsen, Mike Corkery also is a Group Executive. He runs Deltek full-time, and he's a Group Executive and has three other companies that he looks after. He sits as a part of my team and also leads Deltek. He will introduce Aderant as one of his companies. The administrative team from corporate, you certainly have Jason Conley, our CFO. You have Shannon O'Callaghan here. Most of you know, he used to sit, you know, with you guys out here for hundreds of these things when he wrote coverage on us many moons ago.
He runs FP&A and finance and treasury, is a core member of our M&A team. John Stipancich is our Chief Legal Officer, General Counsel, also a core member of our M&A team. Tim Haddock. Where's Tim? Tim is a unicorn. You won't see him much. He's in charge of our corporate development activities, our M&A executive, I'm sure there'll be a line. It'll be one on many with him. He's terrific. I think that covers the operating team. We're delighted back over here mid-room to have two of our board members, our Board Chair, Amy Woods Brinkley, our Nominating Governance Chair, Shellye Archambeau. That's 15 folks. None of this would happen without Jill, my assistant, and Serena sort of making everything happen.
We're 17 strong today and excited to spend time with you. Okay. In a nutshell, if there's a sentence about Roper, right. We compound cash flow by acquiring and growing niche market-leading technology businesses, right. That's, that's how if I have, you know, a dinner conversation, what's Roper do? This is what I say. We compound cash flow by acquiring and growing niche market-leading technology businesses. Who we are. The bedrock of what we are, our North Star financially, has always been and will continue to be this notion of cash return on investment. You know, cash return on investment is centers on finding the very best businesses that have durability, that are blessed with terrific business models, that have high customer value, and many other characteristics that we're gonna tap into today and discuss today. The second point is trust and mutual respect.
This is super important. You know, the trust we're talking about in our culture is not the trust that Shannon will do what he commits to doing. The trust that we're talking about throughout our organization is what we call vulnerability-based trust. It's the trust that I have the confidence and the trust to say, "I don't know," or, "I need help. I need help solving a problem." When you can build a basis of vulnerability-based trust, then what happens is you can have real conflict, and the conflict is about the ideas, right? What's conflict without vulnerability-based trust? It's politics, right? So we work super hard at the base layer of this vulnerability for us to get conflict, 'cause through conflict, you can get commitment. Through commitment, you get accountability. Through accountability, you get results.
It is something that is truly special about our organization. We work hard at it at the corporate center. The businesses work hard at it. Just by way of illustration, at the center corporate office, we have individual coaches, we have a team coach focused entirely on this notion of how do we authentically live in this vulnerability-based culture. That enables high performance, right? That's part of the ethos of who we are. We manage our risk, and then as organizations scale, they invariably get more complex. That complexity creates chaos. There's a matrix. You have to referee the matrix. One of the core things about Roper is there's nowhere to hide. 27 businesses have 27 P&Ls and balance sheets unallocated, and there's just nowhere to hide. It ties into the accountability. That's the bedrock on which everything stands.
First pillar, as we talked about, market-leading defensible niches. What do we mean by that? The second one is the decentralized operating environment. If we compete on intimacy with our customers, so we need an environment, an operating environment that enables that to work. We have a decentralized approach. If we competed on scale, then our decentralized approach would not work. The interconnectivity of these things is by design and intentional. Third, we have a process-driven and center-led capital deployment approach. What do I mean by market-leading defensible niches? Vertical in our orientation and mission-critical. All 27 of our businesses do something or sell develop a product or sell a solution that is very specific to an industry, to a very specific person in the industry, and solves a very specific problem in the industry.
It's the essence of why vertical software is so mission-critical. As I alluded to, our customers can't do what they do without us, right? We're not a discretionary spend. You can't run a large law firm without Aderant, right? If you're a large government contractor, you basically can't run without Deltek, or you run much better with Deltek. We're the core of what our customers rely on. We compete on this notion of intimacy. Throughout the day-to-day, you're gonna get a sense of what intimacy really is with our customers. Because we're mission-critical, purpose-built and intimate, we deliver this very high levels of customer value, which enables us to have high gross margins, which is the beginning of the flywheel, the investment flywheel. All the businesses have highly resilient and recurring revenue.
As a hallmark of being focused on cash returns for 20 years, super asset-light, right? We create competitive advantage on IP and knowledge and networks, customer intimacy, not throwing up fortresses of fixed assets that require reinvestment, definitively over time. What do we mean by decentralized operating model? We're talking about local resource allocation. What do we mean by that? The 27 business presidents are making decisions, hiring, firing decisions, how to allocate resources from go-to-market to R&D. They're making the strategic decisions about the course and travel the businesses, asking the questions about where to plan, how to win strategically. We're certainly gonna engage with them and apply our pattern recognition and our learnings from other parts of the portfolio.
At the end of the day, we rarely come to loggerheads where we have a, you know, we believe companies should go left and they wanna go right. It's pretty clear and obvious the course of travel and the strategy, so they're making the decisions about applying the resources, and then they execute super nimbly. Maybe the best example of this is COVID. When COVID happened in March, April 2000, we did not send an edict out to the presidents to say, "You need to get cautious," or whatever. It just started happening. It was natural, like, whoa, our customers are sort of slowing down. We should slow down. We're gonna tap the brakes. A couple of weeks in, we got everybody together and hunkered down and figured out what our game plan was. They weren't waiting to be told what to do.
What comes with that autonomy and local resource allocation is a, is a very high expectation for performance. Our expectation is that every business, every year is gonna compete and win in the marketplace. That did not exist in our organization seven years ago, right? The expectation for high performance is sort of the is required. As such, as I talked about at the beginning, the leaders, these are leaders that are, again, learning, competitive. They wanna get help to the extent that it can help them be better. We have our group executives that are corporate coaches, right? They have , the group executives have six-eight companies each. They themselves have their individual pattern recognition.
We had our first-ever Roper Leadership Summit just a couple weeks ago, where we had our 27 leaders together, and they taught each other about problems and opportunities and best practices. It's about the sharing of the learnings and coaching. The core of what this is, though, is we care at the Roper level that the businesses are built for long-term competitive advantage. We're a forever owner, we need our companies to act and behave over a long-term period of time. It's not about just getting bigger, it's about getting better while you're getting bigger. You're gonna see in the case studies with the four companies, the last page is gonna be what it was then and what is it now.
Yes, they're bigger, but we tried to show the dimensions of how the quality's improved, the underlying quality of the organizations, and I talked about the growth-based incentives. Finally, process-driven capital deployment. It's center-led. We take all the excess free cash flow from all 27 companies. It sits at the center, and then the Roper corporate team spends a lot of our time, and Jason's gonna walk through this in excruciating detail, our process, but it centers on finding the very best business. You know, what type of businesses? We just talked about it. Market leading, niche leaders, vertical orientation, et cetera, et cetera, to sort of get the next 28th and 29th next great business into the portfolio. It's a super liberal...
My job and the board's job of ultimately deciding where we're gonna deploy capital, it's super liberating to not be wedded into a single or a small number of end markets, 'cause then you're trying to do the best you can from a very small pool of opportunities. Here we have a wide array of opportunities to be able to put our capital to work at the very best and next highest use. It's low risk. We'll talk about that. We're gonna show you the dimensions of how we evaluate risk in deals. Super disciplined and analytical. It's a learning process.
Where we were 10 years ago versus today in terms of the diligence process and the learnings and the expert advice we get, it's light years better, and 10 years from now, it'll be light years better from where we are today. We do postmortems on every process. We do postmortems on every deal. We look at short-term postmortems, long-term, medium-term, and long-term postmortems to incorporate the learnings back in and try. If we're gonna make a mistake, which we will do, try and only make it one time. We fund it, as you know, from our cash flow and investment-grade leverage. When you put all that together, this is the flywheel or the perpetual motion machine that is Roper, right?
It's a combination of market-leading businesses that are beautifully run by our decentralized operating environment and then our process-driven, center-led capital deployment. Here's our journey. I mean, it has been a journey over the last 20 years. The first thing that happened is, obviously, the portfolio has changed quite a bit. In 2003 or 2000, we were a deeply industrial business. Didn't even know how to spell software. Here we are today, 75% software, 25% medical and water products. What's led us on this journey is our CRI orientation. Getting to changing the portfolio to be more asset-light. Again, the basis of competition based on the intellectual property you can create versus and sell, and the network benefits of that, for instance, as opposed to a widget. Obviously it's been an arc in the portfolio.
About the enablement or the disciplines. CRI has always been the bedrock of organization. Sometime in the 2013, 2014 timeframe, we really changed what the corporate coach's role was. The corporate coach's role before that period of time was really like a controller. Starting in this period of time, it was how do we have a group of seasoned leaders able to help the businesses get better? Once we had those folks, we worked together as a group saying, okay, how do we improve the organic growth outlook of the organization? What can we systemically apply across the entire 27 businesses to enable that? We created, if you will, it's not branded, but this Roper enablement program around strategy development. Satish is gonna walk you through what this means.
Keep in mind, the Roper portfolio company, right? $6 billion of revenue, 27 companies, talking $200 plus or minus million-dollar median company. These are small companies. They're not innately skilled at thinking about strategy. We can help them think about how they can create a plan, answer the question of where to play and how to win and make choice. Choice is a very hard thing to do, especially for a small company. How do you make choice? Once you've made the choices, how do you enable the strategy? Right? Strategy, if you knew how to do it, you've already done it. If you need to build European distribution, and you don't have European distribution, how do you process enable that thing so it's repeatable and sustainable?
You're gonna hear about that in all the businesses, but in particular at Verathon today, sorry. Our talent offense. How do we create a true competitive advantage with talent? Most companies say they do, very few do because they don't do the tedious and rigorous and disciplined things day in and day out to enable that to happen. It's something that many of our businesses have really built that capability. Data and cybersecurity and ESG and DE&I, these are all things if we do these well, it meaningfully improves our ability to compete and win in the marketplace for both customers and talent. What stayed the same throughout this journey, right, is most of Roper, right?
CRI is a North Star or niche leaders or vertical or application-specific or high trust autonomous model, long-term builder mentality, you know, growth-based incentives, centralized capital deployment, being super disciplined, analytical in everything we do, just passionate in what we do, and then being low risk. Those things have not changed over this arc of time. CRI, what is it? This is the math. It's not about the math today. What it does, if you, if you apply this, what is CRI? They lead you to durable, you know, business model advantaged asset-light businesses, right? If you take the math, you throw it away and say, what is a high CRI business? It's a business model advantaged high cash flowing business, high recurring revenue, high gross retention, high net retention, stability that underlies it is what CRI is.
On the x-axis is the asset intensity, on the y-axis your profit margin. In 2004, we were pinned in the industrial landscape, and today we're up with the software folks, if not a little bit more profitable than on average, the vertical software. It's really been a transformational journey through our CRI lens here. The portfolio optimization since 2019, we've divested 34% of our 2019 revenues. It's about 40% of our 2018 revenues. Proud to say that in 2022, we're coincidentally exactly the same scale, $5.4 billion, because we're successful in deploying our capital and having a few years of terrific organic growth. I think the moral of the story here is not the scale, it's the quality, right?
The portfolio construct is now 75% vertical software and 25% medical and water products, and that grayed out part is the cyclical piece that we divested, cyclical and project-oriented piece. Much more resilient, much more high quality. In terms of the quality dimensions, apologies for the small sort of font on the left. The top line is organic growth. 2016 sort of flattened down a little bit. 2022, +9%. Software as a percent of revenue was 32%. Now it's 75%. Cyclical revenue was 44%. Now it's approaching zero, right? That was the core driving force behind the portfolio reshaping. EBITDA margins, 35%-40%, net working capital per-percent of revenue, 20 points better.
We now have a business that as it grows, it creates cash as opposed to consuming cash as it grows. It's been a tremendous change in the quality. In terms of revenue composition, $5.4 billion of revenue, $4 billion of which is vertical software. Of that, vertical software, $3.4 billion is recurring or reoccurring. Of the $2.9 recurring, you can see here that $2.1 of it is SaaS subscription, $900 million of it is on-prem annual maintenance. As a note, this on-prem annual maintenance will eventually, over time, again, at our customer's pacing, I'll say it again, at our customer's pacing, will convert to the cloud and SaaS subscription. It'll convert at 2-2.5 times.
That's our experience as we move our clients from the ground to the cloud. My guess is that takes every bit of a decade. It's hard to put an exact time period on it, but it is an embedded long-term growth driver of our organization as that right-hand side converts to subscription. In terms of revenue growth, this five-year period shows through a pandemic, we were able to grow double digits. You know, underpinned by very strong organic growth and then our ability to deploy capital through cycle. You'll see a little bit later on when Jason comes up, sort of pull this period out, look back over 20 years, and we've been able to sort of do the same thing through high interest rate environments, low interest rate environments, through, you know, growing macroeconomic conditions, declining macroeconomic conditions.
Really, I think this is a perfect proof point of how compounding sort of overwhelms sort of the short-term nature of some of those factors. This shows you the compounding over the last 15 years, revenue of 8%, EBITDA 11%, cash flow 12%, and market cap by 15%. Very proud of that. Over the longer arc of time, over the last 20 years, it's been about a 5x to that of the S&P. This model has proven to work, and we have more conviction today that it's gonna work going forward and excited to explain that story to you today. With this, let me talk you through what our market-leading, these businesses are in a bit more detail. Vertical, this is an array of our, of our companies by size. You can see the 27.
It is quite a, quite an array. You can see the meat is in the 100 to 250. While, I mean, these are just names and logos. The commonality of all this is that they're all number one or number two in the markets in which they serve. Leadership is super important. They're all application-specific. They're all mission-critical. Just a note on leadership, you know, the, the study from 30 years ago about relative market share and profitability is absolutely true. You have a statistically like a 20 times better chance of having long-term sustained economic outperformance if you're the market leader versus not.
Leadership is super important to what Roper is because it gives you the optionality to sort of find adjacencies, to continue to expand and grow from the position of strength of leadership. If you abstract away a little bit what our businesses do, these are the end markets by segment. I'm not gonna read them all, but an application software, there's certainly healthcare, IT, education, government contracting, legal, P&C. On network, you know, freight matching, transportation, life insurance, media entertainment, and also healthcare IT, but in the post-acute setting. On tap or technology-enabled products, medical products and water. Again, all purpose-built, all mission-critical, all high customer value. If you wanted to find secular trends that we benefit from or our companies benefit from, certainly digital transformation.
You're going to hear stories today at Aderant, Deltek and Vertafore about how their solutions are tech-enabling very manual workflows for sure. AI, ML, I'm gonna give you stories on both the product, the tech-enabled product side and software, where we're applying AI and ML. You know, we're not creating the core technologies, but being application-specific, focused companies, we will apply them to the very specific use cases. Certainly SaaS migration, which I talked about before. On the medical healthcare, medical products and water, certainly the aging of America, aging of the world, sort of the, as you age, you get into the power curve of medical consumption. Single-use devices is a very real thing across the globe now for infection control and then conservation, certainly of water. What is intimacy, right?
It's rooted, and we compete on this, right? We compete on intimacy, not scale. You know, Mike, Chris, Earl, and Amy are gonna make this real during their presentation. It's customers don't rely on us. They do rely on us, but they want us to win. When you're you enable their business, you're the leader, they want us to win. They say, "Hey, can you do that?" They'll even tell you if you're not doing something well, they'll tell you that, and they ask you to fix it. Those moments of crisis, actually, when you fix it, bring you closer together. Our customers they want us to win, and we partner with our customers. It's rooted in a deep understanding of markets. It informs the innovation roadmap. It informs go-to-market investments.
It's then we have these highly specific solutions. You know, you're gonna hear about how our businesses don't just like you're gonna hear from two businesses today in Deltek and Aderant. Both essentially deliver ERP for professional services firms. One is so specific to legal 'cause the use, the needs there are so much different than of a government contractor or an architect or an engineer or a building contractor. You're gonna hear about the specificity of the solutions, and that leaves the market share adoption value capture. Over time, we talked about our, you know, gross margins improving. This is to us an indication of high customer value. Over the last 15 years, they've grown from 50% to 70%. Our recurring revenue base is something that has been a nice byproduct of the portfolio evolution.
70% of our total revenue is either recurring or reoccurring. That's both software, there's a large percentage of our product businesses. Earl's gonna tell you more than 50% of Verathon's revenue base is reoccurring in nature, for instance. A percent of vertical software, 80% of our software revenues are recurring or reoccurring in nature. Our asset-light journey sort of maybe speaks for itself. This is what we've tried to optimize over 20 years, you can see that we've beaten over 30%. This, in this particular case, it's net working capital plus gross fixed assets divided by sales. Our net working capital, the negative nature of net working capital overwhelms the fixed asset base.
It's just been a tremendous journey for us. All right, now let me introduce Satish, who's gonna come up and talk about our decentralized operating environment. Satish has been with us about four and a half years. He's a super seasoned software executive. He's a tremendous coach. I think I had a couple of his companies before he did, and the companies came up to me and said, "You know, we really liked working with you, but we really like working with Satish." I don't know what that says about me, but it says a lot about you, Satish. Thanks so much.
Thanks, Neil. The good news of going after your CEO, he gets to introduce you. The bad news is he tells your story and covers all your slides. I get to expand and look for room to actually add value after going after this Neil. As he said, he was in our shoes as a group executive before. Often the bar is very high when we walk into a room. The quest is to actually get to know about the business more than Neil actually knows about the business. It's a great team. He sets a very high bar, so thank you for all you do. Thank you, everybody, for taking the time.
Got about 15 or so minutes to shed some light on the details of the operating model that's decentralized and why we are unique at Roper. I'll do my best to cover all those in 15, and then we have some time set aside later where we can spend some more time answering more specific questions after that. It's an honor and privilege to be up here on behalf of the group executive team. I'm just a spokesperson, but the team is really the one that does the work with us as a group. We push each other every day and try to make this operating model a little bit better. If I could just put a name to a face, and if I could just have Harold Flynn stand up, please.
Harold, Jeff Paulsen and Mike Corkery. I think he's back there getting micd up. We're the four group executives. We get to work with the presidents of each of the operating companies. We're all based in Sarasota. Our mission is job number one is to make the great company that Roper owns even better. We do so with a very specific decentralized model, which I'm gonna talk to you a little bit about. We're all gonna be available during the break and lunch, so if you wanna pick our brains, we're happy to expand on that a little bit more. I've got a short story which Neil probably will remember that actually embodies everything we do here.
My first week on the job, came from Nuance Communications, now part of Microsoft. You know, I wanted to sit down with Neil and actually figure out what he has in mind for the first 90 days. He said, "Forget the first 90 days. Here's a book you should go read," the Michael Lewis, those of you who know Moneyball. That's not the book he gave me, though. That's what I'm expecting. He threw this book across. It's a book called The Undoing Project. It felt odd, you know, I would expected the CEO to give me a first-90-days book of some sort, but that embodies the culture. It was about the common corporate cultures usually have a way of doing things, and Roper was uncommon.
This was about, hey, it's great everything you learned over 30 some odd years, but put that culture aside because at Roper we have something special. At about three weeks into reading that book and finishing it, I now understand what he actually meant by that, and it's truly an uncommon culture for us here at Roper. We're pretty proud about it. You know, Neil introduced Shellye and Amy, our Board Chair and the Nominating Governance Committee Chair. Wanna acknowledge their contribution as part of the board that really makes a difference in the way the cadence and the collaboration and yet giving us the room to make us a better place. We appreciate everything you do. As Neil said, everything is interconnected in the way we do things at Roper.
If you actually look at the way we debate, we make the operating process better. We then align. There's some disagreements, but we align and make that process better. It's woven into the culture of how we do things at Roper, that's what truly makes us. It's simple, but yet very powerful. There's several topics that I'd like to touch on, but if I could lay the framework, there are three things I'm gonna cover over the next 10 or so minutes. First is, how does local execution and nimble execution really work at Roper, what makes it tick? The second is, how do we govern, coach, and make that execution better? The third is, how is it all linked to a little thing called compensation? The three things I'm gonna cover again, one is local execution, nimbleness.
Second is governance and cadence and coaching. The third is how is it linked to compensation? Those are the topics I'm gonna touch on. With that, local decision-making and execution, as Neil said, in 27 companies, we might have 27 CRMs, 27 ERPs, because the presidents and the leaders of those businesses do get those to make those decisions, but under the umbrella of a very high bar of elite performance. There's no ambiguity in how we set expectations from Roper for those companies. We'll talk a little bit about how they arrive at those growth rates, et cetera. But they get to make the decisions around talent, capital allocation, et cetera, and that's okay.
The 27 of everything is fine, but it's under the guise of autonomy and the ability to make those decisions at their levels. Now, how does this all work? It only works if there is a level of trust and bounded autonomy and a high level of autonomous trust that's built in the leadership that's running these businesses. Now, over a period of time, given that we are forever holders of businesses, we've learned a thing or two about what makes great leaders tick at Roper. There are four attributes we arrived at. Why four? Well, they happen to be heavily debated. Trust me, there's a lot of debate about this. We arrived at four things that are critical for successful leaders who run companies at Roper. First thing is a continuous learner.
These executives are often put into situations where they're not necessarily from the domain. They're great operators or strategic thinkers, but they may come from outside the domain, and that's okay. Given our niche orientation, they have to be very quick at picking up the concepts in that vertical, being very data-driven, informed, and very quick at decision-making, and they are continuous learners. The second, and I'll let you know how this all makes its way into decision-making in the operating model. The second is an autonomous competitor. These competitive executives are constantly looking to share, take share from the competition. They're looking to grow faster than the market growth rates. Without this DNA, it's extremely difficult to set a very high bar and deliver against that bar at Roper. The third is a builder.
Given that we are not in the business of buying and selling companies, we are forever holders, careers are made within the business. Leaders who actually want to build and live with the decisions that they make. Last but not the least, strategic operators. This is often an oxymoron ’cause if you're a strategic, you can't be an operator or vice versa, but that's not the case. These executives are looking over the horizon, building the next 5-10-year strategic plan, but also are capable of making operating decisions today. You'll see how all this weaves into what we do. At the end of the day, the punchline is they need to act like the owner. Right. Looking at...
That was the ingredients of a decentralized operating model with great leadership and empowerment with high expectations. Next, the second topic I wanna talk to you about is the governance behind this and how do we coach. As I said, there is a very clear set of expectations. The presidents get to make the operating decisions at their level. We, as Group Executives, get to work with them on a specific set of topics and make them better. Examples being collaborating with them during the strategy development cycle, bringing in external resources that are best in the industry to help augment if needed, working with them on a talent office, working with them on a cybersecurity maturity matrix and helping them if need be, not beyond our expertise, but actually bringing outside help if needed on a situation-by-situation basis.
With that, I wanna take you to a little bit more about the specific, somewhat practical but important rhythm. Some of you just even in the discussion we were having before the start of the session said, "How do you actually work with these companies as a group executive?" Let me take a little bit of detail there and work from the bottom to the top. Strategic reviews. These are every two-three years of engagements with each of the companies to get clarity on their growth equation and how they're gonna drive organic growth over the next 5-10-year period. This is a very detailed exercise. I'll talk about that in just a minute, but we get to work with the companies every couple of years or so to refresh that.
The thinking is constant, but the events may be every couple years. Next one up is the annual operating cycle. Every 12 months, typically around the November, December timeframe, each of the operating companies and the presidents with their teams come to spend an hour with us outlining. Of course, the group executives have worked with them for quite some time to bring clarity into the next 12 months of their operating plan to execute against that five-plus year strategic growth runway. A very detailed about where they're placing their bets, how they're driving profitable growth, the process and the capabilities that they're going to invest in over the next 12 months to help their five-year trajectory. That cycle continues every year. Next one up, and I think you see a theme here. We do semi-annual.
We actually spend quite a bit of time on this, is doing twice a year talent reviews. I'm gonna spend a few minutes on talent, so we'll skip this for a minute. Then you get into quarterly reviews where we're actually assessing the progress against the trajectory for the year. It's a very Socratic light touch, but with a very deep and keen intent. I think you get the idea of the rhythm, all rooted by three key variables of success, which is how are we driving organic growth? What is the EBITDA leverage of that growth? It's profitable growth. Then how does that lead to CRI, to Neil's point, and free excess cash flow. It's a very simple model that is very well understood, and it's a light touch Socratic model for us.
Like I said, Neil touched on a few of these, but I'm gonna take the specifics and walk you through some levels of detail. There we go. This is where it all starts. Remember the four attributes of great Roper leaders, the autonomous competitors? This is where it really shines because they're looking at: What does my business have for growth potential? Where is the clarity of the growth runway, as we call it? A growth equation as to which subsegments of the market do I go execute in? Which is more profitable? Where is the faster growth rate? How do I outrun the competition in the growth rates? Where do I take share? Putting all those questions together and creating what we call a strategic plan that has a five-plus year horizon in the growth runway.
The key decisions being made there are where to play and how to win. What is our right to play in the particular segment? We work with them very carefully through this process so that we're not making the wrong bets. The trick, of course, is to filtering the 25 opportunities set down to a manageable few and then prioritizing that into how to win from a capability standpoint. It's a very detailed process. If needed, we get some help from the outside of the likes of the Bain to really put a fine point on this, and this is where it all starts. The competitors really shine as leaders in this stage. Next is the ability to take that and put that into motion.
This is where the strategic operators come into the mindset of that comes into play. Taking all the strategic choices and building the capabilities required, the process and capabilities required to actually execute on that as an operator. This is where choices are made of investments in the organization, capabilities such as product management, go-to-market, Quote-to-Cash capabilities and muscle pricing. All of these are capabilities that are developed when you deploy strategy into execution. This takes quite a bit of time to put together and is very carefully watched and inspected by us to ensure that we're heading in the right direction. Next is talent offense. We talked about twice a year touch points with our companies as group executives.
And this is one that consumes a good amount of time and well worth the investment of our time, by the way. But when we look at talent offense, we've looked at the attributes and the areas that we need to spend time to make the talent in the organizations better. We arrived at three things of three areas that we rally around. One is selection of talent, the second is engagement of talent, and the third is development of talent. Selection of talent, and I'll give you a couple of bits of details in here. A great workforce strategy is where do you put your talent, what DNA, which locations do you need? How do you organize them? What's the org design, spans and layers, all of that. And having clarity around that is super important.
You build and source talent, especially with diversity in mind, diversity of skills, backgrounds, et cetera. You also deploy things like assessment tools, et cetera, to make sure that you're hiring the best talent possible at all levels. The next is the development of talent, where you're looking at succession grids, performance nine boxes, and ensuring that you put the right development in place for leaders at all places, so when time comes, you have the great succession at all levels in the organization. This is easy to say, super hard to get right. We spend a lot of time on this, and this is where I think the muscle that we bring to the table really is, we use all the help we can. The last thing is engagement.
You don't really know how the organization is doing until you have the pulse on the organization. The tools like Gallup engagement surveys that most of our companies use, there are tremendous insights into areas for improvement as to where the organization can actually do better. Action planning that and actually doing a great job and following on that is a regular discipline within the organization. Again, selection, engagement, and development of talent is where we spend a lot of our time as group executives. Last couple of topics along this way. You sort of get a theme here, is the ability to identify what great looks like, put it in a framework that's consumable, and let our leaders adopt and leverage that maturity matrix. We do that in talent. We're doing that in cyber.
Now in the last four or five years, you've seen a tremendous amount of nation-state attacks, brute force attacks on organizations. The risk is very high if you don't get ahead of this. As Roper, we recognized this over five years ago, put a lot of thought into what great looks like for cyber, cloud migrations, and data privacy, encapsulated that into a cyber maturity matrix. Each of our companies has access to that cyber maturity matrix, a self-assessment tool with some inspection from us. The inroads that have been made into progress on this front has been tremendous over the last few years. You can never rest on this because the nation-state actors and the bad actors are getting better. We continue to stay on top of this.
As you can imagine, a tremendous amount of work that goes into this. The last topic in the capabilities that we work with is ESG and diversity, equity, and inclusion. I must say that the organic grassroots efforts on this front from each of the companies is quite impressive. That's where it starts. At Roper, what we had to do is open the door, provide some help, some knowledge sharing around the best practices, and it's great to see the organic effort. This is a more recent muscle the last few years, but very positively encouraged by how the progress with the companies is shaping up in this area.
I've talked to you about the localized execution and nimble model, spent a few minutes on governance and how we work with the businesses in coaching, and I'm gonna sort of end with the growth incentives and how that works. As Neil said
The budgets are flawed, the notion of budgets. You tend to work all year to sandbag your budget for the next year. Then, you know, of course, the corporation is believed, is programmed not to believe you anyway. In our case, we don't have a notion of budgets. It's about just plain simple year-on-year growth in EBITDA. We all know that trying to grow EBITDA once or twice a year or twice in a row works if you actually don't grow your profit, your top line profitably. With focuses on top line growth, the clarity of your compensation being tied with meritocracy to your growth rates year-on-year at EBITDA is very clear. Every company knows their growth curve. It's very transparent all the way down in that operating company.
There's a really good reward for overperformance as the scale is not limited to 100%, and it's very clean. There's no negotiating that happens on the growth compensation curve, which is tremendous, and it's built on trust and transparency. Again, super proud of these very simple tenets. You're gonna hear from four great leaders following about how this all manifests themselves. You know, I have to say that the Roper team and the operating team here really spends a lot of time obsessing over this, improving it, and really seeing how we deliver on that. With that, I'm gonna turn it over to Neil. Thank you for taking the time today.
Again, remember three things, a decentralized operating model with a governance and coaching from the group executives, tied to clean compensation. That's a recipe for the operating model at Roper. Thank you for taking the time. Over to you, Neil.
Thanks, Satish. Are we live here? Thanks, Satish. I have one slide, and I'll turn it over to Mike Corkery. When you pull it all together, right? When you had the last couple parts of this presentation around the composition of the portfolio and then our engagement model with our companies, they get sorted. Those 11 or 12 things we talked about get sorted into how we compete and win. By market, we compete and win because of our vertical mission-critical solutions and our leadership. I can't emphasize enough the importance of leadership as it relates to competing and winning. Second's the model. Compete on intimacy, nimble execution, high customer value, resilient, highly recurring revenue and asset light, and then culture. Local resource allocation, high performance, super high performance expectations on competing and winning, building for long-term competitive advantage.
Like, again, really utilizing our long-term forever home as a strategic weapon. Let's use it to build for authentic capability for long-term competitive advantage, growth-based incentives, and overlay that with corporate coaching. Let's turn to our to our case studies. The first one is Mike Corkery. You can come on up, Mike. Mike has been with us since we acquired Deltek in 2016. He's done a great job. He's gonna brag a little bit for the next few slides, deservedly so. He's also, as I mentioned, a member of my team, the corporate team, about making Roper better. We've worked on, you know, we have vulnerability-based trust, right? I admit all my mistakes to him all the time and vice versa.
Really appreciate what you've done for the company and looking forward to your presentation today.
Well, thanks, Neil. Thanks, Neil. Appreciate it. Good morning, everybody. Very excited to give you a window into what we're up to at Deltek and how we power our customers' project success. At Deltek, who we are, we are the largest provider globally of software and solutions to project-based businesses. The thing that our customers have in common is their mission every day is to deliver for their customers on a project-by-project or engagement-by-engagement basis. Our solutions enable them to do that. I'll talk a little bit more about how we do that in a bit. We delivered over $800 million of revenue this past year. We deliver the majority of our solutions in the cloud. SaaS is the fastest part of our revenue stream in terms of growth, growing more quickly than any other.
As a result, we've been able to very successfully annuitize our business and drive the growth in our recurring revenues. Our recurring revenues are now over 80% of the total. From a geographic perspective, the vast majority of our revenues come from North America. In terms of vertical market focus, 60% of our revenues come from government contractors. That's the contractors that deliver projects to the federal government. The other 40% comes from commercial businesses that deliver projects to their customers. I'll talk in a little bit about the specific verticals that represent that area of our business. These businesses run on our stuff.
As Neil talked about earlier, we are, you know, the analogy we use, we're not, you know, cable and internet, we're like gas and electric for these businesses, right? Once we get in there, we're very difficult to get out. Our solutions are very sticky. What we do is we help businesses navigate the life cycle of every project that they look to win and then deliver for their customers. Our solutions help them find new projects through our customer relationship management and also data as a service projects or products that allow them to see what projects are available in their space. Once they win a new project, our solutions allow them to then track time and expense, so they can build their customers, track schedule, so they can see what milestones-
Into our products and our processes. Again, really proud to win a number of awards for the quality of our customer support and customer success. Most notably, you know, the last four years, we've been able to win the J.D. Power Award. Finally, we wanna keep Deltek a great place to work. We wanna be an employer of choice. We wanna be a home where great technology talent comes to build a career. We have best-in-class employee engagement scores. We have a culture that we're incredibly proud of. Again, we've been recognized as a top workplace by a number of different organizations. Again, I think the one we're most proud of is the last two years, we've been recognized as one of America's best mid-size employers by Forbes.
Again, something that Team Deltek is really proud of. We are focused on a growing set of very vibrant markets, and we continue to take share in all of our markets and expand our market share in each one. It opens up an adjacency that allows us to continue to grow. The most recent acquisition that we closed in the upper right-hand portion of the slide, TIP Technologies. We closed that in 2022, a provider of quality assurance and manufacturing execution to the government contracting space, specifically in aerospace and defense. Again, all these acquisitions have been accretive to our growth, very successful, and also been accretive to our EBITDA delivery as part of Roper.
To that point about our journey with Roper, again, it's been a fantastic partnership for our business since we joined Roper in late 2016. You can see from a revenue perspective, we've been able to grow from just under a half a billion dollars when we became part of Roper to over $800 million this past year. The vast majority of that growth is organic. Again, our organic growth profile has changed from a consistent mid-single digit grower to a high single digit grower since we became part of Roper, again, as we put some of those more enduring muscle and capabilities in place to continue to take share and attack our market successfully. We've been able to annuitize the revenue stream. Again, over 80% of our revenue is now recurring.
That's really important because it allows us to have great conviction about investing in advance in terms of our solutions. We have great visibility into the forward revenue stream. We can invest with great conviction around driving our solutions forward to make sure that we're delivering successfully for our customers and extending our competitive lead relative to what we deliver to our target markets. We've been able to scale the business despite the fact that we've expanded our R&D investment during our period of time at Roper. We've been able to also scale other portions of our cost structure and expand our EBITDA margins. Also, the M&A activity has helped us with the accretive contribution that they have made to our EBITDA as well. From a retention perspective, our solutions are resonating with our customers. Our gross retention is up.
Our net retention is well over 100% still. Was when we started, has expanded since. Again, we are, you know, really proud of the vibrancy of the ecosystem that we're part of, and the success we've enjoyed with our customer base. You know, we affectionately refer to our ecosystem and the ecosystem in the project world that we lead as Deltek Project Nation. It's the intersection of our partners, our customers, and our team. We're at the center of that, really proud to lead that ecosystem. We have our annual user conference. We get 4,000 people together, 4,000 project geeks in one place. It's like a project-based revival meeting that actually, when you say it out loud, it really doesn't sound all that exciting.
It's a pretty amazing thing, and it's a, you know, really vibrant ecosystem that we're, you know, very proud to lead. It's a growing set of markets. We're excited about our position to continue to grow and contribute to Roper's success. Again, with the partnership with the Roper team has enabled us to be in a position to continue to successfully lead this ecosystem and continue to deliver the results that we've been able to put on the board thus far. Thanks for the opportunity to tell you a little bit about what we're up to at Deltek. I'm gonna take the opportunity to introduce our next speaker, Chris Cartrett, who I partner with as part of my group executive responsibilities. Chris has been the president at Aderant for 18 months.
He's been at Aderant for nine years, was the chief revenue officer before taking on the leadership role. He's been in legal tech for over a quarter century, I think, Chris, which I don't know if that means you're really experienced or you're really old. You know, deep domain expertise, and a fantastic leader leading our Aderant business. Chris, come on up.
Thank you. Yes, my name is Chris. I'm the president and CEO of Aderant. We're based in Atlanta, Georgia. Go Braves. Sorry, New York, I had to get that in there. Anyway, we get the chance now to talk about the very sexy world of legal tech. At least it's very sexy to me. The way I've tried to structure this, I hope this will work because listening to Neil and everyone before, you kinda have the skeleton, you know the character traits of the business. I think Aderant's a really good place for you to really see how the meat hangs on the bone, if that makes sense. I've tried to lay this out in a way, give you a little bit of overview as it relates to numbers. We'll talk about the business itself, like what do we do?
Why is it special? What makes it click? I thought I'd kinda get a little bit into the market piece, and then we'll close it with, like, some of the strategic direction stuff that we're doing. I think all this will kinda tie in to what Neil was discussing earlier. First and foremost, like, Aderant, what we do basically is we help these big, large, massive law firms run a better business. You think about the core inner workings of their financial system, how they get a bill out the door, how they're able to collect money, whatever that may be. Now, from a business perspective, we're a little over $200 million in revenue. About 80% of that is recurring.
Our geographic mix, if you were to look at, like, large medium law firms globally, our geographic mix kinda matches that. Like, the vast majority of law firms are here in the States, and then you know, transition to Europe and then across APA. The big thing goes down at the bottom because this is a little bit of our story, and I'll get through this more. ERP, or in the legal space, we'll refer to this as PMS, which means practice management system. That's the majority of who Aderant was forever, especially when we were acquired by Roper. It's still about almost 57% of the total business. Now the other parts of the business have actually grown to about 43%. I'll talk to you a little bit more about those in detail.
When you think about Aderant, if you were talking to your law firms, most of them know us for the very first thing you see up there, which is a product called Expert. Expert is that core kinda back-end financial system. Now, here's what's interesting about this. You don't think of this, but in the legal world, the way they bill, the way your businesses require them to do certain things is very, very, very specific. The way they have to manage rates by client, rates for a different matter, even though you may have a negotiated rate for another client, how you have to split those bills. The point is, inside the law firm, how they actually have to generate bills or think about their time cards, ultimately, to get something out to you to potentially pay them is very, very, very complex.
We're very fortunate that Expert, our main kind of product line there, is the number one product in that large and medium space, hands down. Because of that, Expert basically gives us a right to play. Like, you can imagine, if you've got all your financial all your data about your clients in one financial system, you're putting it through crazy security audits, you're putting it through all kinds of pen tests and everything else just inside the law firm because that data is so incredibly valuable. Well, that gives us an enormous right to win when you think across the rest of the law firm. For example, when you go to some of our other offerings that we have, for example, BillBlast. BillBlast is an e-billing tool.
One of the big things in the legal world today is you don't submit a bill through email. You tend to do it through a billing site where somebody goes out there and basically makes sure it aligns with how your service level agreements are set up and stuff. BillBlast is basically a product that I remember us texting Neil four or five years ago. A small law firm had built this. It was about a little less than $1 million in revenue, and we'll do $1 million in bookings of BillBlast this month. The point is, it's that kind of an application because we earn that right to play because of the success that we've had with Expert and the way the large and medium space sees us. The same goes for the other product lines.
iTimekeep, another application that I remember us texting Tim Haddock and working with Stipp to bring a Bellefield product line in. This was the first real true SaaS time application introduced into the legal marketplace. Recently, you've seen where we acquired a company called vi Global, which really kinda helps with how people recruit. We're even integrated into the law schools in Canada. Resource allocation, which in a legal world, how you manage your assets and who you're able to put on a matter and how you're able to pull them back is obviously very complex.
Because of Aderant's relationship that we have with all these law firms that you have globally, it's given us an opportunity to be able to go to them and help them really kind of learn how they can manage their assets, how they can, you know, put their lawyers in different places when they're busy, when they're not busy. Those are the types of tools that we bring to the table. The last one real fast is another good one. We acquired another very small company at the very end of 2021. I mean, like December 31st at midnight. When that acquisition happened, we had another product, calendaring and docketing. Think if you ever have a court case, there are all these filings that you have to make, and there's a time when those things have to happen.
CompuLaw, one of our core products, was considered really one of the leaders in the market space. ALN, American LegalNet, had actually come along, and it's starting to become a little bit of a disruptor in really introducing the first kinda cloud application into that space. We were able to acquire them, and the ending result now is a product called Milana, which is Hindi for better together, bringing this CompuLaw and ALN product together to really deliver this one true cloud application into the space. That's to kinda help you understand what we do and why it's so unique and why it's so very specific within the legal world that it's different, right? If you think about, though, who our market is. We do have about 2,500+ law firms across the globe.
I mean, they are all large, medium sized law firms. If you think about the big space, and I'll reference that a lot here. Inside the United States, we refer to some of the Am Law 200. Think about the top 200 law firms that we have, of which a lot of them are, you know, obviously based right here in New York. We have about 97% of them are current clients of ours, 86% of the Global 100, if you wanna think even large firms outside that. They work in about 21 countries. From a market perspective, the way to look at this is the most recent survey had like global legal services this year will continue to increase at about 5%.
If you look within those really large law firms, it's been on a pretty consistent about 10% CAGR over the last few years, with the last year being just something that's really special within the firms. Who are those firms? I mean, these literally are your firms. I mea it's your Skadden, your Mayer Browns, your Clearys, your Jones Days, your Squire Patton Boggs. I mean, these really are the firms that people look at as being truly the leaders in their space, wherever it may be, really across the globe. I wanna kinda zero in a little bit, though, on Expert that I was talking about before because I think this kinda helps tell a little bit more of the story as we move forward of how the relationship with Aderant has really grown underneath Roper.
Specifically in that Expert world, I mean, we've added about 220 plus law firms. I mean, you gotta remember, y'all, you're talking about a very smaller space as far as size, 220 plus firms over the last five years. 39 in the Am Law 200. I mean, these are the big ones, right? Of that now, there's 97 firms in the Am Law 200 that are either on Expert or implementing Expert. The most important part of that is during that entire time, we haven't lost any. It really speaks to kind of the success that we've had inside the business. I actually use this one stat.
We were acquired by Neil and team, we were at about 31% of the market in the Am Law 200. Today we're 48% of that. It's been a really strong story. For that story to continue, when you're working in such a niche, you have to really be focused on the experience that your clients are gonna have. We've put a lot of focus on our implementation teams and our services, and we're very happy to say we're probably the only provider out there that's not had, like, a failed implementation when you're going after these large firms. Second to that, though, is a heavy focus on our support. We carry a pretty consistent and over 90% Net Promoter Score when it relates to how we're able to serve our clients.
Finally, from an organic piece, now we mentioned a little bit about some of the smaller acquisitions we've done. Off those, we've been able to build products and basically create new modules for clients to kind of help drive that organic growth. Since the Roper acquisition, we've built about 35, or it's actually closer to 40 now, 40 applications that we've been able to take to the market. If you think about this from a timeline, now we'll all kind of stick to the same piece. The land grab is what we refer to that opportunity where you're going out and you're winning these clients away from your larger competitor, and that's still out there, and that will always be there, and it's been a wonderful thing to do.
For us personally as a business, I would say knowing that we had this great right to win in this space, we've been able to take and start expanding within that large and medium space into these other products, like the things that I've talked to you about before, like e-billing and talent management and some of this. We started back in 2017 with a heavy focus on trying to do more bolt-on M&A work, and that bolt-on M&A has led us into this skill, which we think is one of the muscles that we're able to flex really, really well, and that is this idea about cross-sell and upsell. That's a heavy part of who we are as a business today, bringing new applications to our clients, continuing to kind of expand our wallet share on inside the firms.
Probably one of the bigger things going on is the SaaS journey migration that started kind of in 2019. This is a great example where inside the legal world, whether, I don't know if y'all realize this or not, but they're very risk averse. Just thought I'd throw that out there. What was going on at the time is everybody was very nervous about taking their financial data and moving it into the cloud. If you read The Wall Street Journal, there's all kinds of hacks or things like this were trying to happen at law firms all the time. They had this mindset that, "No, no, we need to keep everything close.
We need to keep everything under our own ownership." As we moved into COVID, and everybody had to start working from home, immediately everybody started realizing, like, "No, this is not a good idea. We need to be looking to have more hosted providers or other people to help us on our cloud journey." This was one of the places where Neil and team really have been hugely beneficial for us at Aderant, because whereas we had SaaS applications as it relates to all those point solutions, we had not really tackled that with the large ERP or practice management solution that was Expert. That became a large part of our journey really at the very beginning of 2020. Now, I'll give you just a real good stat that kind of relates to how this has radically changed.
In March of 2020, we had somewhere in the ballpark of 10%-15% of our total sales pipeline was SaaS or subscription business. As I sit here today, it's 90. It's been a radical shift. For us, this has been really good because on this journey, this kind of SaaS journey, and then also, the hosting journey as it relates to Expert, as people may move into our cloud or into our single tenant that we may be able to offer them, I mean, we're very early in those stages. That's basically increased our serviceable addressable market by about threefold. It's been a wonderful journey that we look forward to continuing. What do we look like compared to when Roper first acquired us?
I will say, you know, we've worked very closely with Roper across a lot of things, helping us kind of grow and develop as a team, also maturing as a business. You know, jokingly, I just want to stand here and let y'all read the slides, I guess I should point them out for the webcast. The truth is, we did, we went from a number two position to a number one position. When we were acquired, we were actually slightly below $100 million in revenue. Today, we're over $200 million. Our recurring revenue has grown. Now we're 79%. By the end of this year, we'll be north of 80%. Our SaaS bookings, you know, literally it was 0, today it's 80% of what we have is actually booked.
From a margin perspective, we've actually been able to hold our margins even through this transition from perpetual into a more SaaS world. Finally, I think this just speaks to it being a better business or a healthier business, is our net retention has basically increased from 102%, which was good, but to 113%, which is, I think we would all agree, great. You know, I represent a really, really good team, and I'm very happy with the success that we've been able to have as a business. I think we do a really good job of representing what Roper's all about and how Roper's able to influence a business. I look forward to talking to any of y'all at the breaks or at lunch.
With that, I appreciate it very much. Thank you. Jeff? How so, sir?
Well, we've heard from two of our software companies. Now we're gonna shift gears a little bit and hear from one of our medical products companies. I think it's a very similar story, though, of process-enabled capability building. Earl Thompson is gonna present our Verathon story. Earl's been with us since 2016. He and his team have built a real execution machine at Verathon that are delivering exceptional results. You'll draw your own conclusion from Earl's presentation. I think it's the story of what can happen when you put exceptional leadership in a business and allow them the elbow room to put first things first. They've had excellence and achieving excellence as a first-order priority, and it's just showing up in the transformation of the business.
With that, Earl?
Great. Thanks, Jeff. Mic on. Can you hear me okay? Great. Jeff and I have actually been on this journey together. We joined about the same time in 2016. He's been an amazing partner on this journey. I really am excited to have an opportunity to introduce you to Verathon and share our journey with you. Let me start by talking about who we are. Verathon is a specialized medical device company. We're a technology company. We're a growth company. We're the global leader in really two spaces, airway management and bladder volume measurement devices. We're a hardware and solutions company. You know, the best way to think about Verathon is to think about our mission. We've got an incredibly compelling mission. Our mission is to empower healthcare providers to improve and extend patients' lives.
If you're to talk to one of our clinicians, an anesthesiologist, an OR doctor, an intensivist, they would put a finer point on it. They would say, "Verathon, you're in the business of saving lives." The mission's very personal. In fact, I would guess many of you in the room have a relative, a friend, an acquaintance that has actually you had a Verathon product used during their medical care at some point. We're largely focused in the hospital setting, the acute setting, we call it, in all aspects of the acute setting, the ER, the ICU, and the OR. We're three-quarters visualization, which is our airway management business, and that's our growth engine. One-quarter bladder volume measurement. We're a global company, we're still largely centered and anchored in the United States, where about 79% of our business comes from today.
I think the most important part of our story is the top graph, which is today our consumables business, driven by our single-use portfolio, is 53% of our business. That's recurring revenue, 53%. That will continue to grow every year. Finally, we exited 2022 at about $350 million, and I'll give you a peek at that journey, that growth journey going forward. This is really a story of accelerated growth through market expansion and product generation excellence, combined with, as Neil's pointed out, and everybody's pointed out, a journey of continuing to build capability each and every year to strengthen our foundation for sustained growth. Let me introduce you now to our three core products. What we have are incredibly known and leading brands and leading product positions in all three areas. Our probably strongest brand is our GlideScope brand.
If any of you know a anesthesiologist or an intensivist or an OR doctor, when you're seeing them on a weekend, ask them if they've ever heard of GlideScope. I'll guarantee you, every one of them knows GlideScope and has a very, very favorable view of the role GlideScope has played in helping them save lives. GlideScope is our video laryngoscope portfolio. What's a laryngoscope? A laryngoscope is a device that helps you assist doctors in intubating patients. What does that mean? Setting the oxygen tube in the trachea for patients that can't breathe on their own. A video laryngoscope combines camera and imaging technology to allow you to see the vocal cords, the trachea when placing that tube, ensuring first-time success and improved patient safety. You think about who uses this. Think about a trauma patient in the ER that can't breathe on their own.
Think about people in the intensive care unit that can't breathe. They might be on a ventilator. They must be intubated. That oxygen tube must be set. You must use a direct laryngoscope or a video laryngoscope to set that tube. Then in the OR, if it's a long operating procedure, you'll need to be intubated during that OR procedure. We're the leaders in video intubation. The three blades there are our rigid devices. They're single use, so every time you intubate, one of those three blades is disposed of, and you will use a new blade during the next intubation. It's a system play as well, including a monitor, a core system for visualization. Our next product area are bronchoscopes, single-use bronchoscopes. This is our BFlex brand. We entered this market in 2019. We were number two in this market.
A competitor had created the market over the previous 10 years. A BFlex has been around for many years. They historically were big reusable systems, towers. They're used to visualize the airway, visualize the lungs. A single-use BFlex is just that. It's a single-use version of that flexible device for visualizing the airway and lungs. It's used for diagnostic procedures as well as management procedures of medical issues in the airway or in the lungs. We launched in 2019 our first products. We have four products in the portfolio today, and really the operation of these is the same as a reusable product, but they ensure patient safety through sterilization and through single use and the lack of reprocessing needed, combined with availability in the workflow when needed. Our third brand is BladderScan. BladderScan is known to everybody out there.
It's a product used by the nursing community and urologists. It's a purpose-built ultrasound device that allows you to make accurate decisions about when to cath a patient or not. It tells you very accurately how much fluid is in a person's bladder. You really don't wanna have to cath a patient in the ICU or after an OR procedure unless you need to. Catheterization is a high source of infection in the hospital environment. This device empowers nurses for when to make that decision. Let's talk about our market positions. We're in a really strong position in these markets. These markets are very attractive. Globally, these markets combine to about $1 billion. They're growing at double-digit rates combined. The first markets are video laryngoscope market. This is a high single-digit growth market.
The growth in this market really comes from the single-use side of the market. We're the global leader in single use. Global leader. The middle market is the single-use BFlex market. This is a really attractive market, growing in the high teens. It's all driven by the replacement from reusable to single use. We entered in 2019 with one scope. We have four scopes today. We're the undeniable number two globally, a really strong number two in the U.S., and we expect actually to exit 2023 as the market leader in the United States for single-use BFlex. It's been an amazing journey since launch in 2019. Finally, imaging. This is largely a replacement market. Grows low single digits, 1% maybe.
Again, we're the global share leader, globally in this case, U.S. and strength of product outside of the U.S., it's really a replacement cycle business. I think it's kind of cool to look at the numbers to understand the scope and scale of what we do. I think there's like 6,300 hospitals in the U.S., acute setting facilities, and we're in just the majority of them, well over 6,000 of them, with any of these three products, if not all three products. 4.8 million. We do about five million single-use devices we ship supporting our video laryngoscope business in 2022, out the door, single-use products. Six million patients are intubated annually with GlideScope. How's that different than the five million? We also have reusable video laryngoscopes The difference between the two would be how many customers are using reusable scopes around the world. Our predominant business is the strength and position of our single-use video laryngoscope business. On the bottom, we're number two i n bronchoscopes in the U.S., vectoring to number one by 2023. Finally, in our bladder volume measurement business, we estimate we scan patient exams, support annual patient exams of about 175 million exams a year. Really a lot of scope, scale, and volume of product shipping out to our clinical settings. This is a slide you've seen from all the businesses. You know, as Neil reinforced, a key part of Roper is an expectation that we're building the business and building capability for growth every year. I think Verathon's a real poster child for that journey.
When we were acquired by Roper, became part of the portfolio in 2009, it was really an inventor-led company. Actually, it was two inventors that created two leading medical device categories in video laryngoscopes and bladder volume measurement devices. There was a real need to work on the foundation for growth, and the team went to work in 2010 and have been on that journey since. I joined in 2016. I wanna really focus on two areas. For us, it's first and foremost product development or product generation excellence. We are on a journey to accelerate the rate at which we innovate, so accelerate the quality of our products and the quality of our innovation. It's customer-driven innovation. I'll show you a stat on that coming up.
Not only are we expanding our product development capability each year, we're accelerating the rate in how we do product development and how we drive customer-driven innovation. The other one that's really important for us is strategy development and strategy execution. We went to work in 2017 to really assess our markets, our growth potential going forward, and we made the choice in 2017 to expand our market into an adjacency that was a logical adjacency in airway management, single-use bronchoscopy. We had a right to play and win in single-use bronchoscopy because of the intersection of video laryngoscopes. We made that choice in 2017. We've been laser focused and relentless on execution since 2017. First product launched in 2019. Full portfolio by early 2020. The market share results speak for themselves.
The main part of our story is accelerating growth. Historically, if you looked at Verathon through 2016, 2017, it grew at about a 4% compounded rate. Since 2019, we're on a double-digit growth trajectory, 13%. We expect to stay on that double-digit growth trajectory going forward. The first key part of our story is what we call market expansion or served available market expansion. When we were just in video laryngoscopes and bladder volume measurement, we played in about a $450 million market, growing at, you know, low single digits. When we made the choice to expand to single-use bronchoscopy, we more than doubled our served available market. We're now playing in a $1 billion market, growing it at low double digits. We made that choice back in 2017, we entered in 2019, we're in a $1 billion-plus market today.
We will continue on that strategic journey. We expect and are planning to expand SAM again into, again, logical adjacencies where we have a right to play and win. Additional endoscopy scope areas, combined with some imaging areas right next to the bladder that can leverage our point-in-fact technology. You know, the keys on the left side are what's really enabled this growth journey. Market expansion, portfolio extensions, and product development execution, acceleration, predictability, higher quality products, higher differentiated on our products, higher quality product. Finally, commercial transformation. We win at Verathon because of the intersection of product leadership and customer intimacy. Product leaders and customer intimacy. We have a direct commercial organization around the world. They're clinically trained, and we've been scaling that organization the last five years as we continue to grow at an accelerated rate.
Combined with that, we've added clinical capability as we enter the single-use bronchoscopy journey with clinical respiratory specialists throughout our commercial organization to help train our customers on our single-use bronchoscopy products. The summary is the graph on the bottom. We were on a 4% trajectory, really, since acquisition. Since 2018, 2019 through 2022, we've grown at about 13%, and we will continue on a double-digit growth trajectory for the foreseeable future. To summarize, Verathon has become a much stronger company being part of Roper. The numbers speak for themselves. Our revenue back in 2014 was $190 million. We finished last year approximately $350 million. Our profile moved from low single digits to now low double digits.
Our recurring revenue, this is, I think, the most impressive part of the story, was less than 15% back in 2014, 53% last year. This will grow every year as our highest growth part of the business is all single-use consumables. We launch products every year. We'll launch three or four major products this year. Before, they might have launched one product, you know, every two or three years. The last part of our journey is so important. It's the people that make Verathon. We've got an incredible group of associates around the world that are really committed to our mission, aligned by a common set of Verathon values, and really are the I think the differentiation is our people and our culture to what is underpinning Verathon's success. With that, I'm excited for the journey going forward.
I hope I have a chance to come back and speak to you in a few years and let you know how we're proceeding. Thank you very much.
Thank you, Earl. Is this working? Okay. Saved the best for last. We've got, it's my pleasure to introduce Amy Zupon, who's the CEO of Vertafore. Vertafore, as you might know, was an acquisition just about three years ago, one of the largest acquisitions, in fact, the largest that Roper's made over the years. Amy's based in Denver, great product executive. If I could have you come up, Amy, please. And from Pittsburgh, we have some interesting conversations between Steelers and my fans, the Patriots, but she's a true thorough Pittsburgh fan, so welcome, Amy.
Thanks, Satish. Appreciate it. Satish used my line. I was going to say, "Save the best for last," but here we are. Thanks, Satish. I appreciate that introduction. It is truly terrific to be here with all of you today to talk a little bit about Vertafore. Vertafore is a company that focuses specifically on insurance, right? We provide purpose-built software for the property and casualty distribution channel and the employee benefits distribution channel. We've enjoyed tremendous success over the years. We operate with high recurring revenues, even more if I get to count my reoccurring revenues. Fundamentally, we focus on North America with the majority of our revenue actually coming from the U.S. markets. I want to spend just a few minutes talking with you about what I mean by the insurance distribution channel.
What we do, who we do it for, and why it fundamentally matters. You know, when you think about insurance, I'd ask you to very simply think about two parts. There's creating the insurance products, and then there's how we bring those products to market, how we sell, market, and service those products in the industry. We focus on the latter, right. How the products are sold, marketed, and serviced in the industry, and we call that the insurance distribution channel. For property and casualty and employee benefits, it's actually quite a complicated distribution channel, and I'll kind of explain all of the players in there and fundamentally how they have to work together in order to actually sell and service insurance products in the market. You start with the insurance carriers on the right.
Insurance carriers, these are the folks, obviously, who create an issue and carry the insurance policies, right? At Vertafore, what we do for these folks is we help them manage their distribution channel. Think all of the licensing and agency partners that they have in the industry and how they manage them. We also help them connect with those insurance agency partners. Think they've got to get information from a policyholder in order to actually deliver a quote, in order to get that back to an agency, in order to get that to you, me, and the end insured at the end of the day, right? That's how we help the carriers.
Some carriers actually go to market through a direct channel, which I would consider either, you know, through a website or they go through market through a captive agency who largely sells on behalf of that insurance carrier. More often than not, those carriers go to market through the independent agency channel. There are 35,000 independent agencies out there. When I say independent, they are separate companies. They run and operate their own businesses, and they sell insurance on behalf of many of the insurance carriers. Not just one, but lots. To make it a little bit more complicated, the carriers actually go to market through many insurance agencies, so there's a many to many relationship here. There's about 35,000 insurance agencies out there. They range in size.
Some are, you know, thousands and thousands of employees all the way down to one or two person shops. Fundamentally, what we do for them is we provide an anchor system that they run their business off of. Think they have to manage their current business, everything from servicing the uninsured to actually managing the policies and the information that needs to get to the carriers and back to them, to doing the accounting inside of their business. We also service MGAs in the industry. I want you to think about MGAs as almost like intermediaries in this distribution channel that are used for particular purposes. We provide anchor solutions for them to run their business off of. Then encompassing it all, we provide solutions to the Department of Insurance, so the state governments.
Insurance distribution channel is highly regulated, and it's regulated at the state level. We provide solutions to them to help them managing the licensing and compliance requirements inside the industry. You can see lots of players. They all have to work together effectively to ultimately sell and service an insurance policy for all of you. What I will tell you about us is something that is very unique about us, is we service this entire distribution channel, so we focus on all pieces and parts of it, which is unique. We also only focus on the distribution channel. This is the niche market that we fundamentally work within each and every day.
If you actually take a look, our company, our products, our people are consistently recognized by industry leaders, as the best in the business, whether it's our people, whether it's our products or our company, and all of that's great. You can see some of the value that we have been recognized for alongside here. What I'll tell you what really differentiates us as a business, what makes Vertafore special, is that we operate in a terrific industry. Insurance is growing, and it has favorable trends towards Vertafore, right? We operate from a unique market position of strength as a market leader, and I'll share more about that here in a second. We operate in a complex industry. The distribution channel, hopefully you understood a little bit as I was talking through it. It's complicated. There's a lot of moving parts.
There's still a lot of manual practices in there that need to be automated. Because it's complicated, it does create natural barriers for entry for us. What I think what makes us most special is we take none of that for granted. We take none of that lightly. We have a very strong team in place to execute. We have a strong strategy that is built for long-term growth. Fundamentally, we are filled with a team of people who, you know, love our culture, believe in our culture, and wake up every day super passionate about helping those inside the insurance distribution channel, our customers, be fundamentally successful. To me, that's what actually differentiates us in the market.
I mentioned we operate from a strong market position, 100 of the top 100 brokers leverage a Vertafore solution. 66 of the top 100 brokers leverage a solution for agency management. They actually use us as their anchor system. 96 of the top P&C 100 carriers leverage a solution from Vertafore. Seven of the top 10 benefits brokerages leverage our solution for benefits. If you wanna think about things more from the licensing and the compliance world, 20 of the state governments leverage our Vertafore solutions. About 50% of the industry's transactions today go through our system. We have a little bit north of 1.2 million insurance professionals on our licensing and compliance network. We're super proud of that, but honestly, much more to do.
You know, at the end of the day, that gives us the privileged position of getting to service and partner some of the best and the brightest folks that are in the insurance industry. As you think about our company, I think it's really important to understand that insurance market trends support our continued growth, and that independent agents, which I described to you as kind of the heart of that distribution channel, they're a fixture in that distribution channel, and they're actually just continuing to grow and perform in importance. If you look at the graph on the left, you'll see the consistent growth in insurance premiums. If you look at the graph on the right, you'll see consistent growth in employment in the distribution channel over time. Both good markers for us.
If you look in the middle, you focus on independent agents, what it's really showing you is that the percentage of insurance premium that is going through that independent agency channel is only growing over time. In 2021, it was 63%, up from about 56% several years prior to that. All trends that are favorable to continue to support our growth. I'm going to switch gears a little bit and talk about building the business with Roper. You know, we were acquired by Roper just a little bit more than two and a half years ago. I can honestly tell you that the journey has been super positive for our business.
You know, very early on after our acquisition, we spent a tremendous amount of time with the Roper team, kind of deep diving into our strategy to figure out and make sure that we are fundamentally aligned for long-term growth. Three things became clear to me during that process, right? One was, you know, fundamentally, there's a high expectation at Roper to have a data-driven strategy that drives long-term growth. Very important. Second is that we need to be building the business from a capability perspective to drive good growth, right? Consistent long-term growth and make our business better each and every day. Third is we need to have a talent plan in place to fundamentally make sure that we can support that growth. Through that exercise, we kind of built all three of those things. It was actually a super helpful exercise.
It drove a lot of alignment in our business. What I thought I could do today is just kind of highlight th ree of the initiatives from that work to help you get a sense of the type of work that we did there. A lot of good things came out, but I'm at least gonna highlight three for you. The first one I'm gonna highlight is the shift that we are making at Vertafore from enhancing the way we work with our customers, moving more from a transactional software vendor model to more of a partnership, to more of a consultative engagement model. There's two market drivers that are impacting that decision. I think 1, large agencies, MGAs and carriers, they're getting more sophisticated in their technology decisions and their use of technology on a go-forward basis.
At the same time, M&A activity in our industry is growing, and that means there's more complexity around our service model needs. If you think about those two things, you can very quickly say that this segment of the market is actually growing faster than the rest of the market, and their needs from us are shifting. If you think about our market position, it became crystal clear that we needed to shift from being a transactional provider to being a partner provider to drive long-term growth. Through that exercise, that's taken investment. We've had great support from Roper to do it, but it's more people, new roles, upskilling our talent, changing our incentive model, all sorts of operational things that go through actually making that capability shift in our business. You know, it's still early days.
We're not where we wanna be just yet, but I will tell you it is absolutely making a positive impact already. I think the second one I wanted to highlight for you is increased product investment. There are three core areas where we are driving investment in our core products. The first is user experience, so simplifying the workflows and actually modernizing that user experience for our end user. The second is around advancing technology with the migration of our solutions to Amazon Web Services, which has been very successful for us thus far. The third is bringing new capabilities to market. Probably the most notable is last year we launched a new solution to change the way that small commercial quoting works in the industry.
We are a leader in personal lines quoting and automating that and super excited to actually bring this new capability out to our customers. It's been terrific. While Roper hasn't necessarily shifted our strategy around our investment, they have 100% absolutely been pushing us to invest more and accelerate investment as we think about our continued growth and our scalability. Then the third thing that I would like to highlight for you is driving strategic M&A for growth. Since we've been part of the Roper team, we have done two add-on acquisitions, so two bolt-on acquisitions, both of which have been very successful. The first was called AgencyZoom. It was a small product line that we acquired in 2021 to actually fill a gap for us in the small agency and the mid-agency space.
The second we did mid last year, it's called MGA Systems. It was a new platform for us to actually help accelerate innovation for that MGA market segment that I described earlier. Both acquisitions have exceeded the financial cases that we put forth, which I'm super proud of. AgencyZoom has delivered 50% growth since acquisition, and MGA Systems delivered 30% more in net new sales in the first six months under our ownership. What I will tell you is that our partnership with Roper, so Tim, Sip, and the team, have been just honestly terrific as part of this acquisition. They were great thought partners to us on doing the acquisition. They provided additional resources to help us through the diligence process.
Probably most importantly, once we had conviction on the acquisitions, they were very, very quick to execute these transactions, which I can't tell you how much I appreciate, because I think our ability to execute quickly, really put us in a position to win on both of those acquisitions. The Vertafore team has led the value creation, and so the biggest lever that we were gonna pull was to actually leverage the Vertafore sales engine, kind of unleash it with these two new products, which we've clearly done. What I think is really important to note is the best of Vertafore and the best of Roper kind of coming together. We've really built a really solid motion, and I look forward to the opportunity to do more of these in the future.
In closing for me, I would just tell you that it's been a terrific couple of years with Roper. I think Vertafore has definitely become stronger as a business under Roper guidance. You know, revenues are up 15% since the time of acquisition, while still maintaining our top-notch EBITDA margins at 49%-50%. One thing I'm very proud of is that our development productivity in the last few years has increased significantly, which I definitely attribute to the fact that our growth and net retention rates are both going up as well. They were already good at 91% and 105%, but now they're sitting at 92% and 108%. I'm excited to see that, I think that's gonna continue going in the positive direction.
I have to tell you that my employee engagement scores have never been higher, in my 6.5 years in leading and running Vertafore. That's exciting. The way I sit, where I sit and how I feel about it has been a terrific foundation that we have built. We are very committed to building the business, making it better. I think we've got a terrific long-term strategy in place, and I'm pretty excited for the future. Thanks for being here today, and thanks for letting me tell my story. I appreciate it.
All right. Thank you, Amy. We're gonna start our first of two Q&A sessions. I'd like to welcome Neil, the group executives, and our business presidents back up on stage. If you'd like to ask a question, we'd ask that you please raise your hand, and we'll bring the microphone to you. Additionally, if you could please state your name and your firm before asking a question for those that aren't in the room. Finally, you know, any question is of course, fair game, but this is a great opportunity given the folks that are up on stage to ask about our operating model and our businesses. I'll go. I'll start in the middle and go here.
Thank you. Good morning, everyone. It's Deane Dray with RBC. Appreciate all the detail this morning and the showcase of the leadership team. And my question is around bolt-on M&A. We heard from all of the presenters this morning on how their growth has been augmented through bolt-on acquisitions. The Roper model is decentralized management but centralized capital allocation. Just give us a sense about that competition for capital within the businesses. You know, part of their growth destiny is being able to allocate capital to grow, but it's still the purse strings are mostly at the headquarters level. Just what are the dynamics, competition for capital, maybe a little more insight into Tim's role? He got referenced a whole bunch of times, so just would love to hear about that, and appreciate it. Thank you.
Yeah. why don't, you know, you kinda did it. Chris, why don't you just talk about the process, and then I'll say a couple things at the end.
Sorry. Sorry about that. I would even tell you one of the reasons I'm here in New York, and we have something going on up the road here. It's called Legalweek. at Legalweek, there's a lot of different businesses and things are here servicing other clients. it's a chance for me to go up there and meet with some of these other companies. The idea is that you're looking for these other companies that really kinda fit what we do, where we play, how we think we can kind of add value and bring it to market.
From there, then the conversation really does, it goes back where we work with Tim and Tim's team to really create relationship, whether it's go meet somebody, talk to them about the Roper story, how it's a little bit different sometimes in the private equity world that many of them are in today. Really it's more of a collaborative conversation. Our job is pitching and selling them on the business and helping them understand operationally what it'll be like. The Roper team in the center basically take care of everything else. So...
I think the first, the incentive that the operators have for bolt-ons is the litmus test is does it help improve the organic growth outlook, right? That's the incentive. They only wanna do something to the extent that's true. They're sourced through a combination of things like Chris said or just, I mean, you know, all of our companies are intimate with their markets. They know the competitors or the adjacencies left or right that are likely candidates. They'll have some knowledge there and might serve one or two up occasionally. Also, we'll get ideas that come through Tim and our corporate team, we'll sort of work with the group executives in terms of process. In terms of diligence, it's very much a collaborative process.
You have, as Amy Zupon just mentioned, you got the best of Vertafore and the best of Roper pitching in and working on the diligence. In the case of this, the operational work will generally principally reside with the business. The risk items will reside with Roper. At the end of the day, the returns thresholds and the ultimate decision is made at the center through our board, right? We take every bolt-on, every transaction through our board. There's not really competition for capital 'cause they tend to be smaller. Over the long or last 10 or 15 years, Jason Conley, about 10% of our capital deployed's been to bolt-ons. They've been, as you'd imagine, 'cause they carry with them capital S synergies. They're the best returning deals that we have done and can do.
We'd love to see a larger allocation of that going forward.
All right. We'll try and move it around the room a little bit.
Hey, thanks. It's Joe Giordano from TD Cowen. I guess this is for any of the business leaders that we heard from this morning. You know, you mentioned you're buying not fixer upper companies, right? You're buying good companies that are inherently successful, that are leaders in their markets. When you show the slides of here's where we were at acquisition and here's how we are now, like, how much of that were you on that path anyway? You're a good company, like you would have gotten there anyway. How do you parse out how much is really attributable to Roper specifically owning you? Maybe how has that ownership been different than under maybe PE ownership previously?
Sure. I, while we were partially on the journey, I think the durability of our, of our growth, the durability of the capabilities underlying the business, because, you know, Roper's a permanent home. I'll speak for Deltek. Roper is a permanent home for Deltek. Incredibly galvanizing for our team, for our customers, there's a long-term strategy that we're investing in as opposed to, you know, when owned with a different, you know, source of capital, more of a short-term focus that doesn't have the durable investment relative to building long-term business capabilities. I think we're on, we're in a different place than we otherwise would be. It was a great business, right? It was gonna continue to grow, and it was gonna continue to thrive. It's done so in a more durable and meaningful way since we've been part of Roper.
We've got a better foundation in place as a result of our time with Roper than I can say we otherwise would have, and we had historically.
Yeah, I would say with Verathon, I mentioned this earlier, I think in 2009, right at the time of acquisition, we were about a $120 million company, it was really two inventors that came up with two leading product categories and grew it to $120 million. I think the key to the growth up to now and the accelerated pace has been all of the capability building that starts with regulatory quality, our operational capability, especially navigating COVID for our business, our product generation journey and product generation excellence, our talent journey. That's really all happened under Roper. If I just take a look at our leadership team today, we have a leadership team that's just wired for continuous improvement and capability building.
you know, I think these two inventors invented incredible product categories, and we inherited a real business. Neil, you can probably comment 'cause you were here, but I really think it's the capability building under Roper that's unlocked Verathon and accelerated the growth today and in the future.
Yeah, just as the to wrap that up, I think in, you know, their prior owners, they would have all gotten bigger, right? That's. They would have. I'd question the level of better underneath, like the durability, the repeatability, the process-driven nature, the principal difference with a long-term ownership model versus a more interim ownership model.
Thank you. Cliff Ransom, Ransom Research. You know, you and I had a chance to talk about this a couple of months ago, so I'd like to address it to the other folks, please. I think of strategy deployment as kind of Roperized Hoshin Kanri. The key to me is that process-driven mentality has in it the learning component that the Japanese call yokoten, the horizontal dissemination of best practices. You look at the SaaS conversion at one company, you look at the new products conversion at another company, how do you share that amongst yourselves to maximize the impact on the system?
I'll take that, Satish.
Yeah.
That's a great question. There is a fine line between socratically helping the business and doing exactly what you just said. At first, I think you're looking at the group executives who are able to take learning lessons and encourage that translation of that skill set across companies. We do this in the cadence we talked about earlier in my chat. There are other forums beyond that. I was not able to comment on the cloud and cybersecurity forum, for example. We tried this just before COVID, took a couple of year hiatus for obvious reasons. Last September, we had another forum, which was a total opt-in, and it's culturally super important to make sure that it is not a Roper conference, so therefore you're forced to come and do something.
We're super sensitive about that, but this was an opt-in forum for the C suite within each of our operating companies, and it was oversubscribed to come and learn. It is companies sharing their best practices with other companies, not something that Roper is doing or through a third party preaching how we do this. That has a tremendous amount of runway and more we could do to encourage that without actually preaching down from a Roper perspective. Last but not the least, the forum that Harold and the team ran last couple of two, three weeks ago that Neil referenced in Phoenix, where each of the CEOs spent talking about TED Talk style formats, sharing their best practices around the topic of the day.
Those are the forums that organically develop as opposed to us, putting a program around it and still keeps the Socratic balance.
There's one comment from Jeff, then we'll go-
Yeah, just a real quick comment. You've mentioned, you know, the use of the Hoshin Kanri construct. You know, I would say most companies that we acquire at that $200 million mark don't have that kind of rigor and capability. They can see that well deployed through examples like Verathon, where they use a very rigorous Hoshin Kanri process. When we talk strategy deployment inside of Roper with a new company, we've got tools, we've got benchmarks inside the portfolio where they can build that muscle, oftentimes for the first time ever.
Thanks. Julian Mitchell at Barclays. Maybe just a couple of quick questions. One is on CRI. You know, Neil, you mentioned it.
Almost in passing at the beginning, I hate to say that because it sort of caught a Roper. Maybe help us understand, you know, how much do each of the businesses think about CRI versus it being a sort of concept at the center? You know, what's the interplay on that? Maybe also for Neil and Satish around the group executive sort of layer is only a few years old in a way. How has the role itself, the expectations around it, evolved since inception?
Sure. let's let the operating team talk about CRI, and then we can take the Group Executive one. So.
I'll go. I would tell you CRI is definitely front and center for the company. You know, we think about it, we talk about it, we report on metrics that are leading indicators in and around it. At Vertafore in particular, a big initiative for us is to move to Amazon Web Services and out of our own data center. That has a direct impact on improving our position across the board. I will tell you that that initiative was started prior to Roper, so it was something that we were doing that was ultimately good for our business, ultimately good for our customers in driving scalability and performance, but now has front and center view because of the CRI impact.
Maybe you can give the perspective.
Yeah. The being a hardware company, CRI is front and center. How do we drive a hardware business in Roper in a CRI-accretive way? It turns out you can, and it is, you know, it is front and center to everything we do strategically. When we enter that single-use BFlex market, you know, we do that in a way with key strategic partnerships that help us. We do that in a very really asset-light, asset-efficient, capital-efficient way with key sourcing partners, development partners, manufacturing partners. You really can build kind of a high volume hardware business in a CRI-accretive way, but that's front and center to us every day.
The second question.
Yeah. On the evolution of the group executive role, it's been pretty material over the course of the last few years as we have gotten more process-oriented and brought to bear the experience across the group executive group, particularly in the areas of strategy deployment, and the running of the talent offense, developing common constructs and frameworks that we share with the businesses. I would also say, just, from an expectations setting point of view, the performance bar and performance expectations have gone up, and they've gone up. Again, in a pretty material way over the course of that five-year span of time.
If you wanna go.
Yeah. I would just add, my introduction to the board, I was put on the spot by one of the board members, to say: "What's wrong with Roper, and how can we fix it?" Neil alluded to this a little bit before. When we talk about businesses not going backwards, they don't worry as much about going forward either. I think the group executive role, having seasoned operators, we've kind of been there. We've benefited from the, all the scars that we wanna vicariously pass on to all of the people that we work with and support. You know, just thinking about that notion of you're not on defense. It's not a prevent defense, right? We've gotta go on offense. We've gotta take share.
That's all part of expanding and raising that bar. I think that that was, I think very well received and I think very deliberate on Neil's part and the other part as they think about from caretaker to coach, right? To how do the players get better? That's what we're focused on each and every day. How do we support them and invert the org chart, right? We are meant to be and strive to be everyday servant leaders to these folks because they're where we meet the markets.
Most of that.
Yeah, please go ahead.
I'll give it to you from somebody, that's not the group executive. I'm actually in Mike's group, and there are two other CEOs. What's really good about this is you have this opportunity to literally the talk, the collaboration, the things that you're going through. Like, when you're in a software company anywhere, we all go through very similar things. Things are different, but then they're also very similar. For me personally, and I've worked in large corporations before, one of your fears is you can end up with these layers that can actually impact decision-making. I think that's one of the things that we found a really good balance of. I meant what I said in my talk, like literally it is a text to Neil.
It is a text to Mike as far as when we need, like, certain decisions or things that we're wanting to do. Having that group exec still keeps us whole as far as running our business, but you now have somebody that you're speaking to on a regular basis that's really kinda helping you just, you know, think through some of the bigger decisions that you make as a CEO.
Final thing I'd say in the evolution, Julian, is, five years ago, we embarked on this notion of improving the organic growth outlook of the enterprise. At that moment, we were the few group executives we have were sort of independent operators, right? Today, we're a team. Like it's a cohesive team that learns from each other, that teaches each other, that supports each other. It's the team orientation at the corporate is fundamentally night and day difference than what it was just five years ago.
Just one last comment on this.
A lot of comments.
Doing all of that by still preserving the culture and not introducing complexity is a fine walk. We debate this all the time about how much to do without introducing more complexity.
Thanks. That was a passionate one for us.
Yeah. Sorry, this side of the room. Sorry, I don't wanna. There we go.
Morning. Brendan Luecke from Bernstein. Quick question around bolt-ons. We heard a lot about bolt-on acquisitions, the driver of the growth this morning. How do you think about technical debt over time as you add those to your operating companies, either post-acquisition or, if you acquire firms that have had quite a few bolt-ons prior to joining the Roper family?
That was as meaty as the most epic.
No, that's right. Yeah, absolutely not. I think for example, that'll be a filtering criteria for us, right? When we look at a bolt-on acquisition, it has to be something that is either in the cloud or can be quickly brought into the cloud. You know, we're not looking to, you know, weigh down the R&D velocity and the innovation velocity with tech. That could filter something out, frankly. I think we're looking at things that are going to, you know, propel us from an innovation perspective as opposed to be a step backwards. You know, and I think each individual business will have, you know, an individual filtering criteria based upon where they may be in their innovation journey in that regard. I'll just speak specifically for Deltek, that's how we think about it.
Yeah, I would agree with Mike. The one thing I might add is that when you think about product investment and R&D into software business, you're constantly thinking about the things that you have to do compared to the things that you wanna do. The things that you have to do are you have to keep up with maintenance, you have to keep up with technical debt, you have to keep up with regulatory changes across the board. We all navigate that. The goal is keeping up with it as you go through things and never letting it build up. I agree with Mike. As we look at new M&A, we're constantly weighing the benefit of having something that we're bringing to market versus the work that we would have to do on it.
The one thing I would say Roper does a really nice job of forcing us to do, though, is actually commit to cleaning up any technical debt if we see it during the diligence process, so we have a real plan in place before we actually make that acquisition.
Hi, this is Terry Tillman from Truist Securities. I had a single question. Unfortunately, it's th ree parts. As it relates to the software businesses and the portfolio, I'd be curious a little bit more in terms of as the customers, whether they're new customers or long-standing customers, they get on board, and they're moving to the cloud and that kind of architecture, what's their propensity to buy the adjacent capabilities and how frictionless is that? The second part is, does that provide structural improvement opportunities in NRR? I saw some solid stats, you know, some SaaS companies can get into 120% plus NRR. Can that help with that as they move to cloud? Lastly, I've exhausted my 3-part question, what about the sales side, the go-to market?
How well are you able to then farm, and really go after those existing customers that are on that journey and get on the cloud? Thank you.
Yeah.
You get all that, Dennis?
No.
I scribbled a few things.
All right. I caught most of it. No, I think fundamentally, the journey to the cloud is super powerful, and it's powerful because it provides scalability for the systems, but it also allows us to take advantage of tools and solutions that allow us to upgrade our existing platforms across the board. As we do that, you can simplify the technology underneath. The short answer to your question of does it actually allow us to drive incremental adoption in a faster, more frictionless way? The short answer is yes, right? The longer answer is there's a lot of work to do to get to that fundamental point. What I'll also tell you, Vertafore, I gave you great stats about our market penetration, but I think what's important to note is that our customers still only own a small percentage of our overall portfolio.
A big sales and marketing motion that we have in place, regardless of the cloud or not the cloud, is cross-selling into our existing customer base and driving and delivering more value.
Yeah. I think we see it in our businesses that a large percentage of our bookings are to our existing customers and through cloud conversion. You know, again, speaking for Deltek, we have a sales team that's similar to Amy that does nothing but convert customers to the cloud. We've got, you know, sales teams that do nothing but mind the base because of the breadth of our solution set. In terms of being, you know, frictionless might be a bit strong, but, you know, I think that we've got a really good motion to continue to grow the penetration of solutions. Again, the ability to, as we innovate, keep some of the new functionality aside, that is the incentive for them to go to the cloud to get access to that is also a big part of that as well.
From our side, I'd just say that's a major part of our entire strategy. From a sales piece, our salespeople, I mean, literally when you're only working with large and medium law firms, like, they better know everybody by name. The reality is, as we introduce new applications, the customers have already vetted us. They know we've been through all of our SOC 2 audits. We've had all this other pen testing, other things that we're bringing in. They expect that next solution to be something that's of that quality or of that caliber. That's really gonna help us. Like, I would say we have probably developed our muscles on the cross-sell probably more so than anything else, and it's really kinda carried us some with our growth over the last few years.
Just a couple of capstones on that. We take for granted, but just to make it clear, the vast majority of the customer base of Roper are enterprises, right? It's not SMB. To the velocity, almost all the sales motion has some human t-touch to it, right? It's how do you make that more efficient, but frictionless is only shows up in a couple of our SMB-oriented businesses as totally e-commerce-enabled channel and product promote, things like that. Certainly in SaaS, it's super informative for us 'cause we get more telemetry of use, so the product management team can figure out sort of roadmaps. That's certainly helpful. It's a large migration or a large tailwind for us and excited to see how that unfolds for the next decade.
Right. Anybody on that side of the room? Okay. Yeah, Serena, go ahead.
Yeah. It's sort of a question, and it's not really relevant to just Roper, but you know, one of you mentioned, you know, of course, you have to keep up on bug fixes and maintenance and regulatory. Can you talk about that being in your R&D budget? I mean, all that matters really are your EBITDA margins, but some of that is really just cost of goods sold, especially in a SaaS environment. How much money are you spending on true new product development versus keeping the lights running on the platforms? Then to Amy, just a quick question. You mentioned moving to AWS several times.
How much of that was lift and shift versus a whole rewrite of the applications?
Just to set it up, certainly you can talk about. Well, first, the amount of, as a setup, the amount of every strategic planning cycle and every AOP, the answer to your question by company can be slightly different. With that as the context, why don't you just give a general sense of how we block out an AOP, the use and the evolution of, or the allocation of R&D dollars? Why don't just go down the line? Wanna start with Amy?
Yeah, sure. When we think about it, at Vertafore, we spend about 30%-40% at any given time on maintenance, regulatory, technical debt, and the rest of it is on enhancements and investment for the future and new solutions. While we're on that question, your question on AWS, since I've got the mic, right? Your question for us is, the way we're approaching it is a bit of a lift and shift first and an enhancement second. We're doing that because we service a pretty complex market with complex products, to de-risk that for our customer, it is clearly the best approach for us.
One thing I would say, I mentioned as part of Deltek's journey, better quality, right? If you think about, you know, the affectionate term sustaining engineering, right? Which is the bug fixes, the regulatory stuff. Again, Amy, I love what she says that the have-to stuff. Better quality means you can squeeze more hours out of the sustaining engineering and put it into new work. I think that's been a quest that we've been on. If you've got, you know, an inventory, this is all about how many hours can you put against development effort, right? If you can squeeze more hours out of that sustaining effort into new work, that's gonna propel your innovation velocity.
That's been one of the big things that we've tried to do with the better quality, and we've seen, you know, tangible evidence of that, of pushing, you know, between 5% and 10% of the hours across the business into new work out of sustaining, which has been pretty powerful. Aderant has been on that same journey. Chris, you may wanna speak to that relative to quality.
Yeah. I would say from a stat standpoint, we're right in line with what Amy said. I would tell you that, like, when we have some fun things that we're looking forward to doing as we go forward, and my COO right now is just back from traveling around. We have a, what we will classify as a workforce strategy, as our big thing that we're focused on this year, trying to think about what we're trying to do, where we wanna go the next two or th ree years, and what that's gonna mean for how kinda the mix of R&D, where we're able to find certain talent that has certain skills, for things we're looking to bring to the market. Our goal, obviously, is to always drive up that we can spend on new innovation.
That's very much part of Like, that is our big thing this year, is how we kind of set ourselves up for what are going to be some fun times in the days to come.
Yeah. Last thing I'd say, tech debt. In any software company that has more than two customers that's been around for two years, you have tech debt. One of the... I mean, I think Amy said it. It's a real thing in our planning cycle, where we're looking for commitments to stay on top of it, right? It's easy to sorta pull back from that for a few years and then put it into new products or new things that you can monetize in a short run. As a long-term owner, that is not the strategy to play, right? You've gotta stay on top of the tech debt, and as a result, you heard how we do it today.
Hi. Allison Poliniak-Cusic from Wells Fargo. Neil, Satish, you both had talked about the importance of trust in this decentralized model. The businesses here are in different stages of the length of ownership. Can you maybe talk about how quickly that trust evolved, from either side of it, and if there were any challenges that you certainly had to overcome to kinda get to this relationship?
You're directing this to the operating team?
Operating team, yeah.
We let them sort of talk through it. First of all, I think it starts in the relationship you build before we buy the company, right? We're explaining what we are, and then do we actually are we that once they join the company, I would start there.
I may start since I'm probably the newest, right, company in the fold. I was gonna say exactly what Neil did, which is it actually starts during the diligence process. It starts from the first time we meet. I remember the first time I met with Neil, he spent more time talking to me about me and my background and who I was than even about the company at that time. I think for me, you know, where our company was going to end up, you know, it mattered a lot when I met Neil and team during the process to really understand who they are, how they approach things, that humble kind of belief. Then, in all honesty, I tell people all the time, you know, post-acquisition, it was as advertised, right?
As we met in the discussions, right, you never quite know how it's gonna come out until you're on the other side, but it's been completely as advertised.
Yeah, I think it's an environment where bad news travels faster than good news, which I think again, is back to, you know, the high level of trust that we've gotten. I think, you know, to Amy's point, just as advertised, right? That was the interactions during the, you know, really active sale process, right? Where there's a lot of different alternatives, but it was clear that it was just different in that regard. I can speak for myself. I trust my group executive intimately. Yeah, again, I think that's the biggest thing is that the speed at which news needs to travel does travel.
I remember the first meeting with Neil, and at the time, Brian, where it's like, "The only thing we're ever gonna ask is just for you to tell us the truth." That's the, you know, that's the thing that we want, and we wanna know quickly and that's the way that we operate.
Will Harrell with Capco. In all the list of growth initiatives, I'm struck by the fact that I don't think anybody said price a single time. I wonder if you could speak to that philosophically and maybe in doing so, address if or how that might be different if we have some protracted inflation.
Sure. We'll ask the couple of the software leaders to talk about price as it relates to our model and Earl relative to a product business.
Great. We do drive price increases year-over-year. The way we think about it at Vertafore is it's largely as part of our customer expectations and as part of our contracts. At the same time, we believe in value-based pricing at Vertafore, and so we spend a tremendous amount of time and put the onus on ourselves to deliver incremental value in the insurance distribution channel that actually supports our ability to continue to drive those price increases. That's how we think about it.
Go ahead, Earl.
Yeah. Being a hardware company, we've been managing through a pretty complex supply chain environment the last couple of years, everybody knows what has been going on with pricing in the supply chain environment. You know, first and foremost, our growth is really market-based and market-driven. We've got really strong growth markets, the vast majority of our growth comes from those markets combined with our share gain. In saying that, we do price increases every year. We've been even more intentional on those the last two or three years to ensure we're covering those increases in our key commodities and key parts costs.
Yeah. I think the last thing I'd say, you know, when you see us talk about gross to net retention on the software side and, in terms of revenue, part of that motion is getting priced, right? It's a matter of how much price we get. Again, it's an annual event, you know, based upon, you know, cost, value delivery and whatnot. That is something that we do each and every year, is go get price and do that across all of our software businesses.
Great. Well, that was one of two, so if you didn't get a chance to ask your question, there'll be another session. We're gonna take a quick 15-minute break. There'll be a timer on the screen to keep you on schedule, and we'll come back in about 15 minutes, and Jason will talk about capital deployment.
Good morning, everyone. I'm Jason Conley. I'm the newly appointed CFO for Roper Technologies. I've been with the Roper 16 years now, which is about half our life as a public company. We went public in 1992 with about $14 million of EBITDA, which is pretty amazing. What's more amazing is this is our first Investor Day in our 30-year history, so better late than never, I guess. You know, this strategy, I mean, I think we've had the same strategy around since I started at least. This is a much more elegant version of the slide, but I think it's, you know, it's been very consistent and simple throughout the years, and that's really enabled focus for Roper, and there's something very powerful about that.
I'm really excited to double-click on a very important part of our growth algorithm historically and in the future, which is capital deployment. I promise I'll go into detail, but I'll try not to be as excruciating as Neil had suggested. It really breaks down into six elements that I'm gonna go into in further detail. First of all, it's really led by corporate. As we talked about earlier, we're more business pickers than market pickers. We don't try to time a market trend or anything like that. We really pick the best businesses available. Because we're able to pick the best businesses, we really do this through a low-risk lens. That's really enabled by our highly disciplined and analytical processes that I'll talk about.
It just continues to get better, like everything you do through a learning culture, that just makes it even better. You know, once our businesses invest in organic growth and we pay a little bit of a dividend, we deploy all that back using our free cash flow, plus invest grade leverage to enhance our compounding, which is a little bit different than a lot of software companies out there. As we talked about, as passionate as we are about decentralized operations, and you've heard about that today, we're just as passionate about centralized capital deployment. You know, we really have a small team in place. It's myself, John Stipancich, Neil, Tim Haddock, who you've heard about. Shannon O'Callaghan's a part of our team. I think having a small team, it allows us to be super focused.
We can agree, we can commit on things quickly, allows us to be nimble in a fast-paced marketplace. We don't have an army of people, you know, to make decisions, which we've seen, you know, in divesting 40% of our portfolio. We certainly saw that a lot of other companies, it takes them a long time to come to consensus, that we don't have that issue here. Really, being centrally led, it enables us to deploy capital to the best ideas out there in the marketplace, right? Because we're not tethered to any end market, we really see a lot of great assets. So, you know, we love bolt-ons. We have heard the conversation about bolt-ons there. They've been some of our best, you know, value, assets.
You know, it can come with an opportunity cost. There's always that, there is that tension and that conflict. You, you will see us do more bolt-ons in the future. It's been about 11% of our capital historically. We'd like to see that go up. I think for us, sort of the governor is really around the price we're willing to pay for something, right? We've seen a lot of great bolt-ons. Some have gotten away from us in the last six months. We're just not willing to pay some of the prices that were out there because there's just better opportunity costs for the platform deals that are out there. Lastly, I think we have a really strong reputation in the marketplace, especially with private equity. You know, we have a 20-year track record doing this, right?
I think it really matters in the private equity markets that speed and certainty are really important, right? With speed, we've seen so many great software companies over time. We can quickly through our criteria, we can understand if we really wanna buy the business. We have good pattern recognition that informs that, and that just gets us to a decision quicker. Really we do what we say, right? When we're in a process, we're gonna commit to the other counterparty, and that really does matter in the markets. You heard Amy talk about that in a recent bolt on that speed really does matter in an M&A process. I would just say that it can't be stated enough that reputation really does matter. It ensures our access and ability to win in the market.
The reason we can be so quick, and we've talked about this before, but it's no coincidence that the acquisition criteria you see here are the businesses that we own today, right? We're ultimately business pickers. We pick businesses that have the lowest amount of risk for us and for the shareholders. That just gives us, you know, it's been a consistent strategy, and it allows us to really focus on businesses that are attractive in the marketplace. CRIs, we've talked about, has always been our North Star. It's the quality of the cash flow, it's the quality of the business model, and that's where it all starts for us. Neil hammered on market leadership. It is so important, especially in a niche market. It allows you to grow with your customers, learn from your customers. Key filter for us.
Increasingly, it's been about durable, organic, recurring revenue growth. Not only does that help from a resiliency standpoint, but it really helps us compound, right? If you think about a business that's cyclical, you're not getting the same compounding returns. If you continue to get cash flow, especially when you get into tougher market conditions, it allows you to compound even faster 'cause you can redeploy that capital. Then, you know, we obviously have very strong margins. That goes without saying with the value that we provide to our customers. Then strong management team is another, you know, huge capability for us that we look for, a criteria we look for. For us, it's about the things you've heard about today.
We've really defined what a great leader looks like inside of the Roper family. That's what we look for in our diligence process. You know, we don't wanna ignore the market. We're market agnostic, obviously we wanna pick really good markets that have really good structural characteristics to it. You know, we wanna be in a growing niche market or a vertical market. Very important to us. I think you've heard today about these markets that we're in. They're really stable. We're leaders in those. That allows us to grow. Very favorable competitive landscapes. We don't wanna be in a brand-new market where we don't really know sort of where the puck's going. We wanna be in an established market with a favorable competitive landscape.
We've obviously removed a lot of the cyclicality in our business, you won't probably see us get into anything cyclical in the future either. Lastly, I would just say that as a forever, you know, owner, we don't wanna be in a market with existential risk. We were just looking at something this week with forecasts out into 2040. I mean, that's just how we think about long-term sustainability of the marketplace.
One thing just wanted to highlight, you know, we get asked the question sometimes, "Would you buy a business a little earlier in its life cycle, in its peak life cycle?" I would say, you know, based on what you've heard today and the work that we've been doing at corporate, we have the capabilities to be able to do that now. I mean, Verathon's a good example, right? It's a business that we bought that probably was a fixer-upper, and we didn't intervene fast enough. Today, you would see that happen, right? I think the only thing that would change in our M&A sort of lens would be probably EBITDA margin, right? If we can get some of the cost out, and perhaps management, depending on sort of what the situation is.
Nothing would fundamentally change other than those, and probably our intervention in an asset like that a little faster than we have historically. Next, I just want a deeper dive into our M&A process, right? We've talked about it a lot in one-on-ones and over the years, so thought we'd wanna click in a little bit more. I mean, it's highly quantitative and analytical, and it's really underpinned by discipline and patience. For us, it's really a core competency, and it's a competitive advantage for us in the marketplace. Just ticking through it chronologically, it all starts with an effective sourcing and filtering program. As I mentioned, you know, private equity has to convey every 3-5 years. We know what that vast universe of private equity assets looks like, and it's a growing asset class as well.
We'll talk about that a little bit later. You know, the second part is we've established really good relationships with private equity firms, not just at the analyst level, but at the partners and the MDs. What that does is it gives us a really good inside track on assets before a process even starts. We'll have started our diligence maybe before a process even starts, or maybe we'll get an early look at something, and that's a competitive advantage for us. You know, based on our business picker orientation, that really enables us to quickly curate, filter and curate a deal. It gives us an ability to focus as well, right? There's a lot of assets out there. This enables focus.
One thing I think the team's all proud of over the last five years is we really honed our go-to-market capability and process. What do I mean by that? Well, we treat this no different than a sales team motion, right? We track prospects at a very deep level. You know, we use the CRM to manage all of our pipeline, track our information, our notes, our workflow. This is just a core capability and a motion for Roper today. Next, just wanna go through our diligence process, right? We, I mean, we operate a little bit like private equity. This is a daily and weekly motion for us. You know, I should say that, like, I was asked if, you know, if M&A is a distraction for the Roper team.
I think I got asked that a couple weeks ago at a conference. Nothing could be farther from the truth. This is a big focus of ours, right? We spend a lot of time and energy and mindshare against that. It all starts on a weekly basis. We'll meet as a team and go through, you know, all the deals that are coming in, all the opportunities. From there, we'll make a go and a no-go on decision to diligence. It's really foundationally set up with gotta believes or things that have to be true for us to own the business that we need to prove out in diligence. From that, we're gonna go through, you know, a litany of diligence items that you could expect, right?
We're gonna look at market and strategic elements, the nature of the niche, the competitive landscape. Disintermediation risk, all the things you saw in criteria, we're gonna pressure test the heck out of. We're also gonna look at business-specific risks, right? Go-to-market, product development, product, you know, tech debt, things we talked about. That's all part of our M&A flywheel that we look at. Finance and accounting, I mean, it really is about doing the financial modeling, not just doing a P&L and balance sheet forecast, but really going in at the ARR level, doing deep forensics on the customers, really understanding the motion of the business so that we know what we're getting into when we ultimately own it. We're gonna do quality of earnings, tax, and the usual sort of risk-related diligence items.
I should say, we've got an extended team at corporate. We've got about 70 or so at corporate. A big part of that group is performing that diligence, but we're supplemented importantly by a dedicated advisory team. This team is available anytime we need them. They really know what our pressure points are, and they really just act as an extension of our team. That's across strategic, you know, sort of financial and technical. Once we're done with our diligence, we're gonna go through and diagnose all the things that gotta believes that we set out to do. From there, we're gonna make a go and no-go decision as a team. Again, we can quickly commit based on our rigorous process. From there, we invite our board in.
Oftentimes we invite our board in several weeks in advance of us getting further along. It's a very collaborative process with them. They'll let us know sort of the watch outs and things to think about. They really act as an extension of our team. They're really like an investment committee that is very consultative. We don't just put something to them right at the end and jam them. It's a very sort of interactive process. Ultimately they make the authorization. Hopefully that gives you an appreciation for sort of the breadth and depth of our diligence process. Lastly, it really is underpinned by CRI and our valuation methodology. You know, for us, this has been empirically proven over the years to create value.
We can look at our business as a standalone, we can look at the acquisition, and we can understand if it's gonna increase market cap to us. We've been doing this for a long time. It prevents bias and objectivity. We don't fall in love, ensures objectivity. We don't fall in love with the business. We really kinda look at it through a CRI lens. For us, it's really it's amounted to a 20-year track record of success, and we expect that to continue going forward. You know, as Neil mentioned earlier, we after we finish every deal, we go through a postmortem. Our businesses have to take through when they have a bolt-on.
We just had five of them two weeks ago in our last week in our board meeting. We go step-by-step, what was the value creation plan? How'd you do? What capabilities did you build? We do the same thing with all of our platform acquisitions. Really go through the assumptions, they gotta believe, what actually happened? What course corrections do we need to make if those didn't happen? What are some of the watch-outs? What are the learnings we had from this deal that we can apply to the next? 'Cause we're human, we make mistakes, and we always try to learn from those as we go forward. You know, we've walked through the process.
I thought in addition to the four case studies we had earlier today, that I'd walk you through a couple of other companies that we've acquired and sort of how that's turned out. The first one is our DAT business. Very just great business. We acquired DAT in 2004 as part of our TransCore acquisition. TransCore was basically a transportation roll-up that we had bought out of private equity. A good portion of that revenue was toll and traffic projects and products, which we sold in 2021 for $2.7 billion. We still hold what we think now, and we thought definitely then, that the acquisition was the crown jewel of that asset, and this was before SaaS was SaaS.
Basically, what DAT and its sister company in Canada, Loadlink, do is it's a subscription business, right? They marry load supply and demand and match freight in the spot freight market. They do that between carriers and brokers and shippers in the market. The first thing I think that played out in terms of our diligence process, that this was a great business. It has only gone backwards once in our ownership. The first thing we did, though, was, you know, we don't like roll-ups because then we can't tell what's really going on with all the businesses. The first thing we did is we created discrete management team, discrete P&Ls, so we could measure, you know, the income statement, the balance sheet, and the cash flow of that business.
What that did, it unlocked new potential for the business, allowed them to be focused and expand their product set. The first thing we realized is we were sitting on a lot of truckload, you know, truckload lane pricing data. We created an entire business out of that. Today, it's DAT iQ. We have a team of data scientists, and we're basically selling truckload lane pricing data. Beyond that, I would say the last five or six years has really been underpinned by scale. Obviously, we had a very nice run-up in the freight market during COVID, and the business had really process-enabled doing e-commerce to sign up new carriers. It was a big investment that we underwrote and were supportive of.
What that's enabled is, as the business has grown tremendously over the last few years, they've been able to take their truckers and sign them up. About 80% of truckers now sign up through e-commerce versus 20% four or five years ago. A much lower cost of acquisition for that customer and a good unlock from a margin perspective. Meanwhile, I would say we've doubled down on the R&D investment in the business. The R&D as a % of revenue has gone up about 300 basis points over that time period. Super excited about the business. It's grown, you know, 16% over a very long horizon, cash flow compounding. We're really positioned well to grow in this market. There's a migration, a slow migration from the contract to the spot markets. We'll benefit from that.
I think we're just excited to be able to continue to tech enable the spot freight market, both between brokers, shippers, and carriers. You know? The next business, next sort of cohort is a business we acquired in 2011. It's Northern Digital. We acquired it for about $200 million. It is the easiest way to think about this is it's the GPS system for non-invasive surgeries, right? We're the When the surgeon's trying to go, you know, into the body, they use a non-invasive surgery system, and we allow that instrument to know where the instrument is in the body. When we acquired this business, it was growing nicely. It had really three business units at the time. It was a medical. It also sold into industrial applications.
It sold into physical science and then some other things as well. Then about in probably eight or nine years ago, they got into AR/VR. They had some major, you know, mega cap tech companies come in and say, "Hey, you got some great technology. We'd love to, we'd love to port this into AR/VR." The president said, "Well, that's cool," 'cause he's, you know, he's an engineer. They said, "That could be a good opportunity." They got some funded R&D for that. I think there was a realization from Dave Rath, the president, that, you know, the business was getting spread too thin. There wasn't great focus. There was a huge opportunity based on their market analysis that they could double down in medical.
About four or five years ago, they decided to shed about 15% of their revenue. Very courageous decision to make a strategic choice there. What we've seen from that is their growth has accelerated tremendously. Right now they can do non-invasive surgeries across a number of new modalities, and there's just a ton of growth for the business. Another great story also has grown free cash flow 16% since acquisition. Pivoting to enterprise software. We acquired Strata Decision Technology in 2015 for $140 million, and then we've done a larger bolt-on a couple years ago on EPSi. The way I think about Strata is it's software that enables hospitals to plan and analyze costs in just really kind of like new ways, profound ways.
They can look at margin at a very detailed level that they couldn't otherwise do with their ERP system or otherwise. This business really was experiencing like very fast growth when we acquired it, 20+%. What we said to the management team is, "That's great, but you've got tremendous opportunity ahead of you." We kept margins. Working with the president, kept margins flat in that business for several years so that we could double down on product innovation and go-to-market capabilities. The result of that is we had landed a lot of really established new logos and health systems in the US, as well as just, you know, being able to provide new solutions to existing health systems. We upsold that and cross-sold that across across the install base.
The EPSi acquisition happened in 2020, and that's just been a really successful bolt-on for us. That was a very rigorous, detailed diligence process. It was a carve-out. We had to have the management really have conviction and sign up for that. I remember going through those calls during COVID and really marinating on it. It was our biggest bolt-on at the time, and I would say it's been a big success for us. Not only do they have a new logo, new logos in their base, but they've been able to convert the EPSi customer over to the StrataJazz install base, that's just had tremendous uplift, and there's a lot of runway ahead for that.
You know, so to combine all that together, organic growth has been 23% cash flow CAGR over the period that we've owned them, a little bit higher with the EPSI acquisition. I'll just end with Foundry. Foundry's like our... This is the only business I think my son knows about 'cause it's in, it's in Hollywood. It really is the gold standard in the film industry, right? It enables the, you know, sort of in post-production in the film to marry live action with computer-generated graphics. They really are, like I said, they're the gold standard. It gets trained in colleges and universities, so people know how to be a Nuke person when they get into the workforce.
The business has obviously had tremendous tailwinds, sort of leading into COVID, with Netflix and others sort of, growing. When COVID hit, right, a lot of studios shut down, really didn't know what was gonna happen in the marketplace. We kind of thought that there was an opportunity to really double down on R&D investment. put some money into new products around new extensions for Nuke around machine learning and AI to make the Hollywood end user much more efficient. Coming out of COVID, they've had accelerated growth as a result of that. The next phase of their journey really is about moving their customers to a subscription model. They're a perpetual license and maintenance business today, is moving their customers to a subscription model. They're starting that out this year.
They're gonna do it for all, you know, new customers, and eventually, you know, the thought is to bring, you know, their installed base over with that. Neil talked about, you know, the $900 million of maintenance we have, you know, that's part of that, part of that journey. We often get asked this question, right? What, how can Roper continue to meet its growth objectives, as you get bigger? You know, we need to deploy about $3 billion-$4 billion annually on average right now, maybe a little bit more as we grow. I would just tell you that, you know, given the profile of businesses we look to acquire, the universe of potential targets is really, is quite massive.
What we did is we went back and just looked at 2022 as an example. In 2022, this represents all the sort of software and technology businesses that went to market. You know, I think 2022 is actually a pretty light year 'cause the leverage loan market was locked up for some period of time, so this may at, you know, underrepresent what it normally looks like. You can see that out of, you know, 1,200 targets or 1,200 at-bats, we looked at 235, right? This speaks to our filtering criteria. We know, and the sponsors know that what types of businesses we wanna look at, and we know that we get a look at everything that would fit our criteria.
There's never been a transaction that's happened that we say, "Wow, we didn't get a look at that." We know we're looking at all the things we wanna look at. You can see, just based on our discipline and the things that we. Our criteria I talked about earlier, we only seriously looked at 93. As you move down the cycle of management meetings, you know, putting a bid in and doing full diligence, we only closed on six, right? We, we deployed $4.2 billion-$4.3 billion last year. That just speaks to our discipline, and really it just speaks to the universe, right? We only closed six on 1,200 targets, so that's about five basis points.
We are definitely not running out of inventory in this very growing asset class that is private equity. Another key component for us in how we create value is, you know, from a capital allocation framework, we always wanna invest in organic growth first. That's like table stakes. We're gonna pay a modest dividend. We have for a long time, we're gonna commit to that. The balance goes to our acquisitions, right. This has been the best return for shareholders over time, and we think that's gonna continue. Historically, we funded about two-thirds of our deals to from free cash flow and the other third from debt. That's really been a key enabler for us to continue to compound as it, you know, compounds and enhances returns. I will say, and this is...
I've steadfast on this, we are, we use leverage cautiously. We're very prudent about it. We are very, very solidly committed to being an investment grade, for a variety of reasons. It limits our risk. It enables us access to the markets, right? Enables us to be nimble and opportunistic in deals. Having that access is really, really important. As you can see over history, when we lever up, we're always quickly committed to delevering. Very important to us. I mean, for us, it's really a structural advantage in how we win in the marketplace, specifically when we get into, you know, troubled credit markets as we might be finding here in the future.
CRI has, you know, guided our M&A and organic decisions, which has been rooted in shareholder value. To us, it's really no coincidence that our share price has inversely correlated over the last 15 years. As Neil mentioned, our asset intensity has gone down. We're now generating our free, free cash from net working capital as we grow. This just presents, you know, positions very well in the future for mid-teens cash flow compounding. I thought I'd wrap it up to kind of look at a 20-year journey. I think it's instructive for us to look at Roper's free cash flow and capital deployment over the last 20 years as sort of, kind of thinking forward to the future. From 2003 to 2007, you know, we were primarily an industrial company.
You know, we had cyclicality in the business. You know, interest rates were quite high during this time. I think the 10-year averaged around 4.5%. We were not investment-grade credit during this period. We, you know, I think we met investment grade at the end of this 5-year period. Our former CEO, Brian Jellison, you know, had the wisdom to really invest in two leading platforms that took us through, all through a CRI lens, of course, to take us on a new trajectory. You fast-forward the next five years from 2008 to 2012, obviously, the global financial crisis hit. You know, us as Roper were not immune to that. We still had some cyclicality in the business. I think in 2009, we might've been down 20% or so.
We were still very asset light at the time, even for an industrial business. We didn't have to shut down any factories. We, this, you know, we knew we had stability to cash flow, so we used that, plus our leverage to invest through all the sort of the tumult at that time. We acquired Verathon and NDI, which you've heard, you heard from me a little bit on NDI and Verathon earlier today, which has been a wonderful acquisition. I threw this in here too, just importantly, we acquired CBORD, and it's really was our first pure play software company, and it introduced us to two beautiful words called deferred revenue. Importantly, over this five years, you know, our free cash flow and capital deployment doubled over the prior five-year period.
You fast-forward to 2013 to 2017, had more, you know, issues in the market, some significant contractions, you know, less so this time for us as we were continuing to build improved portfolio with more recurring revenue, higher margin. That really, that higher cash flow helped us to invest through an incredible era of buying really great vertical market software companies. We acquired Deltek, we acquired Aderant, we acquired Strata and many others, and that just set us on another, you know, another trajectory in terms of free cash flow and capital deployment. We, again, almost roughly doubled again over this next five-year period. Just to wrap up the 20-year period, you know, we've obviously lived through the pandemic.
It was a tough time, you know, those first couple of months, we had the confidence based on our recurring revenue and sort of the stability of the markets that we're in. We issued guidance in 2021. We knew that we had mission-critical solutions, you know, Verathon was one of them, we had a lot of customers that couldn't run without our software. We felt good that coming into summer of 2020 that we could deploy capital. The opportunity for Vertafore came in as we talked about, we acted very quickly. You can see we've had demonstrable increase in free cash flow and capital deployment during this period. Maybe a little bit higher for capital deployment 'cause we just acquired Frontline at the end.
Just to call out, that's the 20-year sort of trajectory and the quality of our business has just increasingly got better. This green line represents our free cash flow margins. You know, we're hovering around the 30% range. This is sort of the 5-year period. You know, 20 years ago, we were at 15%. This just better positions us for free cash flow compounding going forward. I think importantly, through every economic cycle and market, you know, interest rate environment, you know, we've been able to drive more cash flow and more capital deployment. We have a proven and repeatable capital deployment process that's resilient in any market environment. I think this positions us well for mid-teens cash flow compounding going forward. All right.
Just to wrap it up, you know as Neil gets up, giving me the hook. We think. You know, we really do think we have a sustainable and low-risk acquisition approach which is underpinned. You know, it's underpinned by, you know, doing capital allocation at the Roper level, making those trade-offs where we need to, that we've talked about. You know, we're gonna buy the best businesses available. Being agnostic, end market agnostic certainly helps with that. Hopefully, you got a sense of our approach. It's highly analytical, disciplined, process-driven. We continue to get better over time. Hopefully, you got appreciation for the large universe of acquisition opportunities through our 2022 view. We're gonna continue to use, you know, investment-grade leverage in addition to our free cash flow to deploy acquisitions.
We think it's the best return for shareholders and, you know, I think it differentiates us from other software companies because they don't have the same opportunity set that we do. Thank you so much for your time for letting me talk about capital deployment. With that.
Thanks. All right. Let's wrap up as we get to your last set of questions. The talk today pointed all back to this perpetual motion machine that is the growth algorithm of Roper. It's the combination of these terrific market leading businesses that are in defensible niches, the way that we deploy our decentralized operating environment, and then collect all the excess free cash flow and deploy it on the very next best thing. Looking at Roper in a nutshell, you know, $6 billion enterprise, double-digit revenue growth, a rule of 40 business when you combine our revenue growth and our free cash flow margin. You know, the margin profile is quite attractive with 70%+ gross margins, 40%+ EBITDA margins, and 30%+ free cash flow margins.
We've talked today that we're 75% software and 25% medical and water products. 80% of our software revenue is recurring. 80% is, 70% of total Roper is recurring or reoccurring. The transformation of Roper, you know, what's been the same and consistent, right? CRI, defensible leading niches, market leading businesses. The evolution and the quality improvement, not only as we've tripled our business over the last 15 years from $2 billion-$6 billion, the margin profile's gone from 25%-40%. We've gone from an organic growth profile in the low single digit, maybe a hair higher than that 15 years ago, to solidly mid-single digits plus. We still work, we're still chipping away at this to be able to continue to improve.
In a few years when we're back, hopefully have a H in front of the SD, we're working to do that. Our evolution in terms of software, 15 years ago, 5% of our business was software. Today, it's 75%. Cyclical, again, the driving force behind our portfolio realignment is beating the cyclicality out of the portfolio, if we can say that we've done that. 50% of our revenue 15 years ago was cyclical. 0%, roughly 0% is today. You can imagine the confidence that gives us to continue to invest or deploy capital, where you don't have to manage through cyclical impacts of a business. Then the asset intensity, right? We generate cash flow in substantial ways.
Not only have we gotten bigger, but the drumbeat of the quality across every dimension, you know, margin structure, growth profile, asset intensity, lower cyclicality, all those quality dimensions have improved. Our long-term growth algorithm, the perpetual motion machine, starts with double-digit revenue growth. That's gonna be underpinned by our mid-single-digit plus organic, plus this process-driven, repeatable, disciplined, patient, capital deployment process. You saw a slide in the earlier section through five years, including COVID, each year was double-digit organic, or excuse me, double-digit revenue growth. Second is layering on 45% operating margin. You know, leadership allows us, market leadership allows this, customer intimacy allows this, customer value allows this, terrific operating excellence allows this to where we can post a little bit of operating leverage against our 40% margins.
When you put that together, it very solidly, very routinely have a perpetual motion machine of mid-teens free cash flow compounding. That's our formula. It's what's worked for the last 20 years, and we have a very high degree of confidence and conviction for the next 20 in that. Pulling it together, the same six things we talked about at the beginning, then we'll get to your questions. The key message from today, we own and operate a portfolio of 27 super high-quality market-leading businesses, right? Leadership matters. It matters for competitive advantage. It matters for customer intimacy. It matters for margin profile. It matters for durability. Like leadership matters for a multitude of reasons.
Second, again, hopefully you saw this today, but we have a clear and de-demonstrated ability, and, you know, collectively with the Roper enablement sort of approach, the excellence of the operators, the innate skills of the operators to improve businesses that we own. Right? Third is we have a very disciplined and analytical approach for capital deployment. Again, it's a motion. We take all the free cash flow and deploy it on the single best idea available to us, and we find the best business. Fourth rather, culture is a true and authentic competitive advantage, right? You have to have vulnerability-based trust. When you have that, you can have conflict without politics. When you have conflict without politics, it's about conflict with the ideas, not the person. Once that happens, we get commitment.
Once you have commitment, you can have accountability, and with accountability comes high performance and results. It is truly something special and advantageous for us and for you as shareholders. Fifth is the low risk orientation, right? The small markets provide protection, right? The leadership position provides protection. The highly recurring revenues are low risk. There's virtually no cyclicality. That's the operating risk, right? As compounders, everything needs to move forward and nothing can go backwards. We apply the same set of criteria in the capital deployment. Finally, we have a very clear and compelling mid-teens cash flow compounding algorithm that is a perpetual motion machine. With that, it's been an honor to prepare for this presentation for the last couple months. The team has enjoyed all the preparation.
We've enjoyed sharing our story with you, and we'd love to open it up to your questions for the last 35 minutes or so. Our goal here, by the way, is Jason and I are gonna be on the stage, but we're really gonna try to hand it to our team as much as possible.
We'll do the same. Is this one on? All right. We'll do the same setup as last time. Please do raise your hands. We'll try and get to everybody in half an hour. Please say your name. I'll try and mix it up a little bit to some folks that haven't asked questions yet. Perfect. Thanks.
Thanks. Chris Glynn, Oppenheimer. Jason, you alluded, I think directly or a little bit, you know, indirectly to broadening the funnel, in particular with more capabilities around, managing EBITDA margins and management personnel a little bit. Just wanted to go a little deeper into the topic of broadening the funnel.
I don't, I don't know if it's necessarily broadening the funnel. It's probably just, being a little bit more thoughtful about disregarding things that would require a little bit more near-term intervention. I think it's more of a natural evolution of the company that we've seen that we've been able to do this several times over. We, we have a process to build, you know, to hire good leaders, thoughtfully. We know what good looks like. I think, I don't think it's necessarily widening the aperture. It's just maybe saying yes, and let's go a little further on the diligence, to those businesses. I so hope that answers that. I don't know if you wanna.
I think it's well said. I mean, I think if you, if you wanna just be, like, super precise, there are the 1,200 targets in a cut down, I think it was 235 was the number. A natural sort is if something meets all of our criteria and it's lower margin profile than mature, then it's 3-4 been sorted out. It's just gotta be sorted in because we now have the very clear and demonstrated capability to make those sorts of improvements. By not sorting it into our screening process and then running through all of the rest of our process around the risks and the opportunity, we're just leaving value on the table for the company and for you as shareholders.
Steve Tusa from J.P. Morgan. Thanks for all the disclosure on these businesses. It's great to dig in a little bit here. On the topic of disclosure, you guys guide organic growth and then EPS every year. Given that free cash is an important metric, and obviously with ASC 606 and, you know, all the accounting around software companies, is there any thought to giving, you know, maybe ARR or, you know, free cash, actual pinpoint, free cash flow guidance for the year given how important those are? Just a follow-up.
Sure. Yeah, yeah, good question. I think on ARR for us, it's been a journey, we wanna make sure we give you numbers that sort of represent the right sort of rhythm of a lot of these businesses. Some of them, you know, a small % are selling to SMB, it's more like MRR, where you've got other businesses that are enterprise software that's ARR. We're being very thoughtful internally on how we wanna do that. I do think at some point we will disclose that, as you can imagine, we have a lot of businesses, we wanna make sure we get that right. Then on free cash flow, look, I think, you know, you're probably right. There's more recurring that we could look at. That could be something in the future. I'm not sure.
We haven't really talked about it internally.
Is 30% a floor on that in any given year? 30% margin for free cash, a floor?
I think it kinda depends on the interest rates and those types of things. you know, it's in the area, it's in the 30% area.
Just one more maybe, Neil, for you? The huge funnel you guys have, all the deals you look at, yet over the last several years, you've bought from a few players, a couple of them you highlighted in videos, complimenting you guys on your process. How do we kind of reconcile such a, you know, what should be a little more of a fragmented funnel and such a consolidated, you know, seller base, if you will, of your deals?
I think in the, if you have an ocean of private equity, they all specialize in what they invest in, right? It's not, you know, software is this, so then you have horizontal and you have vertical, and you have different, private equity investors invest in certain types of verticals. When you narrow that down, there's very much an 80/20 rule that's applied. There isn't everything in life. Tim, I don't know, maybe 30 sort of private equity firms are probably 80% of the assets that are of interest. I'm looking at you to confirm that-ish. Less
maybe 20, sort of They're large. while we see a lot of stuff and, it is concentrated, in terms of, the holders of the type of assets that are A-list priority. as we look at doing things a little bit earlier, like a half a click earlier, then that we're gonna get a wider array of sponsors that we talk to in that regard.
Thanks so much, Neil. Really enjoyed the presentations. You know, CRI makes a lot of sense and clearly points to good businesses. I was wondering, once you have found something that looks great on CRI, and a little bit of problem that we investors face as well, you know, once you've found a good business, what price to pay for it. You can pay $100 million for the same business and you can pay, you know, $500 million or $1 billion for the same business and becomes a completely different proposition investment-wise. Once you've found a good business, how do you approach the price element of it?
Yep. CRI is fundamental to our valuation methodology. We also know, we look at everything through our cash flow compounding growth algorithm. We know for a growth profile of an asset and a margin profile of an asset, and then the trajectory of its change to our ownership, what sort of the year five and year seven performance of that business needs to be to be able to propel the mid-teens cash flow compounding. That informs also what a, what a current multiple would look like or current price would pay. Those are two sort of valuation frameworks. Perhaps most importantly, what overlays that is this notion of opportunity cost. There have been many assets we've looked at in the past that have met all the CRI.
We could have paid X through CRI, we could have paid X through our sort of forward-looking growth algorithm calculation. You look at it and it's just still a very expensive price relative to what we paid for assets in the past. You just make the judgment that at this moment for that asset, the opportunity cost of our precious capital is too high. We filter out a lot of things for valuation, but opportunity cost as well. Anything you wanna add to that?
I think we're also just mindful of what's happening, and we have visibility into everything that's happening in the private market. That's always just another sort of data point around what we're willing to pay. I mean, if it's an LBO deal where they can't really PE can't do anything with the business, and it's large enough, that's a good opportunity for us. You know, there's other factors that go into that, but that's, I mean, that's the foundation there is the CRI and opportunity cost.
Okay. Gentlemen, thanks. Hey, Zach, make sure you're looking up front, too. Yeah, make sure you're in the back, just the front to the front.
Okay.
Hi, my name is Greg Walsh. I'm an individual shareholder, so just wanna thank you for all the work you and your team do for individual shareholders over the years. I guess my question is a follow on to the one about the PE seller group. The M&A side here, deployment is very important to the overall thesis going forward, of course. There's been a multi-year trend now of private equity firms pursuing GP-led recapitalizations and continuation vehicles so that they and their LP bases can continue to own some of their best companies for longer. Recognizing that your overall company universe, target universe is very large, but is maybe concentrated in a group of firms that are pursuing that kind of strategy, what kind of impact has that had on the actionability of your pipeline?
Have you seen that you've been tracking some companies you were very excited about, and then, you know, that's gonna be another five years before it gets sold again?
Let me ask Tim Haddock, who looks after our development deployment.
Okay, thanks.
Why don't you stand up so this camera can get you.
Just working here?
Yes.
I would say this, I mean, obviously continuation vehicles have kind of shift to permanent ownership is a phenomena that has really emerged over the last, you know, three to five years in particular. It's a little bit episodic right now because of sometimes LPs are more interested in it, sometimes they're not, sometimes it's based on marks and discounts to marks, and it's a lot of that. I would say as a broad matter, it's a competitive situation that we're keeping a very close eye on. We have not seen a material kind of degradation, if you will, in our opportunity set as of this point, but you can definitely envision a world where there might be some movement on the edges.
I think that, we think our, we think our aggregate flow or volume is gonna be sufficient where we don't foresee it being a material impact.
Just to put that in scale, I think there's like a 12-ish of that universe that went into a continuation fund. It's on the edge, a competitive sort of factor, but in the macro, it's not something that we'd lose any sleep over. They also appear to be maybe a little trending, faddish trending. We don't know if it's like a thing. A final thing I'd say is the sponsors who have tried to raise long-dated fund, that product generally hasn't worked, right? There's the LPs very much want their money out and back, so.
Go ahead. Yeah.
Thank you. Quick follow-up on the deal funnel and private equity. If you were to broaden your funnel beyond sort of PE sponsors, what would you need to do differently within your M&A processes to sort of continue? What is a stellar track record?
You want to do that?
You can do that.
Okay. The motion just has to be widened, right? Right now we have the reputation, I would say, at the very top of the funnel. That's where we have to focus on changing and adding a few resources, not a tremendous amount. Right now, because of our reputation being somewhat of a prolific vertical software acquirer over the last decade, as Jason said, we see everything of size and scale, and it's a very well-known set of criteria that all the sellers and all the intermediaries know what we're looking for. We don't have to put a tremendous amount of resource against identifying the assets. With all the desk research you can do, we've got a database, and we track it. We're talking about, like, literally like a half a click earlier.
We might have to have one or two people that get into a little bit more of the middle market just to build middle market sponsors, just to build our reputation and credibility. That's all. Once we've identified the opportunity, the process downhill from there is the exact same. There's no difference to the process.
Thank you. It's Deane Dray with RBC. Neil, the spirit of the question is the law of large numbers. You talked in your wrap up about Roper for the next 20 years. When we look at Roper today, 27 businesses, you have four group executives, and you said there was they could handle six to eight businesses. Sorry to be an analyst, but if I take the midpoint, you're at 28. You still have some headroom. Just what's the gating factor here? Is it as you grow, will you add more group executives? Is there any risk of, you know, complexity here that would jeopardize in the decentralized model in any way? Just your thoughts on the longer term growth algorithm.
We talk about this with our board every three years. We do a seven-year outlook to sort of revalidate the elements of the growth algorithm, the perpetual motion machine. Then that's the math. When you step back from the math, organizationally, are there any constraints or pinch points? Right now, you know, we have to deploy. It all starts with the amount of capital you have to deploy. It's $3 billion or $4 billion today. Year seven, it's like $6 billion or $7 billion. With our current sort of staffing resource processes, do we have the ability and funnel and opportunity set in the marketplace? Can we deploy, you know, $7 billion versus $3 billion or $4 billion, you know, seven years from now? I think it's a resounding yes. The opportunity set's there.
Our current processes will withstand sort of the scalability and extensibility to that. Might have to add some analyst type resources to help with the math and the modeling, but it's a very extensible part. Once we own them, if, you know, think if there's no budget or specific plan because you just don't know in any given year how many platforms or bolt-ons you're gonna do. Last year, it was six deals, one platform, five bolt-ons. Generally, if, you know, call it one or 1.5 new platforms a year, seven years maybe of 8-10 new platforms, that's a group executive. We go from four to five, you worry about span. Five is no problem.
If we get to a point where we have, you know, go to the next seven years, and maybe we have seven or eight group executives, now you might have to talk about like a COO and a little bit of a layering. That's the second seven-year horizon, not the next seven years. That's a long-winded answer, but for the next planning horizon, our current process, scope, scalability, all appears to be well attacked.
Thank you. Two somewhat related questions. First, you know, private equity isn't always known to sell the best businesses. From your vantage point, you know, how do you weed out the challenged businesses where, you know, private equity might be, you know, putting lipstick on a pig? Secondly, in terms of the last five years, you know, what one or two elements of your M&A process in terms of your ability to add value to businesses has really been augmented? What would you highlight? I know you've highlighted a number of things, but what would you really highlight among those factors?
Maybe I'll take the first, and you take the second one.
Sure.
Is that all right?
Yeah.
This is when Jason went through our process, one of the very first things we do is we outline the gotta believes for each transaction. These are highly customized. They're not like, is it a good market? Is the market growing? Is the company a leader? I mean, these are much more specific. In Vertafore's case, there were 12 gotta believes, for instance, and that was the diligence model. A big chunk of that is weeding through the risks that you identify, right? Second thing I'd say is there are some undisputable facts.
If you're the clear leader in a niche market and you go talk to customers, right, and the Net Promoter Score is high, propensity to buy is high, we ask about pricing, propensity for pricing to go up is high, to accept higher pricing. You can get a sense of the intimacy of the relationship with the customer. If you're a leader and you have great customer relationships, and then you buy a business and you find out that maybe some of the stability of the operating practices aren't or what we like, which we'd expect, that's where we go to work. You have a tremendous amount of protective ability or protection by virtue of the leadership in the niche market with the intimate customer relationships. You wanna take the second one?
Just on the M&A process and how we've improved businesses over the last several years compared to history, I would say that we are just much more intentional about interacting with management, making sure we have a team that's gonna be aligned with higher expectations, that's gonna have those things we've talked about in terms of the.
Of the leader. We look for that quickly and wanna make sure we have alignment. That really does have a lot of power, right? If you have the right leader in the business, our model scales really well. I think, you know, all the things that we've talked about today that Satish has walked you through, in terms of team and talent and just really all these things that that's the hard work of running a really good business, we install in that a lot earlier. I'd say before, we were much more passive in that, and there were some great businesses such as Verathon, that we just let sort of run on their own for five years. You know, we could have had a lot more success a lot earlier.
To us, I think it's just, you know, sort of intervening in Roper's way of intervening a little bit faster and then just reinforcing the things I think that are just as fundamental to running a good business, and not something that's really force fed, but bought in by the business leadership.
Cliff Ransom, Ransom Research. I apologize for not getting the memo on what shoes to wear. I even had to live in Florida for a while. I would like to just expand on.
There, there's a sport coat story we can tell you after this, by the way.
We live in a small town.
Shannon and Jason had the same sport coat until Sunday, so.
I love it. On the thesis that learning organizations learn more from their mistakes than from their successes, can you talk about... You sort of touched on it a little bit on the acquisition model. Can you talk a little bit about the process? Pick a mistake. You don't have to identify what the mistake was, but tell us how that mistake informed the way you run your business.
Yeah. I toss this. I mean, any of the operating crew wanna take a whack at this one? I'll put you on mic on the spot. Grab a mic. Maybe you can talk if you... I can give you a couple.
I can take. Yes. I have one that's. I think one of the things that I think back to a specific acquisition is leveraging some of the talent across the portfolio to go a little bit deeper into business diligence efforts. I think, thinking back to one specific instance, Neil, that may be what you were thinking about, that there were a couple of things that we may have been able to understand earlier relative to the trajectory of a business that we were bringing on board. There was work to be done. Just how much work needed to be done and how quickly was the thing that I would point to in one particular instance, if that makes sense.
Another learning moment.
How did you change the process so that you didn't repeat that?
I think one of the things we've done is we've leveraged people with specific expertise around some of those gotta-believes across the portfolio. You know, a couple of diligence efforts, we've had people from existing businesses come in that had a very specific expertise to retire some of that business diligence risk, where we wouldn't have necessarily done that previously. That's the one thing that I can think of.
I'll give you a real-time one from last week, our postmortems. We had five that were on the docket at the year anniversary. Fourtwo worked really well. One was less good. One of the principal reasons for a less good one was they had two very large implementations in flight that ended up going sideways. Now we've incorporated in our diligence process doing customer channel checks for the in-flight implementations heretofore. You take an assumption that somebody who just bought something is generally pretty happy. That's an example of like a real-time learning and process adjustment.
Yeah.
Thank you. It's Terry Tillman again at Truist Securities. Another couple parter. In terms of the $900 million plus in maintenance revenue across all the businesses, I'd be curious, and I think you said earlier, you're not gonna force your customers' hands, these are enterprises, so, you know, we may not be ready for the next big thing. If we look out over the next decade or so, I mean, how would it look? Would it be linear, or would there be maybe a period of time where it really starts to step up? The second part of this is, you know, maybe Neil related to some of those growth algorithmic comments earlier at the end of the messaging part.
As you get that maintenance installed base, the vast majority of it move over, does that have implications on some of those long-term financial targets? Thank you.
It's very hard to predict the pacing. I mean, as good as a guess as any, but it's a guess, would be a linear progression. You know, the vast majority of the $900 million is product enabled, but not all of it is product enabled today, so there's still product work that has to happen. It's on the pace of journey. For instance, you know, Jason alluded to it with Foundry. Their arc of moving their customers to the cloud starts with net new. In this year, their goal is that half of net new customers take the cloud adoption, next year it'll be a higher percentage. That's just net new. They haven't been getting to move their base, right? It's just for Foundry, it's gonna be an arc.
You layer on the rest of the company. I'll say it's concentrated in a few businesses, most of which are in the application software segment. It's not across the entire portfolio. In terms of the growth algorithm impact, I really don't think it has any long-term impact. I mean, it's 10 years from now. I mean, this transition is a little bit of a... It's a tailwind, but it's not like a predominant part of growth algorithm, so I don't think it has a meaningful impact over a long arc of time.
Yeah. The way we think about it is it's gonna have, you know, sort of better ultimate EBITDA margins, right? The conversion to the cloud, but probably a little bit lower gross margin 'cause you're trading off cloud margins for perpetual. Relative to the growth algorithm, it doesn't. I don't think it really fundamentally changes it.
Hey, guys. It's Joe again from TD Cowen. Over here. As you kind of are moving to lever up the organic growth rate, particularly as you get comped against, you know.
More traditional software companies. Like, where does, like, the evaluation, does it shift a little bit when you're looking at, you know, kind of niche opportunities that have, like, ironclad growth that might be a little bit slower? Like, versus more like, I don't know, maybe this market isn't fully defined yet, and it's not fully established who the true leaders are, and we can back the right horse, like maybe taking on a little bit more risk for potentially like a faster growth opportunity that maybe you can crystallize?
We remain committed. Like, our tooling, our expertise is on this business pickers of finding very solid, industries or niches where the competitive behavior is very well understood. You can observe it, you can survey it, you can analyze it, you can understand the basis of competition, and then we're selecting, you know, one of the two winners in that space. Underwrite, like, if any of those conditions precedent aren't understandable, if there's shifting forces and there's gonna be clear winners and clear losers or a tremendous amount of disruption, that brings in, on Jason's slide with the 10 boxes in the bottom right-hand corner, the existential risk question. We're just not in a position, in any capacity to wanna take on that existential risk.
Again, with a compounder's mindset, we love the defensibility of the niche and the predictability, just because it's a smaller market doesn't mean the market's not growing. Doesn't mean you can't grow, you know, high, you know, single digits, if not low doubles, as we showed you in a handful of case studies today. That's what we do, and we're gonna stay committed to that. Anything you wanna add?
No.
Hi, it's Allison Poliniak-Cusic from Wells Fargo again. You probably more reflective of the bolt-ons. When you're thinking through that, are there any guardrails in place or concerns about a vertical that you have today getting too big, indifferent to it based on the portfolio? Kind of how you're thinking through managing that over time?
There are guardrails for sure. I don't believe the one you highlight is one that would be a principle one, right? First is the platform mature enough with enough processes to be able to onboard and capital integrate a business? Not all 27 of our businesses are in that position today, nor do I think they all will be. That's from a systemic capability point of view. The second one is, once, you know, we've done a bolt-on, so we did a big bolt-on for Strata EPSi. They have the capability, but they're out of the game while they're digesting that, right? There is some. Those are more the guardrails and rate limiters. Again, it's all the bolt-on activities, all to drive improved organic growth.
We need to see that manifesting itself before, if you will, Strata's open for business again for any sort of meaningful bolt-on. Those are more the guardrails.
Yeah, that's right. I mean, if it was a horizontal bolt-on, that could introduce, you know, more large platform players, but it's staying within the vertical, so we typically, it's just us going deeper with the existing sort of market.
Yeah. Joe Vruwink from Baird. Just on M&A diligence and the market assessment that you spoke on. Do you typically underwrite that the TAMs will get bigger, not just a function of buying into a growing market, but as a function of your ownership? Customers might direct you on what they want new, and that feeds product development, and that drives market opportunity. Are you underwriting that ultimately you'll be a driver of a bigger TAM, or are you kind of underwriting that the status quo is what it is today and you work from there? I have a follow-up.
I can.
Go ahead.
Yeah. I think, it really kind of depends on the asset, but we've seen situations where, you know, management will make assertions around that, and we will do independent, you know, sort of, analysis around those market opportunities. It depends on the situation. You know, I think we have underwrote it at certain times, and other times we've sort of said that's a little bit too adjacent or that you don't have the right to win there. But it is... You know, we kind of take that, we take management's forecast, what their assertions are, we do our independent analysis of that, and then we make the assessment from there.
Yeah. I think that's, it's perfectly well said. On platforms, we would not underwrite any of that, right? That just by virtue of our ownership or something. If it's a bolt-on, you know, Rarely, but occasionally, there might be an application that's sold in adjacency, and that's the TAM, and nobody's ever taken that capability into our core. We would certainly underwrite to bring it into our core. Like, two or three adjacencies to the right, just where we don't have a right to win, we would not.
Just kind of related to the last one, but it gets back to the question on past mistakes or I guess the batting average with success. In some of the examples shared today, if one of your companies maybe veered too far from its core, and so the success was just refocusing them on what was working, and they did that better. There's other examples where a company got more R&D to go after that adjacency, and that was a success. What kind of defines when one is right and one is wrong and just getting that right?
You're exactly right to call that out. At a handful of our companies, it's been retrenching to the core because the prior seller was trying to create a TAM that was larger, an illusion of growth that wasn't real. When we do our work, the core TAM is large enough to support the growth that we wanna see in the business. It's very easy to refocus back to the core. In other cases, once you've sort of done what we wanna do there, and you have a right to an adjacency, like Deltek's done, moving from A&E into construction, for instance. You're right to point that out. To answer your question is bespoke to each company and a strategic arc where they are. There's no common answer.
As Satish said in his slides, every three-ish years, we're doing a long-range strategic plan with each business unit and asking and answering these types of questions.
Hi, this is Jonathan from Sustainable Growth Advisers. Maybe this question is somewhat for the board. You guys talk a lot about the opportunity cost of capital. How do you think about, like, share buybacks? You've gone through this journey to transform into a really great, a lot of great businesses. How do you kind of think about that as a potential for the opportunity cost of capital?
Go ahead, Jason.
Yeah, no, I think it's funny you mentioned that. We just updated the board on that last week. We always look at it, every so often. I think for us, you know, sort of for the free cash flow and relevering that and compounding it through acquisitions sort of overwhelms the buyback opportunity. So that's sort of our current posture now down the road. Would we look at it? Maybe. But, you know, we run the math several ways, and that's still, to us, is a better way to increase our returns overall.
Yeah, it's all about the math. We have no ideological leaning one way or another, it's got to be clear and compelling. A buyback at this moment is not clear and compelling versus our current capital deployment.
Hi, David Landry, Demesne Investments. You spoke a lot today about how the decentralized autonomous model is so important to what you do. Hearing some of the subsidiary companies, I was kind of surprised to hear that or to not hear that some of that hasn't filtered down in some kind of modified way, to how they run their businesses, creating accountability, clear P&L lines within their businesses. I don't know, to the extent that that exists, if maybe you could shed some light on that next layer down.
Yeah, I think it's, I won't lead the witness. Maybe, Mike, you can go and then Amy, if that's okay. Do you have the mic there it is?
Sure. I mean, I don't know. I think there's a pretty clear sense of accountability that we all have in some regard, right? I think, You know, as we've gone through bolt-on acquisitions, as we've evolved our businesses, I think there has been some filtering down of how we may be organized that we may not have illuminated today in order to get very clear line of sight around the success of those bolt-ons, getting into different lines of business to be able to, again, I think the term we use a lot is we have to make sure we're building conviction around what we're trying to get done and then being able to demonstrate that over the longer term.
I think that there's a lot of that that has filtered down, and we adjust on an ongoing basis to be able to demonstrate that.
Want to take another crack at it, Amy?
Yeah, sure. I mean, I will definitely tell you that we run our business as a team of resources that have a tremendous amount of trust in one another and drive a tremendous amount of positive conflict and high accountability. While we run as one P&L, we don't have separate P&Ls inside of our business. We do have separate functions, separate roles, and, you know, people who are accountable to each other for different things. Through that, I think we've built a very cohesive team that is based, again, in all the same principles that Neil went through around trust and accountability and how that drives results.
Terrific. What I will say is we began our journey of profiling the leaders and onboarding the leaders that run our 27 companies around being learners, competitors, builders, and strategic operators. Those innate skills start flowing through the organization as well. It just takes some time.
Yeah. Brian Gesuale from Raymond James. I'd like to ask a little bit about pricing from a historical basis. As private companies, how instrumental was pricing in the growth of these businesses? Then maybe the first few years under Roper, in kind of the pre-inflationary days, how important was it? How did you think about it now as part of the accelerated growth rate, as you move forward over the next few years?
Great. I direct that right back to Mike and Amy and Chris. Pricing when you're sponsor-owned and pricing when you're Roper-owned, any differences?
Yeah, I wouldn't say it's been that big of a difference either way. I mean, we have price increases that are factored into all of our contracts. We try to have long-term agreements with everyone, and you know, different price increases are factored in, whether it be a 3, 5, or 7-year agreement. Obviously, when you're in this inflationary period, there are clients that may have legacy agreements that had CPI or some other index tied to what their increases would have been tied to. That's not really the standard. I wouldn't say there's been, like, a major part of the driver. It is something, though, that obviously from a business discipline that we build in to all of our agreements and contracts. I don't know if you all want to add anything.
That's it. I will say as part of the diligence process, we are super dissecting the growth algorithm of each business and price is one of it. We're testing with customers and prospects, through our research around, you know, what is your level of interest to accept price that's in bands? We bounce that up against where the target company is. If a company's, you know, getting 4% year- in, year-o ut, and the customer said they're good with anything less than 7%, then we know we're in a good band. Sometimes it's reverse, you have to worry about if the pricing element of growth algorithm really has durability. In the case of all our business, it does.
That's something we've certainly added to our learning process over time. You know, Go back, you know, several years ago, we've seen some sponsors take up price significantly and what that's done to the customer base. We're super mindful about we're gonna be a forever home. We want our customers to be our partners, and so we just take that long-term approach to our pricing algorithm.
Great. One more, Zach, you think?
Are there any takers? Oh.
There's one back there. Great. Last one.
Yep. About the culture and identifying the leaders, is that relatively new? Because you said it takes time to filter down. I'm just wondering.
How you look at that when acquisition's going forward? You said you might do something a half click earlier. Does this mean that you might replace management right away if you do a deal and that'll allow you to do those things? Sort of related to that, I've heard, you know, we're forever owners and all of that. Have you gotten any pushback given all the portfolio moves you made lately?
Appreciate it. If we forget one, then hold us accountable. If you can remember the third one, I think I can do the first two.
The precision of the four elements around our leader profile is relatively new. We actually as a team did it in the summer of 2020. It is relatively new. Before that, we talked about it just simply, are you a builder or a transactor, right? We knew we wanted the best leaders in our organization were authentically sort of motivated and geeked up to build things for. Those did well with us versus sort of preparing a business to be sold. We added precision. Then also, it's just not the criteria. We have now highly tuned our selection process against those, right? We have testing, we have interview questions, we have our panels. It's the way we discuss all our leadership candidates.
We have the ability to profile against that and then also develop and train against that. Yes, relatively new with a level of precision. Buying things half a click earlier, as Jason mentioned on the 10-panel slide of our criteria, if we're buying something that is a little bit earlier in its stage and the leadership team is not on board for the value creation plan that we're gonna want to deploy, then yes, we now have the confidence with this leadership profile that we developed to be able to go select somebody from the outside or move somebody from inside into that opportunity to be more focused in the nearer term on the value creation plan. The third question.
In terms of pushback on our portfolio with the forever home, sort of, I guess, natural conflict there. I think we've been very explicit internally with all of our businesses about where we're going strategically. You know, we obviously, you know, with the TransCore transaction, it was all about getting more asset light. TransCore was, you know, project-based business with lots of unbilled receivables, so it was just kinda weighing down our cash profile. I think that made a lot of sense, and I think that made sense externally as well. You know, we had a lot of volatility in our quarter-to-quarter numbers in addition to the asset intensity. I think that was well received, candidly.
On the cyclicality, again, that was another part, just our learning over time, how cyclicality informs valuation and then ultimately how it informs compounding. We were pretty explicit about that internally with our leadership team. I don't think anybody feels like, "Okay, what's the next shoe to drop?" Externally, I think it sort of made it cohesive in terms of, you know, the company we own today versus the industrial and energy assets that we just divested it.
Terrific. Well, thank you. Thanks to Jill and Serena and Zach for everything to make today happen, to the Roper and the operating teams for everything you're doing for us, and everybody who committed a big chunk of your day, to learn about our story. Really appreciate it. As you know, we'll be around for the next hour having lunch. Don't forget about our two directors, so you can ask them anything you'd like. They'll be at lunch as well. It's been a terrific day, and really appreciate the time and attention. Thank you.
Thanks.