On the desk today · Roper Technologies
It made pumps. Then it sold the pumps. Now it only buys software.
| NASDAQ · ROP |
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The Company That Sold
Everything It Made
In 2001, a man named Brian Jellison walked into the offices of Roper Industries — a mid-sized industrial conglomerate in Georgia that made pumps, valves, and flow meters — and asked a question that changed the company forever. Why are we tying up capital in factories and inventory when we could own businesses that collect subscription checks every month?
He spent the next 17 years answering his own question. He sold the pumps. He sold the valves. He sold the meters. And he bought software companies — one after another, in niche markets so small that no one else bothered to compete.
I came across Roper while looking at free cash flow data last year. I was sorting companies by cash conversion — how much of every dollar earned actually turns into cash — and Roper kept appearing near the top. I had never heard of it. I looked at the product list: insurance agency management software, legal practice management, church engagement platforms, electronic tolling, school administration. Nothing glamorous. Nothing consumer-facing. All of it recurring. All of it essential.
Most people have never heard of Roper Technologies. That is by design. It does not put its name on anything it owns. The acquired businesses keep their brands, their teams, their customers. Roper provides capital and cash-flow discipline. The subsidiary provides the toll booth.
The company traces back to 1919, when George D. Roper started making gas stoves in Rockford, Illinois. Over the decades it evolved into an industrial products manufacturer. In 1981, the company was reorganized as Roper Industries via a leveraged buyout. It went public in 1992. Then Jellison arrived. His thesis was simple: capital-intensive businesses earn mediocre returns. Asset-light software businesses — the kind where customers pay annually and never leave — earn extraordinary returns. So he stripped away the old Roper and rebuilt it around software.
He renamed the company Roper Technologies in 2015. The last industrial businesses were divested in 2022, when Roper sold a majority stake in its Process Technologies segment to CD&R. What remains is a pure-play vertical software compounder.
In fiscal 2025, Roper reported $7.90 billion in revenue — up 12% from the year before. Adjusted free cash flow reached $2.47 billion. Adjusted EBITDA hit $3.14 billion. The company deployed $3.3 billion on acquisitions during the year — highlighted by CentralReach, a behavioral health software platform acquired for $1.65 billion, and Subsplash, a church and nonprofit engagement platform. It also bought back $500 million of its own stock. The negative working capital model — where customers pay upfront before Roper delivers the service — means the business funds itself.
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That $2.47 billion in free cash flow is the number that tells the whole story. Roper doesn't build anything. It doesn't manufacture anything. It owns software businesses that collect annual subscriptions from customers who can't leave — and it converts nearly every dollar of EBITDA into cash. The adjusted EBITDA margin in 2025 was roughly 40%. For a company doing almost $8 billion in revenue, that efficiency is extraordinary.
The stickiness is vertical. Each Roper business serves a narrow market — insurance agencies, law firms, freight logistics, school districts, churches. The software is deeply embedded in the customer's daily workflow. The data inside it — client files, case histories, financial records, student information — is irreplaceable. Switching means migrating years of operational data into an unfamiliar system while the business keeps running. Nobody does it.
Brian Jellison didn't live to see the company cross $2 billion in free cash flow. He stepped down in 2018 due to illness and died shortly after, at 73. His successor, Neil Hunn, has continued the playbook without alteration. In the fourth-quarter 2025 earnings release, Hunn called it plainly: "2025 was another clear demonstration of Roper's durable long-term cash flow compounding model. During the year, we delivered 12% total revenue growth, 11% EBITDA growth, and 8% free cash flow growth."
The flywheel runs on cash. Roper's portfolio generates billions in free cash flow. That cash funds the next acquisition. The acquisition adds a new vertical software business with recurring revenue and high margins. That business generates more cash. The cycle repeats. Between 2001 and 2025 — the Jellison era and its continuation under Hunn — Roper compounded per-share equity value at approximately 16% annually. The S&P 500 didn't come close. And unlike most serial acquirers, Roper operates with negative net working capital — customers pay before Roper delivers. The machine funds itself.
WHY THIS WORKS
Vertical software is the stickiest product. Insurance brokers, attorneys, school administrators, and church leaders build their operations inside Roper's software. Leaving means rebuilding everything from scratch.
Negative working capital funds the machine. Customers pay upfront on annual subscriptions. Roper collects the cash before delivering the service. The business generates capital rather than consuming it.
No Roper branding, no central integration. Each acquired business keeps its name, its team, and its customers. Roper provides capital discipline. The subsidiary provides the expertise. This attracts founders who want preservation, not absorption.
The playbook survived its architect. Brian Jellison built the model. Neil Hunn runs it. The transition was seamless. $3.3 billion deployed in 2025 alone — the machine accelerates.
In 1919, George D. Roper made gas stoves in Rockford, Illinois. A century later, the company bearing his name doesn't make anything at all. It owns 25 software businesses across 25 verticals — insurance, legal, education, logistics, healthcare, churches — and collects a subscription check from each one, every month, forever. Brian Jellison's insight was that the highest-returning asset a company can own is not a factory or a machine. It is a customer who cannot leave.
