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What changed in Roper Technologies's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Roper Technologies's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+214 added−241 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-27)

Top changes in Roper Technologies's 2023 10-K

214 paragraphs added · 241 removed · 187 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

46 edited+7 added−6 removed15 unchanged
Biggest changeIn 2018, the General Data Protection Regulation (“GDPR”) became effective in the European Union (“EU”) and United Kingdom and imposed restrictions on how companies use and process personal information. In particular, legal challenges to the way regulators implemented GDPR have created additional operational burdens for companies transferring personal data back and forth between the EU, U.S., and India.
Biggest changeRisk Factors.” Privacy and Data Security We are subject to privacy and data security laws around the world that may impose operational burdens on our businesses. In 2018, the General Data Protection Regulation (“GDPR”) became effective in the European Union (“EU”) and United Kingdom (“UK”) and imposed restrictions on how companies use, process, and protect personal information.
CBORD/Horizon - campus solutions software including access and cashless systems and food and nutrition service management serving primarily higher education and healthcare markets along with software, services, and technologies for foodservice operations specializing in K-12. CliniSys - diagnostic and laboratory information management software solutions. Data Innovations - software solutions that enable enterprise management of hospitals and independent laboratories.
CBORD – campus solutions software including access and cashless systems, and food and nutrition service management, serving primarily higher education and healthcare markets along with software, services, and technologies for foodservice operations specializing in K-12. Clinisys – diagnostic and laboratory information management software solutions. Data Innovations – software solutions that enable enterprise management of hospitals and independent laboratories.
Deltek - enterprise software and information solutions for government contractors, professional services firms and other project-based businesses. Frontline Education - K-12 school administration software, connecting solutions for human capital management, student and special programs, and business operations with powerful analytics to empower educators. IntelliTrans - transportation management software and services to bulk and break-bulk commodity producers.
Deltek – enterprise software and information solutions for government contractors, professional services firms, and other project-based businesses. Frontline – K-12 school administration software, connecting solutions for human capital management, student and special programs, and business operations, with powerful analytics to empower educators. IntelliTrans – transportation management software and services to bulk and break-bulk commodity producers.
We pursue consistent and sustainable growth in revenue, earnings and cash flow by enabling continuous improvement in the operating performance of our existing businesses and by acquiring other businesses that offer high value-added software, services, technology-enabled products and solutions that we believe are capable of achieving growth and maintaining high margins.
We pursue consistent and sustainable growth in revenue, earnings, and cash flow by enabling continuous improvement in the operating performance of our businesses and by acquiring other businesses that offer high value-added software, services, technology-enabled products, and solutions that we believe are capable of achieving growth and maintaining high margins.
As a result, apart from guidance with respect to: (i) compliance with regulatory requirements or corporate policies; and (ii) the implementation of compensation and benefit programs provided by corporate management, managers at individual businesses are the primary decision makers with respect to human capital management and development.
As a result, apart from guidance with respect to: (i) compliance with legal and regulatory requirements or corporate policies; and (ii) the implementation of compensation and benefit programs provided by corporate management, managers at individual businesses are the primary decision makers with respect to human capital management and development.
Below is a description of the products offered by business that comprise the Application Software segment. Aderant - comprehensive management software solutions for law and other professional services firms, including business development, calendar/docket matter management, time and billing and case management.
Below is a description of the products offered by businesses that comprise the Application Software segment: Aderant – comprehensive management software solutions for law and other professional services firms, including business development, calendar/docket matter management, time and billing, and case management.
ITEM 1. BUSINESS All currency amounts are in millions unless specified Our Business Roper Technologies, Inc. (“Roper,” the “Company,” “we,” “our” or “us”) is a diversified technology company. Roper has a proven, long-term, successful track record of compounding cash flow and shareholder value.
ITEM 1. BUSINESS All currency amounts are in millions unless specified Our Business Roper Technologies, Inc. (“Roper,” the “Company,” “we,” “our,” or “us”) is a diversified technology company. Roper has a proven, long-term, successful track record of compounding cash flow and shareholder value.
Many businesses have retained work-from-home flexibility for their employees and have implemented hybrid work-from-home and in-office arrangements. Outside the U.S., we have some employees, particularly in Europe, that are represented by an employee representative organization, such as a union, works council or employee association.
Many businesses have retained work-from-home flexibility for their employees and have implemented hybrid work-from-home and in-office arrangements. 8 Outside of the U.S., we have some employees, particularly in Europe, that are represented by an employee representative organization, such as a union, works council, or employee association.
FMI - dispensers and metering pumps which are utilized in a broad range of applications requiring precision fluid control. Inovonics - high-performance wireless sensor network and solutions for a variety of applications. IPA - automated surgical scrub and linen dispensing equipment for healthcare providers.
FMI – dispensers and metering pumps which are utilized in a broad range of applications requiring precision fluid control. Inovonics – high-performance wireless sensor networks and solutions for a variety of applications. IPA – automated surgical scrub and linen dispensing equipment for healthcare providers.
Below is a description of the products offered by business that comprise the Network Software segment. ConstructConnect - cloud-based data, collaboration and estimating automation software solutions to a network of pre-construction contractors. DAT - electronic marketplaces that connect available capacity of trucking units with the available loads of freight throughout North America.
Below is a description of the products offered by businesses that comprise the Network Software segment: ConstructConnect – cloud-based data, collaboration, and estimating automation software solutions to a network of pre-construction contractors. 5 DAT – electronic marketplaces that connect available capacity of trucking units with the available loads of freight throughout North America.
In the U.S., several states have adopted legislation that imposes similar (but not identical) restrictions to GDPR on companies conducting business or serving customers in those states.
In the U.S., many states have adopted legislation that imposes restrictions similar (but not identical) to GDPR on companies conducting business or serving customers in those states.
We are also subject to a variety of federal, state and foreign laws which broadly relate to our interactions with healthcare practitioners and other participants in the healthcare system, including, among others, anti-kickback law, and laws regulating the confidentiality of sensitive personal information and the circumstances under which such information may be released and/or collected, such as the Health Insurance Portability and Accountability Act of 1996, or HIPAA, the Health Information Technology for Economic and Clinical Health Act, or HITECH Act, and the GDPR. 7 Anti-Corruption and Anti-Bribery Laws and Regulations We are subject to the U.S.
We are also subject to a variety of federal, state, and foreign laws which broadly relate to our interactions with healthcare practitioners and other participants in the healthcare system, including, among others, anti-kickback law, and laws regulating the confidentiality of sensitive personal information and the circumstances under which such information may be released and/or collected, such as the Health Insurance Portability and Accountability Act of 1996, or HIPAA, the Health Information Technology for Economic and Clinical Health Act, or HITECH Act, and the GDPR.
Healthcare Regulations The manufacture, sale, lease and service of medical diagnostic and surgical devices intended for commercial use are subject to extensive governmental regulation by the FDA in the U.S. and by a variety of regulatory agencies in other countries for some of our businesses.
Healthcare Regulations The manufacture, sale, lease, and service of medical diagnostic and surgical devices intended for commercial use are subject to extensive governmental regulation by the Food and Drug Administration (“FDA”) in the U.S. and by a variety of regulatory agencies in other countries for some of our businesses.
Our businesses realize growth from new and existing customers in their niche markets through successfully executing go-to-market strategies, developing new products and applications, and delivering professional services. Diversified End Markets and Geographic Reach - We have a global presence, with sales to customers outside the United States (“U.S.”). totaling $806.5 in 2022.
Our businesses realize growth from new and existing customers in their niche markets through successfully executing go-to-market strategies, developing new products and applications, and delivering professional services. Diversified End Markets and Geographic Reach – We have a global presence, with sales to customers outside of the United States (“U.S.”) totaling $873.4 in 2023.
As of December 31, 2022, we employed approximately 15,800 people worldwide on a consolidated basis, of which approximately 10,500 were employed in the U.S. and approximately 5,300 were outside of the U.S. Management believes that the Company's employee relations are favorable. During the COVID-19 pandemic, most of our businesses implemented broad work-from-home initiatives.
As of December 31, 2023, we employed approximately 16,800 people worldwide on a consolidated basis, of which approximately 10,900 were employed in the U.S. and approximately 5,900 were employed outside of the U.S. Management believes that the Company’s employee relations are favorable. During the COVID-19 pandemic, most of our businesses implemented broad work-from-home initiatives.
These filings are also accessible on the SEC’s website at www.sec.gov. Our Corporate Governance Guidelines; the charters of our Audit Committee, Compensation Committee, and Nominating and Governance Committee; and our Business Code of Ethics and Standards of Conduct are also available on our website.
These filings are also accessible on the SEC’s website at www.sec.gov. Our Corporate Governance Guidelines; the charters of our Audit Committee, Compensation Committee, and Nominating and Governance Committee; and our Code of Conduct (the “Code of Conduct”) are also available on our website.
PowerPlan - financial and compliance management software and solutions to large complex companies in asset-intensive industries. Strata - cloud-based financial analytics and performance management software that is used by healthcare providers for financial planning, decision support and continuous cost improvement.
PowerPlan – financial and compliance management software and solutions to large complex companies in asset-intensive industries. Strata – cloud-based financial analytics, performance management software, and data solutions used by healthcare providers, higher education, and financial institutions for financial planning, decision support, and continuous cost improvement.
The businesses included in this transaction were Alpha, AMOT, CCC, Cornell, Dynisco, FTI, Hansen, Hardy, Logitech, Metrix, PAC, Roper Pump, Struers, Technolog, Uson, and Viatran (collectively “Indicor”). Following the sale of the majority stake, the Company retained an initial 49% minority equity interest in the new standalone parent company, Indicor, LLC.
The businesses included in this transaction were Alpha, AMOT, CCC, Cornell, Dynisco, FTI, Hansen, Hardy, Logitech, Metrix, PAC, Roper Pump, Struers, Technolog, Uson, and Viatran (collectively “Indicor”). Following the sale of the majority stake, the Company retained a minority equity interest in Indicor.
Technology Enabled Products Our Technology Enabled Products segment had net revenues of $1,353.8 for the year ended December 31, 2022, representing 25.2% of our total net revenues. Below is a description of the products offered by business that comprise the Technology Enabled Products segment. CIVCO Medical Solutions - accessories focused on guidance and infection control for ultrasound procedures.
Technology Enabled Products Our Technology Enabled Products segment had net revenues of $1,551.5 for the year ended December 31, 2023, representing 25.1% of our total net revenues. Below is a description of the products offered by businesses that comprise the Technology Enabled Products segment: CIVCO Medical Solutions – accessories focused on guidance and infection control for ultrasound procedures.
The compliance and other burdens on our businesses imposed by these privacy laws and regulations may be substantial as we work to comply with differing legal and implementation requirements across multiple jurisdictions.
Canada (Quebec) and China have also significantly updated their privacy laws. The compliance and other burdens on our businesses imposed by these privacy laws and regulations may be substantial as we work to comply with differing legal and implementation requirements across multiple jurisdictions.
However, some components and sub-assemblies are currently available from only a limited number of suppliers for which we regularly investigate and identify alternative sources where possible. We also believe these conditions affect our competitors.
Materials and Suppliers We believe most materials and supplies we use are readily available from numerous sources and suppliers throughout the world. However, some components and sub-assemblies are currently available from only a limited number of suppliers for which we regularly investigate and identify alternative sources where possible. We also believe these conditions affect our competitors.
Vertafore - cloud-based software to the property and casualty insurance industry, including agency management, compliance, workflow, and data solutions. 5 Network Software Our Network Software segment had net revenues of $1,378.5 for the year ended December 31, 2022, representing 25.7% of our total net revenues.
Vertafore – cloud-based software to the property and casualty insurance industry, including agency management, compliance, workflow, and data solutions. Network Software Our Network Software segment had net revenues of $1,439.4 for the year ended December 31, 2023, representing 23.3% of our total net revenues.
For example, in 2020 the California Consumer Privacy Act (“CCPA”) became effective and required companies to make disclosures to consumers about their data collection, use, and sharing practices; allowed consumers to opt out of certain data sharing with third parties; and provided a private right of action for data breaches.
For example, in 2020 the California Consumer Privacy Act (“CCPA”) became effective and required companies to make disclosures to consumers about their data collection, use, and sharing practices; allowed consumers to exercise control over the use and sharing of their personal data; and provided a limited private right of action for data breaches.
Any amendment to the Business Code of Ethics and Standards of Conduct and any waiver applicable to our directors, executive officers or senior financial officers will be posted on our website within the time period required by the SEC and the New York Stock Exchange (the “NYSE”).
Any amendment to the Code of Conduct and any waiver applicable to our directors, executive officers, or senior financial officers will be posted on our website within the time period required by the SEC and The Nasdaq Stock Market (the “Nasdaq”).
This transaction is referred to herein as the “Indicor Transaction.” During 2021, Roper entered into definitive agreements to divest our TransCore, Zetec and CIVCO Radiotherapy businesses (“2021 Divestitures”). As of March 31, 2022, Roper had completed the 2021 Divestitures. The aggregate of the 2021 Divestitures and Indicor Transaction have greatly reduced the cyclicality and asset intensity of the Company.
During 2021, Roper entered into definitive agreements to divest our TransCore, Zetec, and CIVCO Radiotherapy businesses (“2021 Divestitures”). Roper completed the 2021 Divestitures by the end of the first quarter of 2022. The aggregate of the 2021 Divestitures and the Indicor Transaction have greatly reduced the cyclicality and asset intensity of the Company.
Northern Digital - optical and electromagnetic precision measurement systems for medical and industrial applications. rf IDeas - RFID card readers used in numerous identity access management applications across a variety of vertical markets.
Northern Digital – optical and electromagnetic precision measurement systems for medical and industrial applications. rf IDEAS – RFID card readers used in numerous identity access management applications across a variety of vertical markets. Verathon – medical devices that enable airway management, including bronchoscopes and video laryngoscopes, and bladder volume measurement solutions for healthcare providers.
Changes to the CCPA effective in 2023 have added to the processing restrictions and notifications requirements – particularly when companies engage in online advertising. Virginia, Colorado, Connecticut, and Utah have passed similar legislation that will also become effective in 2023. Canada (Quebec) and China have also significantly updated their privacy laws.
Changes to the CCPA which became effective in 2023 have added to the processing restrictions and notifications requirements – particularly when companies engage in online advertising. Virginia, Colorado, Connecticut, and Utah have passed similar legislation that became effective in 2023 and eight other states have passed similar legislation that will become effective in subsequent years.
Foreign Corrupt Practices Act (FCPA) and anti-corruption laws, and similar laws in foreign countries, such as the UK Anti-Bribery Act. Any violation of these laws by us or our agents or distributors could create substantial liability for us, subject our officers and directors to personal liability, and cause a loss of reputation in the market.
Any violation of these laws by us or our agents or distributors could create substantial liability for us, subject our officers and directors to personal liability, and cause a loss of reputation in the market. Increased business in higher risk countries could subject us and our officers and directors to increased scrutiny and increased liability.
In the last three years, we have deployed approximately $10,500 of capital toward acquisitions, including approximately $3,750 in 2022 for the acquisition of Frontline Education, a leading provider of Software-as-a-Service (“SaaS”) solutions for school administration and approximately $5,400 in 2020 for the acquisition of Vertafore, Inc., a leading provider of SaaS solutions for the property and casualty insurance industry.
In the last three years, we have deployed approximately $6,550 of capital toward acquisitions, including approximately $1,380 in 2023 for the acquisition of Syntellis Performance Solutions, a leading provider of Software-as-a-Service (“SaaS”) solutions for healthcare, financial institution, and higher education providers and approximately $3,750 in 2022 for the acquisition of Frontline, a leading provider of SaaS solutions for school administration.
Competitors might be large or small in size, often depending on the size of the niche market we serve. We compete primarily on product quality, performance, innovation, technology, price, applications expertise, system and service flexibility, distribution channel access and customer service capabilities.
We compete primarily on product quality, performance, innovation, technology, price, applications expertise, system and service flexibility, distribution channel access, and customer service capabilities.
Subject to oversight and guidance from Roper executive management, each business operates as an individual unit with its managers empowered to make day to day operating decisions, including decisions with respect to human capital management.
Human Capital Management Roper is a diversified technology company that utilizes a decentralized operating model across our many businesses which serve a diverse set of end markets. Subject to oversight and guidance from Roper executive management, each business operates as an individual unit with its managers empowered to make day-to-day operating decisions, including decisions with respect to human capital management.
Increased business in higher risk countries could subject us and our officers and directors to increased scrutiny and increased liability. In addition, becoming familiar with and implementing the infrastructure necessary to comply with laws, rules and regulations applicable to new business activities and mitigating and protecting against corruption risks could be quite costly.
In addition, becoming familiar with and implementing the infrastructure necessary to comply with laws, rules, and regulations applicable to new business activities and mitigating and protecting against corruption risks could be quite costly. 7 Export Controls and Trade Policies We are subject to numerous domestic and foreign regulations relating to our operations worldwide.
Information regarding our international operations is set forth in Note 14 of the Notes to Consolidated Financial Statements included in this Annual Report. 4 Our Reportable Segments During the second quarter of 2022, we updated our reportable segment structure following the announcement of the Indicor Transaction.
Information regarding our international operations is set forth in Note 14 of the Notes to Consolidated Financial Statements included in this Annual Report. 4 Our Reportable Segments The Company’s segment reporting structure is based on business model and delivery of performance obligations.
We also employ various methods, including confidentiality and non-disclosure agreements with individuals and companies we do business with, including employees, distributors, representatives, independent contractors and customers to protect our intellectual property.
We also employ various methods, including confidentiality and non-disclosure agreements with individuals and companies we do business with, including employees, distributors, representatives, independent contractors, and customers to protect our intellectual property. We believe none of our operating units are substantially dependent on any single item of intellectual property, including a trade secret, patent, trademark, trade dress, or copyright.
The three updated reportable segments (and businesses within each; including changes due to acquisitions since the realignment) are as follows: –Application Software - Aderant, CBORD/Horizon, CliniSys, Data Innovations, Deltek, Frontline Education, IntelliTrans, PowerPlan, Strata, Vertafore –Network Software - ConstructConnect, DAT, Foundry, iPipeline, iTradeNetwork, Loadlink, MHA, SHP, SoftWriters –Technology Enabled Products - CIVCO Medical Solutions, FMI, Inovonics, IPA, Neptune, Northern Digital, rf IDEAS, Verathon Following the Indicor Transaction and the realignment of our reportable segments, the day-to-day operations of our businesses, our organizational structure, and our strategy remain unchanged.
The three reportable segments are as follows: –Application Software - Aderant, CBORD, Clinisys, Data Innovations, Deltek, Frontline, IntelliTrans, PowerPlan, Strata, Vertafore –Network Software - ConstructConnect, DAT, Foundry, iPipeline, iTradeNetwork, Loadlink, MHA, SHP, SoftWriters –Technology Enabled Products - CIVCO Medical Solutions, FMI, Inovonics, IPA, Neptune, Northern Digital, rf IDEAS, Verathon Financial information about our reportable segments is presented in Note 14 of the Notes to Consolidated Financial Statements included in this Annual Report.
Environmental Regulations Our operations and properties are subject to laws and regulations relating to environmental protection, including those governing air emissions, water discharges, waste management and workplace safety. We use, generate and dispose of hazardous substances and waste in our operations and could be subject to material liabilities relating to the investigation and clean-up of contaminated properties and related claims.
We use, generate, and dispose of hazardous substances and waste in our operations and could be subject to material liabilities relating to the investigation and clean-up of contaminated properties and related claims. We are required to conform our operations and properties to these laws and adapt to regulatory requirements in all countries as these requirements change.
Competition Generally, our products and solutions face significant competition, although in certain niche markets there are a limited number of competitors. We believe that we are a leader in most of our markets, and no single company competes with us over a significant number of product lines.
We believe that we are a leader in most of our markets, and no single company competes with us over a significant number of product lines. Competitors might be large or small in size, often depending on the size of the niche market we serve.
Export Controls and Trade Policies We are subject to numerous domestic and foreign regulations relating to our operations worldwide. In particular, our sales activities must comply with restrictions relating to the export of controlled technology and sales to denied or sanctioned parties contained in the U.S. Export Administration Regulations, U.S.
In particular, our sales activities must comply with restrictions relating to the export of controlled technology and sales to denied or sanctioned parties contained in the U.S. Export Administration Regulations, U.S. International Traffic in Arms Regulations (ITAR), and sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (OFAC).
Information regarding discontinued operations is included in Note 3 of the Notes to Consolidated Financial Statements. We were incorporated on December 17, 1981 under the laws of the State of Delaware. Market Share, Market Expansion, and Product Development Leadership with Technology and Products for Niche Markets - We maintain a leading position in many of our markets.
Information regarding discontinued operations is described further in Note 3 of the Notes to Consolidated Financial Statements included in this Annual Report. We were incorporated on December 17, 1981 under the laws of the State of Delaware.
Backlog is equal to our remaining performance obligations expected to be recognized as revenue within the next 12 months. Backlog was $2,912.6 at December 31, 2022, and $2,325.1 at December 31, 2021. Distribution and Sales Distribution and sales occur primarily through direct sales offices, manufacturers’ representatives, resellers and distributors.
As of December 31, 2023 and December 31, 2022, total remaining performance obligations were $4,612.6 and $4,214.0, respectively. 6 Backlog is equal to our remaining performance obligations expected to be recognized as revenue within the next 12 months. Backlog was $3,156.6 at December 31, 2023 and $2,912.6 at December 31, 2022.
We are required to conform our operations and properties to these laws and adapt to regulatory requirements in all countries as these requirements change. In connection with our acquisitions, we may assume significant environmental liabilities, some of which we may not be aware of, or may not be quantifiable, at the time of acquisition.
In connection with our acquisitions, we may assume significant environmental liabilities, some of which we may not be aware of, or may not be quantifiable, at the time of acquisition. In addition, new laws and regulations, the discovery of previously unknown contamination, or the imposition of new requirements could increase our costs or subject us to new or increased liabilities.
Remaining Performance Obligations and Backlog Remaining performance obligations represents the transaction price of firm orders for which work has not been performed and excludes unexercised contract options. As of December 31, 2022 and December 31, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations was $4,214.0 and $3,539.1, respectively.
Remaining Performance Obligations and Backlog Remaining performance obligations represent the transaction price of firm orders for which work has not been performed, excluding unexercised contract options.
Governmental Regulations We face extensive government regulation around the world relating to the development, manufacture, marketing, sale and distribution of our software, services, and products. The following sections describe certain significant regulations to which we are subject, but these are not the only regulations to which our businesses must comply.
Distribution and Sales Distribution and sales occur primarily through direct sales offices, manufacturers’ representatives, resellers, and distributors. Governmental Regulations We face extensive government regulation around the world relating to the development, manufacture, marketing, sale, and distribution of our software, services, and products.
For a description of the risks related to the regulations that our businesses are subject to, please refer to “Item 1A. Risk Factors.” Privacy and Data Security We are subject to privacy and data security laws around the world that may impose operational burdens on our businesses.
The following sections describe certain significant regulations to which we are subject, but these are not the only regulations with which our businesses must comply. For a description of risks related to the regulations that our businesses are subject to, please refer to “Item 1A.
Additionally, we deployed approximately $1,400 towards bolt-on acquisitions to help build on the strategic position of several of our businesses.
Additionally, we deployed approximately $1,420 toward other acquisitions, primarily bolt-on acquisitions to help build on the strategic position of several of our businesses. In January 2024, we announced that we reached a definitive agreement to acquire Procare Solutions, a leading provider of cloud-based software for the childcare market, for a purchase price of approximately $1,860.
International Traffic in Arms Regulations (ITAR), and sanctions administered by the Office of Foreign Asset Controls of the U.S. Treasury Department (OFAC). Our businesses may also be impacted by additional domestic or foreign trade regulations ensuring fair trade practices, including trade restrictions, tariffs and sanctions.
Our businesses may also be impacted by additional domestic or foreign trade regulations ensuring fair trade practices, including trade restrictions, tariffs, and sanctions. Environmental Regulations Our operations and properties are subject to laws and regulations relating to environmental protection, including those governing air emissions, water discharges, waste management, and workplace safety.
Removed
The Company’s new reporting segment structure is classified based on business model and delivery of performance obligations.
Added
The transaction is expected to close in the first quarter of 2024, subject to regulatory approval and customary closing conditions. See Note 2 of the Notes to Consolidated Financial Statements included in this Annual Report for additional information.
Removed
All prior periods have been recast to reflect the changes noted above. Financial information about our reportable segments is presented in Note 14 of the Notes to Consolidated Financial Statements included in this Annual Report. Application Software Our Application Software segment had net revenues of $2,639.5 for the year ended December 31, 2022, representing 49.1% of our total net revenues.
Added
This transaction is referred to herein as the “Indicor Transaction.” As of December 31, 2023 and 2022, the Company held a 47.3% and 49.0% minority equity interest in Indicor, respectively. See Note 10 of the Notes to Consolidated Financial Statements included in this Annual Report for additional information on this minority equity interest.
Removed
Verathon - medical devices that enable airway management and bladder volume measurement solutions for healthcare providers. 6 Materials and Suppliers We believe most materials and supplies we use are readily available from numerous sources and suppliers throughout the world.
Added
Market Share, Market Expansion, and Product Development Leadership with Technology and Products for Niche Markets – We maintain a leading position in many of our markets.
Removed
Although supply shortages have not had a material adverse effect on our revenues, we may continue to be impacted by supply chain challenges including increased material costs, component shortages and transportation disruptions and delays.
Added
Application Software Our Application Software segment had net revenues of $3,186.9 for the year ended December 31, 2023, representing 51.6% of our total net revenues.
Removed
In addition, new laws and regulations, the discovery of previously unknown contamination or the imposition of new requirements could increase our costs or subject us to new or increased liabilities. Customers During 2022, no customer accounted for 10% or more of any segment or total Company net revenues.
Added
Additionally, repeated legal challenges to the way regulators implemented GDPR provisions relating to international data transfers have created additional operational burdens and legal risks for companies when transferring personal data back and forth from the EU to many other countries, most notably the U.S. and India.
Removed
We believe none of our operating units are substantially dependent on any single item of intellectual property, including a trade secret, patent, trademark, trade dress, or copyright. 8 Human Capital Management Roper is a diversified technology company that utilizes a decentralized operating model across our many businesses which serve a diverse set of end markets.
Added
Anti-Corruption and Anti-Bribery Laws and Regulations We are subject to the U.S. Foreign Corrupt Practices Act (FCPA) and anti-corruption laws, and similar laws in foreign countries, such as the UK Bribery Act.
Added
Customers During 2023, no customer accounted for 10% or more of any segment or total Company net revenues. Competition Generally, our products and solutions face significant competition, although in certain niche markets there are a limited number of competitors.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

63 edited+10 added−13 removed30 unchanged
Biggest changeAlthough we believe that our judgments and assumptions are reasonable, changes in estimates or the application of alternative assumptions could produce significantly different results, as a result we could incur non-cash charges within non-operating income and a corresponding reduction in fair value. 12 Divestitures or other dispositions could negatively impact our business.
Biggest changeIn the event of a decrease in fair value, we could incur non-cash charges within non-operating income with a corresponding reduction in the balance of our equity investment. See Note 10 of the Notes to Consolidated Financial Statements included in this Annual Report for additional information on this equity investment. Divestitures or other dispositions could negatively impact our business.
Several of our operating companies have transactions and balances denominated in currencies other than the U.S. dollar. Most of these transactions and balances are denominated in euros, Canadian dollars, or British pounds.
Several of our operating companies have transactions and balances denominated in currencies other than the U.S. dollar. Most of these transactions and balances are denominated in British pounds, Canadian dollars, or euros.
Failure of our systems or those of our third-party service providers, may result in interruptions in our service and loss of data or processing capabilities, all of which may cause a loss in customers, refunds of product fees, material harm to our reputation and operating results.
Failure of our systems or those of our third-party service providers, may result in interruptions in our service and loss of data or processing capabilities, all of which may cause a loss in customers, refunds of product fees, and/or material harm to our reputation and operating results.
The future success of our business will depend, in part, on our ability to design and manufacture new competitive products, including software, and to enhance existing products and software offerings. This product development may require substantial internal investment.
The future success of our business will depend, in part, on our ability to design and manufacture new competitive products, including the development of software, and to enhance existing product and software offerings. This product development may require substantial internal investment.
Changes in the supply of, or price for, raw materials, parts and components used in our products or for third-party services used in the delivery of our SaaS solutions could affect our business.
Changes in the supply of, or price for, raw materials, parts and components used in our products, or third-party services used in the delivery of our SaaS solutions could affect our business.
Many of these risks are outside CD&R’s or Indicor’s control and could materially impact Indicor’s business, financial condition and results of operations. Moreover, CD&R may have economic or other business interests that are inconsistent with ours, and we may be unable to prevent strategic decisions that may adversely affect the value of our investment in Indicor.
Many of these risks are outside of CD&R’s or Indicor’s control and could materially impact Indicor’s business, financial condition, and results of operations. Moreover, CD&R may have economic or other business interests that are inconsistent with ours, and we may be unable to prevent strategic decisions that may adversely affect the value of our investment in Indicor.
For example, when we decide to sell or otherwise dispose of a business or assets, we may be unable to do so on satisfactory terms within our anticipated timeframe or at all, and even after reaching a definitive agreement to sell or dispose a business the sale is typically subject to satisfaction of pre-closing conditions which may not become satisfied.
For example, when we decide to sell or otherwise dispose of a business or assets, we may be unable to do so on satisfactory terms within our anticipated timeframe or at all, and even after reaching a definitive agreement to sell or dispose of a business, the sale is typically subject to the satisfaction of pre-closing conditions which may not become satisfied.
Also, any new law or regulation imposing greater fees or taxes or restriction on the collection, use or transfer of information or data internationally or over the Internet, could result in a decline in the use of our products and services and adversely affect sales and our results of operations.
Also, any new law or regulation imposing greater fees or taxes or restriction on the collection, use, or transfer of information or data internationally or over the Internet, could result in a decline in the use of our products and services and adversely affect our sales and results of operations.
Legal proceedings in which we are, or may be, a party may adversely affect us. We are currently, and may in the future, become subject to legal proceedings and commercial or contractual disputes.
Legal proceedings to which we are, or may be, a party may adversely affect us. We are currently, and may in the future become, subject to legal proceedings and commercial or contractual disputes.
Global cybersecurity threats are rapidly evolving and becoming increasingly more sophisticated and attacks to networks, systems and endpoints can range from uncoordinated individual attempts to sophisticated and targeted measures known as advanced persistent threats, directed at the Company, its businesses, its customers and/or its third-party service providers, including, but not limited to, cloud providers and providers of network management services.
Global cybersecurity threats are rapidly evolving and becoming increasingly more sophisticated and attacks to networks, platforms, systems, and endpoints can range from uncoordinated individual attempts to sophisticated and targeted measures known as advanced persistent threats, directed at the Company, its businesses, its customers, and/or its third-party service providers, including, but not limited to, cloud providers and providers of network management services.
In addition, there has been an increased focus on industry-specific privacy laws, including in the financial, healthcare, and educational sectors. These statutes and regulations create civil penalties for violations, and in the case of California, creates a private right of action for data breaches, that increases the risk of data breach litigation.
In addition, there has been an increased focus on industry-specific privacy laws, including in the financial, healthcare, and educational sectors. These statutes and regulations create civil penalties for violations, and in the case of California, creates a limited private right of action for data breaches, that increases the risk of data breach litigation.
In addition, 13 some stakeholders may disagree with the Company’s goals and initiatives and the focus of stakeholders may change and evolve over time. Stakeholders also may have very different views on where environmental, social and governance focus should be placed, including differing views of regulators in various jurisdictions in which we operate.
In addition, some stakeholders may disagree with the Company’s goals and initiatives and the focus of stakeholders may change and evolve over time. Stakeholders also may have very different views on where environmental, social, and governance focus should be placed, including differing views of regulators in various jurisdictions in which we operate.
In addition, a significant increase in our insurance costs or the imposition of a liability that is not covered by insurance or is in excess of insurance coverage, could have an adverse impact on our operating results. Our operating results could be adversely affected by a reduction of business with our large customers.
In addition, a significant increase in our insurance costs or the imposition of a liability that is not covered by insurance or is in excess of insurance coverage, could have an adverse impact on our operating results. 10 Our operating results could be adversely affected by a reduction in business with our large customers.
In some of our businesses, we derive a significant amount of revenue from large customers. The loss or reduction of any significant contracts with any of these customers could reduce our revenues and cash flows. Additionally, many of our customers are government entities.
In some of our businesses, we derive a significant amount of revenue from large customers. The loss or reduction of any significant contracts with any of these customers could reduce our net revenues and cash flows. Additionally, many of our customers are government entities.
Failure of our products or software offerings to gain market acceptance or our failure to successfully develop and market new products and software could reduce our margins, which would have an adverse effect on our business, financial condition and results of operations.
Failure of our product or software offerings to gain market acceptance or our failure to successfully develop and market new products and software could reduce our margins, which would have an adverse effect on our business, financial condition, and results of operations.
Despite these efforts, we can make no assurance that we will be able to mitigate, detect, prevent, timely and adequately respond, or fully recover from the negative effects of cyberattacks or other security compromises, and such cybersecurity incidents, depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption or unavailability of critical data and confidential or proprietary information (our own or that of third parties) and the disruption of business operations.
Despite these efforts, we can make no assurances that we will be able to mitigate, detect, prevent, timely and adequately respond, or fully recover from the negative effects of cyberattacks or other security compromises, and such cybersecurity incidents, depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption, or unavailability of critical data and confidential or proprietary information (our own or that of third parties) and the disruption of business operations.
If third parties fail to perform their obligations under arrangements with us, we may be forced to replace the underlying commitment at current or above market prices or on other terms that are less favorable to us. In such events, we may incur losses, or our results of operations, financial condition or liquidity could otherwise be adversely affected.
If third parties fail to perform their obligations under arrangements with us, we may be forced to replace the underlying commitments at current or above-market prices or on other terms that are less favorable to us. In such events, we may incur losses, or our results of operations, financial condition, or liquidity could otherwise be adversely affected.
We assess at least annually whether there has been an impairment in the value of our goodwill and indefinite lived intangible assets.
We assess at least annually whether there has been an impairment in the value of our goodwill and other indefinite-lived intangible assets.
We increasingly rely on third-party data centers and cloud platforms, such as Amazon Web Services, Google Cloud Platform, and Microsoft Azure to host enterprise and customer systems. Our ability to monitor such third parties’ security measures and the full impact of the systemic risk is limited.
We rely on third-party data centers and cloud platforms, such as Amazon Web Services, Google Cloud Platform, and Microsoft Azure to host certain enterprise and customer systems. Our ability to monitor such third parties’ security measures and the full impact of the systemic risk is limited.
As a result, our ability to realize the ultimate anticipated benefits of the transaction depend upon operation and management of Indicor by CD&R and the Indicor management team. In addition, Indicor is an industrial business that is subject to risks that are different than the risks associated with our existing businesses.
As a result, our ability to realize the ultimate anticipated benefits of the transaction depends upon the operation and management of Indicor by CD&R and the Indicor management team. In addition, Indicor is an industrial business that is subject to risks that are different than the risks associated with our existing businesses.
The availability and prices of raw materials, parts and components are subject to curtailment or change due to, among other things, suppliers’ allocations to other purchasers, interruptions in production by suppliers, supply chain delays and disruptions, changes in exchange rates and prevailing price levels.
The availability and prices of raw materials, parts, and components are subject to curtailment or change due to, among other things, suppliers’ allocations to other purchasers, interruptions in production by suppliers, supply chain delays and disruptions, component shortages, changes in exchange rates, and prevailing price levels.
Our compliance, cyber and data privacy programs, cybersecurity technology and risk management cannot eliminate all system risk. Cyberattacks, configuration or human error and/or other external hazards could result in the misappropriation of assets or sensitive information, corruption of data or operational disruption.
Our compliance, cyber and data privacy programs, cybersecurity technology, and risk management cannot eliminate all system risk. Cyberattacks, configuration or human error, insider threat, and/or other external hazards could result in the misappropriation of assets or sensitive information, corruption of data, or operational disruption.
We currently have product liability insurance; however, we may not be able to maintain our insurance at a reasonable cost or in sufficient amounts to adequately protect us against losses. We also maintain other insurance policies, including directors’ and officers’ liability insurance and cyber insurance.
We currently have product liability insurance; however, we may not be able to maintain our insurance at a reasonable cost or in amounts sufficient to adequately protect us against losses. We also maintain other insurance policies, including directors’ and officers’ liability insurance and cybersecurity insurance.
The potential consequences of a material cybersecurity incident include financial loss, reputational damage, damage to our IT systems, data loss, litigation with third parties, theft of intellectual property, fines, diminution in the value of our investment in research and development, and increased cybersecurity 10 protection and remediation costs due to the increasing sophistication and proliferation of threats, which in turn could adversely affect our competitiveness and results of operations.
The potential consequences of a material cybersecurity incident include financial loss, reputational damage, damage to our IT systems, data loss, litigation with third parties, theft of intellectual property, fines, customer attrition, diminution in the value of our investment in research and development, and increased cybersecurity protection and remediation costs due to the increasing sophistication and proliferation of threats, which in turn could adversely affect our competitiveness and results of operations.
These are typically claims that arise in the normal course of business including, without limitation, commercial or contractual disputes with our suppliers or customers, intellectual property matters, third party liability, including product liability claims, and employment claims.
These are typically claims that arise in the normal course of business including, without limitation, commercial or contractual disputes with our suppliers or customers, intellectual property matters, data privacy matters, third party liability, including product liability claims, and employment claims.
Many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on environmental, social and governance considerations relating to businesses, including climate change and greenhouse gas emissions, human capital and diversity, equity and inclusion.
Many governments, regulators, investors, employees, customers, and other stakeholders are focused on environmental, social, and governance (“ESG”) considerations relating to businesses, including climate change and greenhouse gas emissions, human capital, and diversity, equity, and inclusion.
Our business, financial condition and results of operations could be adversely affected by disruptions in the global economy caused by the ongoing conflict between Russia and Ukraine. The global economy has been negatively impacted by the military conflict between Russia and Ukraine.
Our business, financial condition, and results of operations could be adversely affected by disruptions in the global economy caused by the conflict between Russia and Ukraine and the conflict in the Middle East. The global economy has been negatively impacted by ongoing military conflict between Russia and Ukraine and the conflict in the Middle East.
These may include such things as unauthorized access, phishing attacks, denial of service, introduction of malware or ransomware and other disruptive problems caused by threat actors. While we have experienced, and expect to continue to experience, these types of threats and incidents, none of them to date have been material to the Company.
These may include such things as unauthorized access, phishing attacks, denial of service, data exfiltration and extortion, introduction of malware or ransomware, and other disruptive problems caused by threat actors. While we have experienced and expect to continue to experience these types of threats and incidents, none of them to date have been material to the Company.
Although our management will endeavor to evaluate the risks inherent in any particular transaction, including but not limited to cyber risks, there are no assurances that we will properly ascertain all such risks. Acquisitions may involve significant cash expenditures, debt 9 incurrences, equity issuances and expenses.
Although our management will endeavor to evaluate the risks inherent in any particular transaction, including but not limited to cybersecurity risks, there are no assurances that we will properly ascertain all such risks. Acquisitions may involve significant cash expenditures, debt incurrences, equity issuances, and expenses.
If this were to occur, our assets may not be sufficient to fully repay the amounts due under this facility or our other indebtedness. Our goodwill and intangible assets are a significant amount of our total assets, and any write-off of our intangible assets would negatively affect our results of operations. Our total assets reflect substantial intangible assets, primarily goodwill.
If this were to occur, our assets may not be sufficient to fully repay the amounts due under this facility or our other indebtedness. Our goodwill and other intangible assets are a significant amount of our total assets, and any write-off of our intangible assets would negatively affect our results of operations.
Our international operations are subject to varying degrees of risk inherent in doing business outside the U.S. including, without limitation, the following: • adverse changes in a specific country’s or region’s political or economic conditions, particularly in emerging markets; • oil price volatility; • trade protection measures, tariffs, and import or export requirements; • subsidies or increased access to capital for firms that are currently, or may emerge as, competitors in countries in which we have operations; • partial or total expropriation; • potentially negative consequences from changes in tax laws; • difficulty in staffing and managing widespread operations; • differing labor regulations; • differing protection of intellectual property; • differing and unexpected changes in regulatory requirements, including any measures implemented to address the impacts of climate change; and • potentially negative consequences from the United Kingdom’s exit from the European Union.
Our international operations are subject to varying degrees of risk inherent in doing business outside of the U.S. including, without limitation, the following: • adverse changes in a specific country’s or region’s political or economic conditions, particularly in emerging markets; • oil price volatility; • trade protection measures, tariffs, and import or export requirements; • subsidies or increased access to capital for firms that are currently, or may emerge as, competitors in countries in which we have operations; • partial or total expropriation; • potentially negative consequences from changes in tax laws; • difficulty in staffing and managing widespread operations; • differing labor regulations; • differing protection of intellectual property; and • differing and unexpected changes in regulatory requirements, including any measures implemented to address data privacy and impacts of climate change.
Any failure, or perceived failure, by the Company to achieve its goals, further its initiatives, adhere to its public statements, comply with federal, state or international environmental, social and governance laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against the Company and materially adversely affect the Company’s business, reputation, results of operations, financial condition and stock price.
Any failure, or perceived failure, by the Company to achieve its goals, further its initiatives, adhere to its public statements, comply with federal, state, or international ESG laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against the Company and materially adversely affect the Company’s business, reputation, results of operations, financial condition, and stock price.
Our credit facility contains covenants requiring us to achieve certain financial and operating results and maintain compliance with specified financial ratios. Our ability to meet the financial covenants or requirements in our credit facility may be affected by events beyond our control, and we may not be able to satisfy such covenants and requirements.
Our credit facility contains covenants requiring us to achieve certain financial and operating results and maintain compliance with a specified financial ratio. Our ability to meet the financial covenants or requirements in our credit facility may be affected by events beyond our control, and we may not be able to satisfy such covenants and requirements.
If future operating performance at one or more of our business units were to fall significantly below current levels, if competing or alternative technologies emerge, if interest rates rise or if business valuations decline, we could incur a non-cash charge to operating income.
If future operating performance at one or more of our business units were to fall significantly below current levels, if competing or alternative technologies emerge, if discount rates rise, or if business valuations decline, we could incur a non-cash 11 charge to operating income.
In addition to the possibility of fines, application of these existing laws in a manner inconsistent with our data and privacy practices require that we change our data and privacy practices, which could have an adverse effect on our business and results of operations.
In addition to the possibility of fines, the application of these existing laws in a manner inconsistent with our current data and privacy practices requires that we change our data and privacy practices, which could have an adverse effect on our business and results of operations.
Our level of indebtedness and the debt servicing costs associated with that indebtedness could have important effects on our operations and business strategy.
Our level of indebtedness and the debt servicing costs associated with that indebtedness could have substantial effects on our operations and business strategy.
Globally, personal information collected within the European Union and United Kingdom remains subject to the 2018 General Data Protection Regulation (GDPR), which is a UK and European Union-wide legal framework that governs data collection, use, and sharing of an individual’s personal data and creates a range of consumer privacy rights.
Globally, personal information collected within the European Union and United Kingdom remains subject to the GDPR, which is a UK and European Union-wide legal framework that governs data collection, use, and sharing of an individual’s personal data and creates a range of consumer privacy rights.
Absent a pre-emptive Federal privacy law, as more states pass privacy legislation, there is a strong possibility that we will be required to comply with a patchwork of inconsistent privacy regulations.
Absent a preemptive Federal privacy law, as more states pass privacy legislation, there is a strong possibility that we will be required to comply with a patchwork of inconsistent privacy regulations.
In 2022, we divested a 51% majority equity stake of our industrial businesses to Clayton, Dubilier & Rice, LLC (“CD&R”) and retained an initial 49% minority equity interest in the new parent entity, Indicor.
In 2022, we divested a 51% majority equity stake in our industrial businesses to Clayton, Dubilier & Rice, LLC (“CD&R”) and retained a minority equity interest in the new parent entity, Indicor.
A breach of these covenants 11 or our inability to comply with the financial ratios, tests or other restrictions contained in our facility could result in an event of default under this facility.
A breach of these covenants or our inability to comply with the financial ratio, tests, or other restrictions contained in our credit facility could result in an event of default under this facility.
GDPR provides significant penalties for non-compliance (up to 4% of global revenue) and EU data protection authorities have already issued significant fines. The interpretation and application of consumer and data protection laws and industry standards in the United States, Europe, China and elsewhere can be uncertain and currently is in flux.
GDPR provides significant penalties for non-compliance (up to 4% of global annual revenue) and EU data protection authorities have already issued significant fines. The interpretation and application of consumer and data protection laws and industry standards in the U.S., Europe, and elsewhere can be uncertain and currently is in flux.
We seek to deploy measures to protect, detect, respond and recover from cyber threats, including identity and access controls, data protection, vulnerability management, incident response, secure product development, continuous monitoring of our networks, endpoints and systems, and maintenance of resilient backup and recovery capabilities.
We seek to deploy measures to protect, detect, respond, and recover from cybersecurity threats, including identity and access controls, employee training, data protection, vulnerability management, incident response, secure product development, continuous monitoring of our networks, platforms, endpoints, and systems, and maintenance of ransomware resilient backup and recovery capabilities.
Finally, as we increasingly become a provider of technology solutions, our customers and regulators will expect that we can demonstrate compliance with current data privacy and security regulations as well as new industry-developed standards, and our inability to do so may adversely impact sales of our solutions and services to certain customers.
Finally, as we increasingly provide technological solutions, our customers and regulators will expect that we can demonstrate compliance with current data privacy and security regulations as well as new industry-developed standards, and our inability to do so may adversely impact sales of our solutions and services to certain customers.
Risks Related to Economic and Political Conditions Economic, political and other risks associated with our international operations could adversely affect our business. For the year ended December 31, 2022, 14% of our net revenues and 8% of our long-lived assets, excluding goodwill and intangibles, were attributable to operations outside the U.S.
Risks Related to Economic and Political Conditions Economic, political, and other risks associated with our international operations could adversely affect our business. For the year ended December 31, 2023, 13% of our net revenues and 7% of our long-lived assets, excluding goodwill and other intangibles, were attributable to operations outside of the U.S.
Any business disruptions due to political instability, armed hostilities, incidents of terrorism, incidents of directed cyber-attacks, public health crisis, extreme weather events or other natural disasters could adversely impact our financial performance.
Any business disruptions due to political instability, armed hostilities, incidents of terrorism, incidents of directed cyberattacks, public health crises, or extreme weather events or other natural disasters could adversely impact our financial performance.
The Company makes statements about its environmental, social and governance goals and initiatives through information provided on its website, press statements and other communications, including through its ESG Report.
The Company makes statements about ESG goals and initiatives through information provided on its website, press statements, and other communications, including through its annual ESG Report.
ITEM 1A. RISK FACTORS Risks Related to Our Business Operations Our growth strategy includes acquisitions. We may not be able to identify suitable acquisition candidates, complete acquisitions or integrate acquisitions successfully. Our future growth is likely to depend to some degree on our ability to acquire and successfully integrate new businesses.
ITEM 1A. RISK FACTORS Risks Related to Our Business Operations Our growth strategy includes acquisitions. We may not be able to identify suitable acquisition candidates, complete acquisitions, or integrate acquisitions successfully. Our future rate of growth is highly dependent on our ability to acquire and successfully integrate new businesses.
If terrorist activity, armed conflict, directed cyber-attacks, political instability, public health crisis, such as an epidemic or pandemic, or extreme weather events or other natural disasters occur in the U.S. or other locations, such events may negatively impact our operations, cause general economic conditions to deteriorate or cause demand for our products to decline.
If terrorist activity, armed conflict, directed cyberattacks, political instability, public health crises, such as epidemics or pandemics, or extreme weather events or other natural disasters occur in the U.S. or other locations, such events may negatively impact our operations, cause general economic conditions to deteriorate, or cause demand for our products to decline.
As of December 31, 2022, we had $6,661.7 in total consolidated indebtedness. In addition, we had approximately $3,482 undrawn availability under our senior unsecured credit facility. Subject to restrictions contained in our credit facility, we may incur additional indebtedness in the future, including indebtedness incurred to finance acquisitions.
As of December 31, 2023, we had $6,330.1 in total consolidated indebtedness. In addition, we had approximately $3,133 of undrawn availability under our unsecured credit facility. Subject to restrictions contained in our credit facility, we may incur additional indebtedness in the future, including indebtedness incurred to finance acquisitions.
Responding to these environmental, social and governance considerations and implementation of these goals and initiatives involves risks and uncertainties, including those described under “Forward-Looking Statements,” requires investments and are impacted by factors that may be outside the Company’s control.
Responding to these ESG considerations and implementation of these goals and initiatives involves risks and uncertainties, including those described under “Information About Forward-Looking Statements,” requires investments, and is impacted by factors that may be outside of the Company’s control.
Once acquired, operations may not achieve anticipated levels of revenues, profitability or cash flows. Acquisitions involve risks, including difficulties in the integration of the operations, technologies, services and products of the acquired companies and the diversion of management’s attention from other business concerns.
Acquisitions involve risks, including difficulties in the integration of the operations, technologies, services, and products of the acquired companies and the diversion of management’s attention from other business concerns.
Further escalation of geopolitical tensions related to the military conflict, including increased trade barriers or restrictions on global trade, could result in, among other things, cyberattacks, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain. 14 General Risk Factors Impacts related to the COVID-19 pandemic could have an adverse effect on our business, financial condition, results of operations and cash flows.
Further escalation of geopolitical tensions, such as increased trade barriers, economic sanctions or restrictions on global trade, related to these military conflicts could result in, among other things, cyberattacks, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain. 14 General Risk Factors The potential insolvency or financial distress of third parties could adversely impact our business and results of operations.
Further, an increase in the level of our indebtedness may increase our vulnerability to adverse general economic and industry conditions and may affect our ability to obtain additional financing. ITEM 1B. UNRESOLVED STAFF COMMENTS None
Additionally, our credit agreement includes increases in interest rates if the ratings for our debt are downgraded. Furthermore, an increase in the level of our indebtedness may increase our vulnerability to adverse general economic and industry conditions and may affect our ability to obtain additional financing. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 15
Unfavorable changes in the ratings that rating agencies assign to our debt may ultimately negatively impact our access to the debt capital markets and increase the costs we incur to borrow funds. Additionally, our credit agreement includes an increase in interest rates if the ratings for our debt are downgraded.
A downgrade in the ratings of our debt could restrict our ability to access the debt capital markets and increase our interest costs. Unfavorable changes in the ratings that rating agencies assign to our debt may ultimately negatively impact our access to the debt capital markets and increase the costs we incur to borrow funds.
We rely on information and technology, including third-party cloud computing platforms, for many of our business operations which could fail and cause disruption to our business operations. Our business operations are dependent upon information technology networks and systems to securely transmit, process and store electronic information and to communicate among our locations around the world and with clients and suppliers.
Our business operations are dependent upon information technology networks and systems to securely transmit, process, and store electronic information and to communicate among our locations around the world and with clients and suppliers.
In addition, divestitures or other dispositions may have other adverse financial and accounting impacts, and disputes may arise with buyers or with partners in businesses in which we own a minority interest that could be difficult or costly to resolve.
In addition, divestitures or other dispositions may have other adverse financial and accounting impacts, and disputes may arise with buyers or with partners in businesses in which we own a minority interest that could be difficult or costly to resolve. 12 We use artificial intelligence in our business, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations.
Sales by our operating companies whose functional currency is not the U.S. dollar represented 11% and 12% of our total net revenues for the years ended December 31, 2022 and 2021, respectively. Unfavorable changes in exchange rates between the U.S. dollar and those currencies could significantly reduce our reported revenues and earnings.
Sales by our operating companies whose functional currency is not the U.S. dollar represented 11% of our total net revenues for both the years ended December 31, 2023 and 2022.
At December 31, 2022, goodwill totaled $15,946.1 compared to $16,037.8 of stockholders’ equity, and represented 59% of our total assets of $26,980.8. The goodwill results from our acquisitions, representing the excess purchase price over the fair value of the net identifiable assets acquired.
Our total assets reflect substantial intangible assets, primarily goodwill. At December 31, 2023, goodwill totaled $17,118.8 compared to $17,444.8 of total stockholders’ equity, and represented 61% of our total assets of $28,167.5. The goodwill results from our acquisitions, representing the excess purchase price over the fair value of the net identifiable assets acquired.
Regulatory authorities around the world have passed or are considering legislative and regulatory proposals concerning data protection, privacy and data security. In the United States, Virginia, Colorado, Connecticut, and Utah have passed new comprehensive privacy legislation, and joined California (which further enhanced its existing privacy laws) in directly regulating the collection, use and sharing of personal information.
In the U.S., the states of Virginia, Colorado, Connecticut, Utah, Oregon, Texas, Montana, Delaware, Iowa, Tennessee, Indiana, and New Jersey have each passed comprehensive privacy legislation, and joined California (which further enhanced its existing privacy laws) in directly regulating the collection, use, and sharing of personal information.
We have applied the fair value option to value our equity investment in Indicor. The assessment of fair value requires significant judgments to be made.
We have applied the fair value option to value our equity investment in Indicor. The assessment of fair value requires significant judgments to be made. Although we believe that our judgments and assumptions are reasonable, changes in estimates or the application of alternative assumptions could produce significantly different results.
We intend to seek additional acquisition opportunities, both to expand into new markets and to enhance our position in existing markets. There are no assurances, however, that we will be able to successfully identify suitable candidates, negotiate appropriate terms, obtain financing on acceptable terms, complete proposed acquisitions, successfully integrate acquired businesses or expand into new markets.
There are no assurances, however, that we will be able to successfully identify suitable candidates, negotiate appropriate terms, obtain financing on acceptable terms, complete proposed acquisitions, receive the necessary regulatory approvals, successfully integrate acquired businesses, or expand into new markets. Once acquired, operations may not achieve anticipated levels of revenues, profitability, or cash flows.
This is particularly true for customers in highly-regulated industries, such as the healthcare industry and government contractors, and could result in regulatory actions, fines, legal proceedings and negatively impact our brand, reputation and our business.
This is particularly true for customers in highly-regulated industries, such as the healthcare industry and government contractors, and could result in regulatory actions, fines, and legal proceedings as well as negative impacts to our brand, reputation, and business. 13 Expectations relating to environmental, social, and governance considerations expose the Company to potential liabilities, increased costs, reputational harm, and other adverse effects on the Company’s business.
For example, we expect to continue to be impacted by supply chain challenges, including increased material costs, component shortages and transportation disruptions and delays, all of which could escalate in the future. In addition, some of our products are provided by sole source suppliers and our SaaS offerings are increasingly reliant on a limited number of third-party cloud computing platforms.
In addition, some of our products are provided by sole source suppliers and our SaaS offerings are increasingly reliant on a limited number of third-party cloud computing platforms.
Removed
Expectations relating to environmental, social and governance considerations expose the Company to potential liabilities, increased costs, reputational harm and other adverse effects on the Company’s business.
Added
We intend to seek additional acquisition opportunities, both to expand into new markets and to enhance our position in existing markets.
Removed
Furthermore, governments in the United States, United Kingdom and European Union have each imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia. We have historically had limited operations in Russia and a limited number of suppliers in Ukraine.
Added
Unfavorable changes in exchange rates between the U.S. dollar and those currencies could reduce our reported net revenues and net earnings. 9 We rely on information and technology, including third-party cloud computing platforms, for many of our business operations which could fail and cause disruption to our business operations.
Removed
Nevertheless, the Russia-Ukraine military conflict could have a negative impact on the global economy.
Added
We incorporate artificial intelligence (“AI”) solutions into some of our platforms, offerings, services, and features, and these applications may become more important in our operations over time.
Removed
We continue to closely monitor the impact of the COVID-19 global pandemic on our business, including how it has and will impact our customers, employees, suppliers, vendors and business partners.
Added
Our competitors or other third parties may incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.
Removed
The COVID-19 global pandemic has created significant volatility, uncertainty and economic disruption, which may continue to affect our business operations and may materially and adversely affect our results of operations, cash flows and financial position.
Added
Additionally, if our AI applications are based on data, algorithms, or other inputs that are flawed, or if they assist in producing content, analyses, or recommendations that are or are alleged to be deficient, inaccurate, or biased, our business, financial condition, and results of operations may be adversely affected.
Removed
The COVID-19 global pandemic has caused certain disruptions to our business and operations and could cause material disruptions to our business and operations in the future as a result of, among other things, quarantines, worker absenteeism as a result of illness or other factors, social distancing measures and other travel, health-related, business or other restrictions.
Added
The use of AI applications has resulted in, and may in the future result in, cybersecurity incidents that implicate the personal data of end users of such applications. Any such cybersecurity incidents related to our use of AI applications could adversely affect our reputation and results of operations.
Removed
The effects of the pandemic have created and exacerbated challenges with the attraction and retention of talent. The COVID-19 global pandemic has and may continue to adversely impact, our suppliers and customers.
Added
AI also presents emerging ethical issues, and if our use of AI becomes controversial we may experience brand, reputational, or competitive harm, or legal liability.
Removed
As a result of the effects of the COVID-19 global pandemic our ability to obtain products or services from certain suppliers and to operate at certain locations have been and may continue to be impacted.
Added
The rapid evolution of AI, including the potential regulation of AI by government or other regulatory agencies, will require significant resources to develop, test, and maintain our platforms, offerings, services, and features in order to implement AI ethically and minimize any unintended, harmful impacts.
Removed
As a result, our business, financial condition and results of operations have been adversely impacted and could be materially adversely affected if the COVID-19 global pandemic continues or there are resurgences of COVID-19 and its variants.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our corporate offices, consisting of 29,000 square feet of leased space, are located at 6901 Professional Parkway, Sarasota, Florida. As of December 31, 2022, we owned approximately 0.3 million square feet, and leased approximately 2.8 million square feet. Of the total 3.1 million square feet, 76% is concentrated in the United States.
Biggest changeITEM 2. PROPERTIES Our corporate offices, consisting of 42,000 square feet of leased space, are located at 6496 University Parkway, Sarasota, Florida. As of December 31, 2023, we leased facilities throughout the United States and in various locations internationally including North America, Europe, and Asia-Pacific. Additionally, we owned two properties in the United States.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeHunn also served as Group Vice President of Roper’s medical segment from 2011 to 2018 and helped drive significant growth in the Company’s medical technology and application software businesses. In addition to his operating responsibilities at Roper, Mr. Hunn led the execution of the majority of the company’s capital deployment since joining Roper. Prior to joining Roper, Mr.
Biggest changeNeil Hunn , 51, has served as President and Chief Executive Officer since August 2018. He previously served as Executive Vice President and Chief Operating Officer from 2017 to 2018. Mr. Hunn also served as Group Vice President of Roper’s medical segment from 2011 to 2018 and helped drive significant growth in the Company’s medical technology and application software businesses.
Stipancich served as Executive Vice President, General Counsel and Corporate Secretary for Evenflo Company and Assistant General Counsel for Borden, both KKR portfolio companies at the time. He started his legal career in the Cleveland office of the international law firm of Squire Patton Boggs. 17 PART II
Stipancich served as Executive Vice President, General Counsel and Corporate Secretary for Evenflo Company and Assistant General Counsel for Borden, both KKR portfolio companies at the time. He started his legal career in the Cleveland office of the international law firm Squire Patton Boggs. 17 PART II
He previously served as the Chief Financial Officer at Managed Healthcare Associates, a Roper subsidiary, from 2013 to 2017. He also led the financial planning and investor relations activities for Roper from 2006 to 2013. Before Roper, Mr. Conley served in various finance and accounting leadership roles at Honeywell International and Deloitte. John K.
He previously served as the Chief Financial Officer at Managed Health Care Associates, a Roper subsidiary, from 2013 to 2017. He also led the financial planning and investor relations activities for Roper from 2006 to 2013. Before joining Roper, Mr. Conley served in various finance and accounting leadership roles at Honeywell International and Deloitte. John K.
Stipancich , 54, has served as Executive Vice President, General Counsel and Corporate Secretary since 2018 and as Vice President, General Counsel and Corporate Secretary from 2016 to 2018. Prior to joining Roper, Mr. Stipancich was with Newell Brands, Inc., a consumer products company, from 2004 to 2016.
Stipancich , 55, has served as Executive Vice President, General Counsel and Corporate Secretary since 2018 and as Vice President, General Counsel and Corporate Secretary from 2016 to 2018. Prior to joining Roper, Mr. Stipancich was with Newell Brands Inc., a consumer products company, from 2004 to May of 2016.
Jason P. Conley , 47, has served as Executive Vice President and Chief Financial Officer since February 2023. Prior thereto he served as Vice President and Chief Accounting Officer from 2021 to February 2023 and as Vice President and Controller from 2017 to 2021.
Conley , 48, has served as Executive Vice President and Chief Financial Officer since February 2023. Prior thereto, he served as Vice President and Chief Accounting Officer from 2021 to February 2023 and as Vice President and Controller from 2017 to 2021.
MINE SAFETY DISCLOSURES Not Applicable 16 EXECUTIVE OFFICERS OF THE REGISTRANT Pursuant to General Instruction G(3) of Form 10-K, the following list of executive officers of the Company as of February 27, 2023 is included as an unnumbered Item in Part I of this report in lieu of being included in the Company’s Proxy Statement relating to the 2023 Annual Meeting of Shareholders.
EXECUTIVE OFFICERS OF THE REGISTRANT Pursuant to General Instruction G(3) of Form 10-K, the following list of executive officers of the Company as of February 22, 2024 is included as an unnumbered Item in Part I of this report in lieu of being included in the Company’s Proxy Statement relating to the 2024 Annual Meeting of Shareholders. L.
Hunn served 10 years as Executive Vice President and Chief Financial Officer at MedAssets, an Atlanta-based SaaS company, and as President of its revenue cycle technology businesses. He successfully led MedAssets’ initial public offering and the execution of several M&A transactions. Mr. Hunn also held roles at CMGI, an incubator of Internet businesses, and Parthenon Group, a strategy consulting firm.
He successfully led MedAssets’ initial public offering and the execution of several M&A transactions. Mr. Hunn also held roles at CMGI, an incubator of Internet businesses, and Parthenon Group, a strategy consulting firm. Mr. Hunn also serves as a director of Deere & Company. Jason P.
Removed
L. Neil Hunn , 50, has served as President and Chief Executive Officer since August 2018. He previously served as Executive Vice President and Chief Operating Officer from 2017 to 2018. Mr.
Added
In addition to his operating responsibilities at Roper, Mr. Hunn led the execution of the majority of the Company’s capital deployment since joining Roper. Prior to joining Roper, Mr. Hunn served 10 years as Executive Vice President and Chief Financial Officer at MedAssets, Inc., an Atlanta-based SaaS company, and as President of its revenue cycle technology businesses.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe performance graph below presents the indices used in the prior year and the newly selected index. The following graph compares, for the five year period ended December 31, 2022, the cumulative total stockholder return for our common stock, the S&P 500, the S&P 500 Industrials, and the S&P 500 IT indices.
Biggest changeThe following graph compares, for the five year period ended December 31, 2023, the cumulative total stockholder return for our common stock, the Standard & Poor’s 500 Stock Index (the “S&P 500”), and the Standard & Poor’s 500 Information Technology Index (the “S&P 500 IT”).
This is the thirtieth consecutive year in which the Company has increased its dividend. The timing, declaration and payment of future dividends will be at the sole discretion of our Board of Directors and will depend upon our profitability, cash flows, financial condition, capital needs, future prospects and other factors deemed relevant by our Board of Directors.
This is the thirty-first consecutive year in which the Company has increased its dividend. The timing, declaration, and payment of future dividends will be at the sole discretion of our Board of Directors and will depend upon our profitability, cash flows, financial condition, capital needs, future prospects, and other factors deemed relevant by our Board of Directors.
Measurement points are the last trading day of each of our fiscal years ended December 31, 2017, 2018, 2019, 2020, 2021 and 2022. The graph assumes that $100.00 was invested on December 31, 2017 in our common stock, the S&P 500, the S&P 500 Industrials, and the S&P 500 IT and assumes reinvestment of any dividends.
Measurement points are the last trading day of each of our fiscal years ended December 31, 2018, 2019, 2020, 2021, 2022, and 2023. The graph assumes that $100.00 was invested on December 31, 2018 in our common stock, the S&P 500, and the S&P 500 IT and assumes the reinvestment of any dividends.
Dividends – We have declared a cash dividend in each quarter since our February 1992 initial public offering and we have annually increased our dividend rate since our initial public offering. In November 2022, our Board of Directors increased the quarterly dividend paid January 23, 2023 to $0.6825 per share from $0.62 per share, an increase of 10%.
Dividends – We have declared a cash dividend in each quarter since our February 1992 initial public offering and we have annually increased our dividend rate since our initial public offering. In November 2023, our Board of Directors increased the quarterly dividend paid January 23, 2024 to $0.75 per share from $0.6825 per share, an increase of 10%.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the NYSE under the symbol “ROP”. Based on information available to us and our transfer agent, there were approximately 202 record holders of our common stock as of February 17, 2023.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the Nasdaq under the symbol “ROP.” Based on information available to us and our transfer agent, there were approximately 213 record holders of our common stock as of February 16, 2024.
The stock price performance on the following graph is not necessarily indicative of future stock price performance. 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Roper Technologies, Inc. $ 100.00 $ 103.52 $ 138.36 $ 169.34 $ 194.20 $ 171.59 S&P 500 100.00 95.62 125.72 148.85 191.58 156.88 S&P 500 Industrials 100.00 86.71 112.17 124.59 150.89 142.63 S&P 500 IT 100.00 99.71 149.86 215.63 290.08 208.30 18 The information set forth in Item 12 under the heading “Securities Authorized for Issuance under Equity Compensation Plans” is incorporated herein by reference.
The stock price performance on the following graph is not necessarily indicative of future stock price performance. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Roper Technologies, Inc. $ 100.00 $ 133.66 $ 163.59 $ 187.60 $ 165.76 $ 210.38 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 S&P 500 IT 100.00 150.29 216.25 290.92 208.90 329.73 18 The information set forth in Item 12 under the heading “Securities Authorized for Issuance under Equity Compensation Plans” is incorporated herein by reference.
Removed
Roper has historically compared the cumulative total return on its common stock with that of the Standard & Poor’s 500 Stock Index (the “S&P 500”) and the Standard and Poor’s 500 Industrials Index (the “S&P 500 Industrials”).
Removed
As a result of the divestiture activity in 2022 and 2021, the Company will use the S&P 500 Information Technology Index (the “S&P 500 IT”) in place of the S&P 500 Industrials on a go-forward basis to better reflect more relevant comparisons of our software and technology focused portfolio.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYears ended December 31, 2022 2021 2020 Net revenues: Application Software (1) $ 2,639.5 $ 2,366.7 $ 1,785.8 Network Software (2) 1,378.5 1,223.8 1,069.4 Technology Enabled Products 1,353.8 1,243.3 1,167.2 Total $ 5,371.8 $ 4,833.8 $ 4,022.4 Gross margin: Application Software 68.8 % 69.4 % 68.4 % Network Software 84.6 84.1 83.1 Technology Enabled Products 56.9 59.2 61.5 Total 69.9 % 70.5 % 70.3 % Selling, general and administrative expenses: Application Software 41.8 % 42.7 % 42.2 % Network Software 43.2 45.1 47.3 Technology Enabled Products 23.8 25.7 26.2 Total 37.6 % 38.9 % 38.9 % Segment operating margin: Application Software 27.1 % 26.8 % 26.2 % Network Software 41.4 39.0 35.8 Technology Enabled Products 33.2 33.4 35.3 Total 32.3 % 31.6 % 31.4 % Corporate administrative expenses (3) (3.9) % (3.9) % (4.5) % Loss from impairment — (2.0) — Income from operations 28.4 25.7 26.9 Interest expense, net (3.6) (4.8) (5.4) Other income (expense), net (0.9) 0.5 (0.1) Earnings before income taxes 23.9 21.3 21.4 Income taxes (5.5) (4.7) (4.7) Net earnings from continuing operations 18.3 % 16.7 % 16.7 % (1) Includes results from the acquisitions of Vertafore from September 3, 2020, EPSi from October 15, 2020, American Legal Net from December 30, 2021, Horizon Lab Systems, LLC from January 3, 2022, Common Cents Systems, Inc. from April 6, 2022, MGA Systems Holdings, Inc. from June 27, 2022, Common Sense Solutions, Inc. from July 12, 2022, viDesktop Inc. from August 19, 2022, TIP Technologies Inc. from September 23, 2022 and Frontline Education from October 4, 2022.
Biggest changeThe following table sets forth selected information for the years indicated: Years ended December 31, 2023 2022 2021 Net revenues: Application Software (1) $ 3,186.9 $ 2,639.5 $ 2,366.7 Network Software (2) 1,439.4 1,378.5 1,223.8 Technology Enabled Products 1,551.5 1,353.8 1,243.3 Total $ 6,177.8 $ 5,371.8 $ 4,833.8 Gross margin: Application Software 68.9 % 68.8 % 69.4 % Network Software 85.1 % 84.6 % 84.1 % Technology Enabled Products 57.1 % 56.9 % 59.2 % Total 69.7 % 69.9 % 70.5 % Selling, general and administrative expenses: Application Software 43.1 % 41.8 % 42.7 % Network Software 41.2 % 43.2 % 45.1 % Technology Enabled Products 23.7 % 23.8 % 25.7 % Total 37.8 % 37.6 % 38.9 % Segment operating margin: Application Software 25.8 % 27.1 % 26.8 % Network Software 43.9 % 41.4 % 39.0 % Technology Enabled Products 33.4 % 33.2 % 33.4 % Total 31.9 % 32.3 % 31.6 % Corporate administrative expenses (3) (3.7) % (3.9) % (3.9) % Impairment of intangible assets — — (2.0) Income from operations 28.2 28.4 25.7 Interest expense, net (2.7) (3.6) (4.8) Equity investments activity, net 2.7 — — Other income (expense), net — (0.9) 0.5 Earnings before income taxes 28.2 23.9 21.3 Income taxes (6.1) (5.5) (4.7) Net earnings from continuing operations 22.2 % 18.3 % 16.7 % (1) Includes results from the acquisitions of American LegalNet, Inc. from December 30, 2021, Horizon Lab Systems, LLC from January 3, 2022, Common Cents Systems, Inc. from April 6, 2022, MGA Systems Holdings, Inc. from June 27, 2022, Common Sense Solutions, Inc. from July 12, 2022, viDesktop Inc. from August 19, 2022, TIP Technologies, Inc. from September 23, 2022, Frontline from October 4, 2022, Promium, L.L.C. from May 2, 2023, Syntellis from August 7, 2023, Replicon Inc. from August 21, 2023, and ProPricer from December 26, 2023.
A discussion of our significant accounting policies can also be found in the Notes to Consolidated Financial Statements for the year ended December 31, 2022 included in this Annual Report. GAAP offers acceptable alternative methods for accounting for certain issues affecting our financial results, such as determining inventory cost, depreciating long-lived assets and recognizing revenue.
A discussion of our significant accounting policies can also be found in the Notes to Consolidated Financial Statements for the year ended December 31, 2023 included in this Annual Report. GAAP offers acceptable alternative methods for accounting for certain issues affecting our financial results, such as determining inventory cost, depreciating long-lived assets and recognizing revenue.
We also consider the specific future outlook for the reporting unit. We also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test.
We also consider the specific future outlook for the reporting unit. 21 We also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test.
See Note 8 of the Notes to Consolidated Financial Statements included in this Annual Report. 2 Represents minimum fixed price purchase commitments that are legally binding across Roper. We believe that internally generated cash flows and the remaining availability under our credit facility will be adequate to finance normal operating requirements.
See Note 8 of the Notes to Consolidated Financial Statements included in this Annual Report. 2 Represents minimum fixed price purchase commitments that are legally binding across Roper. 27 We believe that internally generated cash flows and the remaining availability under our unsecured credit facility will be adequate to finance normal operating requirements.
However, the rate at which we can reduce our debt during 2023 (and reduce the associated interest expense) will be affected by, among other things, the financing and operating requirements of any new acquisitions, the financial performance of our existing companies and the financial markets generally. None of these factors can be predicted with certainty.
However, the rate at which we can reduce our debt during 2024 (and reduce the associated interest expense) will be affected by, among other things, the financing and operating requirements of any new acquisitions, the financial performance of our existing companies, and the financial markets generally. None of these factors can be predicted with certainty.
The Company determined that impairment of goodwill was not likely in any of its reporting units and thus was not required to perform a quantitative assessment for these reporting units as of October 1, 2022.
The Company determined that impairment of goodwill was not likely in any of its reporting units and thus was not required to perform a quantitative assessment for these reporting units as of October 1, 2023.
Recently Issued Accounting Standards See Note 1 of the Notes to Consolidated Financial Statements included in this Annual Report for information regarding the effect of new accounting pronouncements on our Consolidated Financial Statements. 29
Recently Issued Accounting Standards See Note 1 of the Notes to Consolidated Financial Statements included in this Annual Report for information regarding the effect of new accounting pronouncements on our Consolidated Financial Statements. 28
Our most significant accounting uncertainties are encountered in the areas of income taxes, valuation of other intangible assets, goodwill and indefinite-lived impairment analyses, and valuation of our initial 49% equity interest in Indicor.
Our most significant accounting uncertainties are encountered in the areas of income taxes, valuation of other intangible assets, goodwill and other indefinite-lived intangibles impairment analyses, and valuation of our equity interest in Indicor.
The components of revenue growth for the year ended December 31, 2022 were as follows: Application Software Network Software Technology Enabled Products Roper Total Revenue Growth 11.5 % 12.6 % 8.9 % 11.1 % Less Impact of: Acquisitions/Divestitures 5.3 1.2 — 2.9 Foreign Exchange (1.3) (1.3) (0.9) (1.2) Organic Revenue Growth 7.5 % 12.7 % 9.8 % 9.4 % In our Application Software segment, net revenues for the year ended December 31, 2022 were $2,639.5 as compared to $2,366.7 for the year ended December 31, 2021.
The components of revenue growth for the year ended December 31, 2023 were as follows: Application Software Network Software Technology Enabled Products Roper Total Revenue Growth 20.7 % 4.4 % 14.6 % 15.0 % Less Impact of: Acquisitions/Divestitures 14.8 — — 7.3 Foreign Exchange — (0.2) (0.1) (0.1) Organic Revenue Growth 5.9 % 4.6 % 14.7 % 7.8 % In our Application Software segment, net revenues for the year ended December 31, 2023 were $3,186.9 as compared to $2,639.5 for the year ended December 31, 2022.
The businesses included in this transaction were Alpha, AMOT, CCC, Cornell, Dynisco, FTI, Hansen, Hardy, Logitech, Metrix, PAC, Roper Pump, Struers, Technolog, Uson, and Viatran (collectively “Indicor”). Following the sale of the majority stake, the Company retained an initial 49% minority equity interest in the new standalone parent company, Indicor, LLC.
The businesses included in this transaction were Alpha, AMOT, CCC, Cornell, Dynisco, FTI, Hansen, Hardy, Logitech, Metrix, PAC, Roper Pump, Struers, Technolog, Uson, and Viatran (collectively “Indicor”). Following the sale of the majority stake, the Company retained a minority equity interest in Indicor.
As of the annual impairment test, the Company has 21 reporting units with individual goodwill amounts ranging from $17.5 to $3,363.1. In 2022, the Company performed its annual impairment test in the fourth quarter for all reporting units.
As of the annual impairment test, the Company has 22 reporting units with individual goodwill amounts ranging from $17.5 to $3,363.6. In 2023, the Company performed its annual impairment test in the fourth quarter for all reporting units.
This investment is classified within Level 3 of the fair value hierarchy as valuation of the investment at future dates will reflect management’s estimate of assumptions that market participants would use in pricing the asset.
This investment is classified within Level 3 of the fair value hierarchy as valuation of the investment reflects management’s estimate of assumptions that market participants would use in pricing the asset.
The resulting operating margin was 27.1% in the year ended December 31, 2022 as compared to 26.8% in the year ended December 31, 2021. In our Network Software segment, net revenues were $1,378.5 for the year ended December 31, 2022 as compared to $1,223.8 for the year ended December 31, 2021.
The resulting operating margin was 25.8% in the year ended December 31, 2023 as compared to 27.1% in the year ended December 31, 2022. In our Network Software segment, net revenues were $1,439.4 for the year ended December 31, 2023 as compared to $1,378.5 for the year ended December 31, 2022.
On July 21, 2022, the Company entered into a new five-year unsecured credit facility (the “Credit Agreement”) among Roper, the financial institutions from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A. and Wells Fargo Bank, N.A., as syndication agents, and Mizuho Bank, Ltd., MUFG Bank, Ltd., PNC Bank, National Association, TD Bank, N.A., Truist Bank and U.S Bank, National Association, as documentation agents, which replaced the existing $3,000.0 unsecured credit facility, dated as of September 2, 2020, as amended.
On July 21, 2022, the Company entered into a five-year unsecured credit facility (the “Credit Agreement”) among Roper, the financial institutions from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A. and Wells Fargo Bank, N.A., as syndication agents, and Mizuho Bank, Ltd., MUFG Bank, Ltd., PNC Bank, National Association, TD Bank, N.A., Truist Bank, and U.S.
See Note 9 of the Notes to Consolidated Financial Statements included in this Annual Report for additional information regarding our credit facility and senior notes. Cash and cash equivalents at our foreign subsidiaries at December 31, 2022 totaled $234.0 as compared to $310.8 at December 31, 2021, a decrease of 24.7%.
See Note 9 of the Notes to Consolidated Financial Statements included in this Annual Report for additional information regarding our unsecured credit facility and senior unsecured notes. Cash and cash equivalents at our foreign subsidiaries at December 31, 2023 totaled $148.3 as compared to $234.0 at December 31, 2022, a decrease of 36.6%.
Borrowings under the Credit Agreement are prepayable at Roper’s option at any time in whole or in part without premium or penalty. We were in compliance with all debt covenants related to our credit facility throughout the years ended December 31, 2022 and 2021. At December 31, 2022, we had $6,700.0 of senior unsecured notes and no outstanding revolver borrowings.
Borrowings under the Credit Agreement are prepayable at Roper’s option at any time in whole or in part without premium or penalty. We were in compliance with all debt covenants related to our unsecured credit facility throughout the years ended December 31, 2023 and 2022.
(3) Includes unallocated corporate administrative expenses and enterprise-wide stock-based compensation. 24 Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Net revenues for the year ended December 31, 2022 were $5,371.8 as compared to $4,833.8 for the year ended December 31, 2021, an increase of 11.1%.
(3) Includes unallocated corporate general and administrative expenses and enterprise-wide stock-based compensation. 24 Year Ended December 31, 2023 compared to the Year Ended December 31, 2022 Net revenues for the year ended December 31, 2023 were $6,177.8 as compared to $5,371.8 for the year ended December 31, 2022, an increase of 15.0%.
The resulting operating margin was 41.4% in the year ended December 31, 2022 as compared to 39.0% in the year ended December 31, 2021. In our Technology Enabled Products segment, net revenues were $1,353.8 for the year ended December 31, 2022 as compared to $1,243.3 the year ended December 31, 2021.
The resulting operating margin was 43.9% in the year ended December 31, 2023 as compared to 41.4% in the year ended December 31, 2022. In our Technology Enabled Products segment, net revenues were $1,551.5 for the year ended December 31, 2023 as compared to $1,353.8 for the year ended December 31, 2022.
Consistent negative net working capital demonstrates Roper’s focus on asset-light business models. Total debt excluding unamortized debt issuance costs was $6,700.3 at December 31, 2022 (29.5% of total capital) compared to $7,970.3 at December 31, 2021 (40.8% of total capital).
Verathon patent litigation matter. Consistent negative net working capital demonstrates Roper’s focus on asset-light business models. 26 Total debt excluding unamortized debt issuance costs was $6,360.2 at December 31, 2023 (26.7% of total capital) compared to $6,700.3 at December 31, 2022 (29.5% of total capital).
Capitalized software expenditures of $30.2, $29.7 and $17.7 were incurred during 2022, 2021 and 2020, respectively. Capital expenditures and capitalized software expenditures were relatively consistent in 2022 as compared to 2021 and 2020. In the future, we expect the aggregate of capital expenditures and capitalized software expenditures as a percentage of annual net revenues to be between 1.0% and 1.5%.
Capital expenditures and capitalized software expenditures were relatively consistent as a percentage of annual net revenues in 2023 as compared to 2022. In the future, we expect the aggregate of capital expenditures and capitalized software expenditures as a percentage of annual net revenues to be between 1.0% and 1.5%.
Cash used in financing activities from continuing operations during 2021 was primarily due to net repayments of $1,150.0 on our unsecured credit facility, $500.0 of repayments for our senior notes and dividend payments.
Cash used in financing activities from continuing operations during 2022 was primarily for repayments of certain senior notes totaling $800.0, net repayments of $470.0 on our unsecured credit facility, and dividend payments.
Other expense, net, of $50.1 for the year ended December 31, 2022 was composed primarily of a legal settlement expense of $45.0 related to the Berall v. Verathon patent litigation matter .
Other expense, net, of $50.1 for the 25 year ended December 31, 2022 was composed primarily of a legal settlement expense of $45.0 related to the Berall v. Verathon patent litigation matter. During 2023, our effective income tax rate was 21.5% as compared to our 2022 rate of 23.1%.
The Company has an initial 49% minority equity interest in Indicor which provides us with the ability to exercise significant influence, but not control, over the investee. We elected to apply the fair value option as we believe this is the most reasonable method to value the equity investment.
As of December 31, 2023 and 2022, the Company held a 47.3% and 49.0% minority equity interest in Indicor, respectively. This equity interest provides us with the ability to exercise significant influence, but not control, over the investee. We elected to apply the fair value option as we believe this is the most reasonable method to value the equity investment.
We account for goodwill in a purchase business combination as the excess purchase price over the fair value of the net identifiable assets acquired.
We expect the effective tax rate for 2024 to be approximately 21% to 22% . We account for goodwill in a purchase business combination as the excess purchase price over the fair value of the net identifiable assets acquired.
The growth of 12.7% in organic revenues was led by our network software businesses serving the freight match, life insurance, and media and entertainment markets. Gross margin increased to 84.6% for the year ended December 31, 2022 from 84.1% for the year ended December 31, 2021, due primarily to favorable revenue mix.
The growth of 4.6% in organic revenues was led by our network software businesses serving the freight match, alternate site healthcare, and life insurance markets. Gross margin increased to 85.1% for the year ended December 31, 2023 from 84.6% for the year ended December 31, 2022, due primarily to operating leverage on higher organic revenues.
Discontinued operations - Cash provided by discontinued operations for the year ended December 31, 2022 was primarily due to proceeds from the sale of the majority stake in Indicor, TransCore and Zetec, slightly offset by less cash provided by operating cash flows from discontinued operations which was impacted by the timing of our divestiture activity.
Discontinued operations – Cash provided by discontinued operations for the year ended December 31, 2022 was primarily due to proceeds from the sales of TransCore, Zetec, and the majority stake in Indicor.
Trade names resulting from recent acquisitions generally represent the highest risk of impairment, which typically decreases as the businesses are integrated into our enterprise.
Trade names resulting from recent acquisitions generally represent the highest risk of impairment, which typically decreases as the businesses are integrated into our enterprise. The assessment of fair value for impairment purposes requires significant judgments to be made by management.
We have not changed the application of acceptable accounting methods or the significant estimates affecting the application of these principles in the last three years in a manner that had a material effect on our Consolidated Financial Statements.
Other than the changes as further described in Note 10 of our Notes to Consolidated Financial Statements with respect to the methodology used to value our equity investment in Indicor, we have not changed the application of acceptable accounting methods or the significant estimates affecting the application of these principles in the last three years in a manner that had a material effect on our Consolidated Financial Statements.
Key assumptions used in the income and market approaches are updated when the analysis is performed for each reporting unit. The assumptions that have the most significant effect on the fair value calculations are the projected revenue growth rates, future operating margins, discount rates, terminal values and earnings multiples.
The assumptions that have the most significant effect on the fair value calculations are the projected revenue growth rates, future operating margins, discount rates, terminal values, and earnings multiples.
During 2022, our effective income tax rate was 23.1%, as compared to the 2021 rate of 22.0%. The rate was unfavorably impacted by the recognition of a net tax expense associated with an internal restructuring plan associated with the Indicor Transaction. We expect the effective tax rate for 2023 to be approximately 21% to 22%.
During 2023, our effective income tax rate was 21.5% as compared to our 2022 rate of 23.1%. The 2023 rate was favorably impacted by the recognition of a net tax benefit associated with international legal entity restructuring combined with the non-recurrence of 2022 net tax expense associated with an internal restructuring plan related to the Indicor Transaction.
We operate market leading businesses that design and develop vertical software and technology enabled products for a variety of defensible niche markets.
Roper has a proven, long-term, successful track record of compounding cash flow and shareholder value. We operate market leading businesses that design and develop vertical software and technology enabled products for a variety of defensible niche markets.
The quantitative assessment utilizes an equal weighted income approach (discounted cash flows) and market approach (consisting of a comparable company earnings multiples methodology) to estimate the fair value of a reporting unit. To determine the reasonableness of the estimated fair values, we review the assumptions to ensure that neither the income approach nor the market approach provides significantly different valuations.
The quantitative assessment utilizes an equal weighted income approach (discounted cash flow) and a market approach (consisting of a comparable public company earnings multiples methodology) to estimate the fair value of a reporting unit.
Other income, net, of $24.6 for the year ended December 31, 2021 was composed primarily of a gain on sale of minority investment of $27.1. Other expense, net of $3.1 for the year ended December 31, 2020, was composed primarily of foreign exchange losses at our non-U.S. based subsidiaries.
Other expense, net, of $2.8 for the year ended December 31, 2023 was composed primarily of foreign exchange losses at our non-U.S. based subsidiaries, partially offset by a gain on the sale of non-operating assets.
The decrease was due primarily due to repatriation of $285.6 and cash divested in connection with the Indicor Transaction partially offset by cash generated from foreign operations. We intend to repatriate substantially all historical and future earnings. 28 Capital expenditures of $40.1, $28.5 and $24.7 were incurred during 2022, 2021 and 2020, respectively.
The decrease was primarily due to cash repatriation of $250.8, partially offset by cash generated from foreign operations. We intend to repatriate substantially all historical and future earnings. Capital expenditures were $68.0 and $40.1 during 2023 and 2022, respectively. Capitalized software expenditures were $40.0 and $30.2 during 2023 and 2022, respectively.
Our total debt decreased at December 31, 2022 compared to December 31, 2021, due primarily to repayments of $800.0 for our senior notes and net repayments of $470.0 on our unsecured credit facility.
Our total debt decreased at December 31, 2023 compared to December 31, 2022, due primarily to repayment at maturity of $700.0 related to our senior notes, partially offset by net borrowings of $360.0 on our unsecured credit facility.
We had $19.0 of outstanding letters of credit at December 31, 2022, of which $18.3 was covered by our lending group, thereby reducing our revolving credit capacity commensurately.
At December 31, 2023, we had $6,000.0 of senior unsecured notes and $360.0 of outstanding borrowings under our unsecured credit facility. We had $7.4 of outstanding letters of credit at December 31, 2023, of which $6.6 was covered by our lending group, thereby reducing our revolving credit capacity commensurately.
SG&A expenses as a percentage of net revenues decreased to 25.7% in the year ended December 31, 2021, as compared to 26.2% in 26 the year ended December 31, 2020, due primarily to revenue mix. The resulting operating margin was 33.4% in the year ended December 31, 2021 as compared to 35.3% in the year ended December 31, 2020.
SG&A expenses as a percentage of net revenues remained relatively consistent at 23.7% in the year ended December 31, 2023 as compared to 23.8% in the year ended December 31, 2022. The resulting operating margin was 33.4% in the year ended December 31, 2023 as compared to 33.2% in the year ended December 31, 2022.
The growth of 7.5% in organic revenues was broad-based across the segment led by our businesses serving the property and casualty insurance, acute healthcare, and government contracting markets.
The growth of 5.9% in organic revenues was broad-based across the segment led by our businesses serving the government contracting, property and casualty insurance, acute healthcare, and legal markets. Gross margin remained relatively consistent at 68.9% for the year ended December 31, 2023 as compared to 68.8% for the year ended December 31, 2022.
Investing activities - Cash used in investing activities from continuing operations during 2022 was primarily for business acquisitions, most notably Frontline Education, viDesktop and MGA Systems. Cash used in investing activities from continuing operations during 2021 was primarily for business acquisitions partially offset by proceeds from the sale of a minority investment.
Investing activities – Cash used in investing activities from continuing operations during 2023 was primarily for business acquisitions, most notably Syntellis and Replicon. Cash used in investing activities from continuing operations during 2022 was primarily for business acquisitions, most notably Frontline, viGlobal, and MGA Systems.
Selling, general and administrative (“SG&A”) expenses as a percentage of revenues in the year ended December 31, 2022 decreased to 41.8%, as compared to 42.7% in the year ended December 31, 2021, due primarily to improved operating leverage on higher organic revenues partially offset by higher amortization of acquired intangibles from the acquisition of Frontline Education.
Selling, general and administrative (“SG&A”) expenses as a percentage of net revenues in the year ended December 31, 2023 increased to 43.1%, as compared to 41.8% in the year ended December 31, 2022, due primarily to higher amortization of acquired intangibles from the acquisitions of Frontline and Syntellis and restructuring-related expenses incurred primarily in connection with the integration of the Syntellis acquisition.
Backlog increased 22.0% to $2,325.1 at December 31, 2021 as compared to $1,905.5 at December 31, 2020, with the increase driven primarily by organic growth. 2021 2020 Change Application Software $ 1,541.9 $ 1,366.9 12.8 % Network Software 448.3 361.4 24.0 Technology Enabled Products 334.9 177.2 89.0 Total $ 2,325.1 $ 1,905.5 22.0 % Financial Condition, Liquidity and Capital Resources All currency amounts are in millions unless specified Selected cash flows for the years ended December 31, 2022, 2021 and 2020 are as follows. 2022 2021 2020 Cash provided by/(used in) continuing operations from: Operating activities $ 606.6 $ 1,655.8 $ 1,123.2 Investing activities (4,351.8) (249.2) (6,067.6) Financing activities (1,453.9) (1,807.1) 4,138.7 Cash provided by discontinued operations 5,677.9 456.0 393.8 Operating activities - The decrease in cash provided by operating activities from continuing operations in 2022 as compared to 2021 was due primarily to (i) the non-recurrence of $953.8 of cash taxes paid in connection with the 2021 Divestitures and the Indicor Transaction, (ii) $97.8 of higher cash taxes associated with changes to Internal Revenue Code Section 174 and (iii) less cash provided by working capital.
Backlog as of December 31, 2023 2022 Change Application Software $ 2,136.1 $ 1,796.3 18.9 % Network Software 493.6 507.5 (2.7) % Technology Enabled Products 526.9 608.8 (13.5) % Total $ 3,156.6 $ 2,912.6 8.4 % Financial Condition, Liquidity, and Capital Resources All currency amounts are in millions unless specified Selected cash flows for the years ended December 31, 2023 and 2022 are as follows: 2023 2022 Cash provided by (used in) continuing operations from: Operating activities $ 2,037.4 $ 606.6 Investing activities (2,128.3) (4,351.8) Financing activities (499.5) (1,453.9) Cash provided by (used in) discontinued operations (0.3) 5,677.9 Operating activities – The increase in cash provided by operating activities from continuing operations in 2023 as compared to 2022 was due primarily to the reduction in cash taxes paid, predominantly as a result of cash taxes paid in the prior year in connection with the 2021 Divestitures and the Indicor Transaction, and higher net earnings from continuing operations net of non-cash expenses.
Any changes to the valuation estimates or assumptions as described further in Note 10 of the Notes to the Consolidated Financial Statements could produce significantly different results. 23 Results of Operations All currency amounts are in millions unless specified, percentages are net of revenues Percentages may not sum due to rounding.
Any changes to the valuation estimates or assumptions, as described further in Note 10 of the Notes to Consolidated Financial Statements included in this Annual Report, could produce significantly different results.
Order backlog is equal to our remaining performance obligations expected to be recognized within the next 12 months as discussed in Note 1 of the Notes to Consolidated Financial Statements.
Backlog is equal to our remaining performance obligations expected to be recognized as revenue within the next 12 months as discussed within Note 1 of the Notes to Consolidated Financial Statements. Backlog increased 8.4% to $3,156.6 at December 31, 2023 as compared to $2,912.6 at December 31, 2022. Acquisitions contributed 5% and organic growth in backlog was 3%.
In addition, the Company has an increased mix of recurring revenue and a higher margin profile. The financial results for Indicor and the 2021 Divestitures are reported as discontinued operations for all periods presented. Unless otherwise noted, discussion within Management’s Discussion and Analysis of Financial Condition and Results of Operations relate to continuing operations.
The financial results for Indicor and the 2021 Divestitures are reported as discontinued operations for all periods presented. Unless otherwise noted, discussion within Management’s Discussion and Analysis of Financial Condition and Results of Operations relate to continuing operations. Information regarding discontinued operations is described further in Note 3 of the Notes to Consolidated Financial Statements included in this Annual Report.
Payments Due in Fiscal Year Contractual Cash Obligations 1 Total 2023 2024 2025 2026 2027 Thereafter Total debt $ 6,700.3 $ 700.2 $ 500.1 $ 1,000.0 $ 700.0 $ 700.0 $ 3,100.0 Senior note interest 851.0 176.0 150.5 138.7 120.2 93.6 172.0 Purchase obligations 2 790.7 411.9 138.5 126.4 81.5 12.1 20.3 Total $ 8,342.0 $ 1,288.1 $ 789.1 $ 1,265.1 $ 901.7 $ 805.7 $ 3,292.3 1 We have excluded the liability for uncertain tax positions and certain other tax liabilities as we are not able to reasonably estimate the timing of the payments.
Contractual Cash Obligations All currency amounts are in millions The following table quantifies our contractual cash obligations at December 31, 2023: Contractual cash obligations 1 Payments due in fiscal year Total 2024 2025 2026 2027 2028 Thereafter Total debt $ 6,360.2 $ 500.1 $ 1,000.1 $ 700.0 $ 1,060.0 $ 800.0 $ 2,300.0 Senior note interest 675.0 150.5 138.7 120.2 93.6 83.8 88.2 Operating leases 220.7 47.9 42.9 35.1 28.3 21.9 44.6 Purchase obligations 2 688.4 432.6 143.0 85.8 10.4 5.4 11.2 Total $ 7,944.3 $ 1,131.1 $ 1,324.7 $ 941.1 $ 1,192.3 $ 911.1 $ 2,444.0 1 We have excluded the liability for uncertain tax positions and certain other tax liabilities as we are not able to reasonably estimate the timing of the payments.
If the estimated fair value exceeds the carrying value, no 21 further work is required and no impairment loss is recognized. If the carrying value exceeds the estimated fair value, a non-cash impairment loss is recognized in the amount of that excess.
If the carrying value exceeds the estimated fair value, a non-cash impairment loss is recognized in the amount of that excess. Key assumptions used in the income and market approaches are updated when the analysis is performed for each reporting unit.
Interest expense, net, decreased $41.5, or 17.7%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021. The decrease was due to lower weighted average debt balances and higher interest income earned on our cash and cash equivalents.
The decrease was due to lower weighted average fixed-rate debt balances and higher interest income earned on our cash and cash equivalents.
Net working capital (total current assets, excluding cash and current assets held for sale, less total current liabilities, excluding debt and current liabilities held for sale) was negative $1,053.7 at December 31, 2022 compared to negative $990.9 at December 31, 2021, due primarily to increased deferred revenue, partially offset by movements in income tax-related balances and greater inventory build associated with mitigating supply chain challenges.
Net working capital (total current assets, excluding cash, less total current liabilities, excluding debt) was negative $1,196.6 at December 31, 2023 compared to negative $1,053.7 at December 31, 2022, due primarily to negative net working capital profiles assumed with our 2023 acquisitions, most notably Syntellis and Replicon, increased deferred revenue, and changes in income tax-related balances, partially offset by an increase in accounts receivable and the cash payment related to the settlement of the Berall v.
The growth of 11.3% in organic revenues was broad-based across the segment led by our network software businesses serving the freight match, post-acute care and construction markets. Gross margin increased to 84.1% for the year ended December 31, 2021 from 83.1% for the year ended December 31, 2020, due primarily to revenue mix and operating leverage on higher organic revenues.
The growth of 14.7% in organic revenues was broad-based across the segment led by our water meter technology business and medical products businesses. Gross margin increased to 57.1% in the year ended December 31, 2023, as compared to 56.9% in the year ended December 31, 2022, due primarily to operating leverage on higher organic revenues, partially offset by revenue mix.
The three updated reportable segments (and businesses within each; including changes due to acquisitions since the realignment) are as follows: –Application Software - Aderant, CBORD/Horizon, CliniSys, Data Innovations, Deltek, Frontline Education, IntelliTrans, PowerPlan, Strata, Vertafore –Network Software - ConstructConnect, DAT, Foundry, iPipeline, iTradeNetwork, Loadlink, MHA, SHP, SoftWriters –Technology Enabled Products - CIVCO Medical Solutions, FMI, Inovonics, IPA, Neptune, Northern Digital, rf IDEAS, Verathon Following the Indicor Transaction and the realignment of our reportable segments, the day-to-day operations of our businesses, our organizational structure, and our strategy remain unchanged.
The three reportable segments are as follows: –Application Software - Aderant, CBORD, Clinisys, Data Innovations, Deltek, Frontline, IntelliTrans, PowerPlan, Strata, Vertafore –Network Software - ConstructConnect, DAT, Foundry, iPipeline, iTradeNetwork, Loadlink, MHA, SHP, SoftWriters –Technology Enabled Products - CIVCO Medical Solutions, FMI, Inovonics, IPA, Neptune, Northern Digital, rf IDEAS, Verathon Financial information about our reportable segments is presented in Note 14 of the Notes to Consolidated Financial Statements included in this Annual Report. 20 Application of Critical Accounting Policies Our Consolidated Financial Statements are prepared in conformity with generally accepted accounting principles in the United States (“GAAP”).
Cash used in investing activities from continuing operations during 2020 was primarily for business acquisitions, most notably Vertafore and EPSi. 27 Financing activities - Cash used in financing activities from continuing operations during 2022 was primarily due to repayments of $800.0 for our senior notes, net repayments of $470.0 on our unsecured credit facility and dividend payments.
Financing activities – Cash used in financing activities from continuing operations during 2023 was primarily for repayment at maturity of $700.0 related to our senior notes and dividend payments, partially offset by net borrowings of $360.0 on our unsecured credit facility and net proceeds from stock-based compensation.
Corporate expenses increased by $10.1 to $189.9, or 3.9% of revenues, in 2021 as compared to $179.8, or 4.5% of revenues, in 2020. The dollar increase was due primarily to higher compensation related expenses, partially offset by lower acquisition related expenses.
Corporate expenses increased by $17.5 to $226.7, or 3.7% of revenues, in 2023 as compared to $209.2, or 3.9% of revenues, in 2022. The dollar increase was due primarily to higher compensation and acquisition-related expenses. Interest expense, net, decreased $27.7, or 14.4%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
This transaction is referred to herein as the “Indicor Transaction.” During 2021, Roper entered into definitive agreements to divest our TransCore, Zetec and CIVCO Radiotherapy businesses (“2021 Divestitures”). As of March 31, 2022, Roper had completed the 2021 Divestitures. The aggregate of the 2021 Divestitures and the Indicor Transaction have greatly reduced the cyclicality and asset intensity of the Company.
This transaction is referred to herein as the “Indicor Transaction.” See Note 10 of the Notes to Consolidated Financial Statements included in this Annual Report for additional information on this minority equity interest. During 2021, Roper entered into definitive agreements to divest our TransCore, Zetec, and CIVCO Radiotherapy businesses (“2021 Divestitures”).
(2) Includes results from the acquisitions of FMIC from June 9, 2020, Team TSI from June 15, 2020, IFS from September 15, 2020, WELIS from September 18, 2020 and Construction Journal from December 21, 2021.
(2) Includes results from the acquisition of Construction Journal, LTD. from December 21, 2021.
The new facility comprises a five-year $3,500.0 revolving credit facility, which includes availability of up to $150.0 for letters of credit. Loans under the facility will be available in dollars, and letters of credit will be available in dollars and other currencies to be agreed.
Bank, National Association, as documentation agents, which replaced the previous $3,000.0 unsecured credit facility, dated as of September 2, 2020, as amended. The Credit Agreement comprises a five-year $3,500.0 revolving credit facility, which includes availability of up to $150.0 for letters of credit.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS All currency amounts are in millions unless specified Overview Roper Technologies is a diversified technology company. Roper has a proven, long-term, successful track record of compounding cash flow and shareholder value.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS All currency amounts are in millions unless specified This item generally discusses our 2023 results compared to our 2022 results.
SG&A expenses as a percentage of net revenues decreased to 43.2% in the year ended December 31, 2022, as compared to 45.1% in the year ended December 31, 2021, due primarily to operating leverage on higher organic sales.
SG&A expenses as a percentage of net revenues decreased to 41.2% in the year ended December 31, 2023, as compared to 43.2% in the year ended December 31, 2022, due primarily to expense reductions resulting from cost structure rationalization at our businesses serving the freight match market and cost synergies resulting from an acquisition completed by our business serving the construction market.
The rate was unfavorably impacted by the recognition of a net tax expense associated with an internal restructuring plan related to the Indicor Transaction . Order backlog is equal to our remaining performance obligations expected to be recognized within the next 12 months as discussed in Note 1 of the Notes to Consolidated Financial Statements.
The 2023 rate was favorably impacted by the recognition of a net tax benefit associated with international legal entity restructuring combined with the non-recurrence of 2022 net tax expense associated with an internal restructuring plan related to the Indicor Transaction.
Removed
Information regarding discontinued operations is included in Note 3 of the Notes to Consolidated Financial Statements. Update to Segment Reporting Structure During the second quarter of 2022, we updated our reportable segment structure following the announcement of the Indicor Transaction. The Company’s new reporting segment structure is classified based on business model and delivery of performance obligations.
Added
Discussions of our 2022 results compared to our 2021 results can be found within Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022. Overview Roper Technologies, Inc. (“Roper,” the “Company,” “we,” “our,” or “us”) is a diversified technology company.
Removed
All prior periods have been recast to reflect the changes noted above. Financial information about our reportable segments is presented in Note 14 of the Notes to Consolidated Financial Statements included in this Annual Report. 20 Application of Critical Accounting Policies Our Consolidated Financial Statements are prepared in conformity with generally accepted accounting principles in the United States (“GAAP”).
Added
Roper completed the 2021 Divestitures by the end of the first quarter of 2022. The aggregate of the 2021 Divestitures and the Indicor Transaction have greatly reduced the cyclicality and asset intensity of the Company. In addition, the Company has an increased mix of recurring revenue and a higher margin profile.
Removed
During the fourth quarter of 2021, the Company determined the use of the Sunquest trade name would be discontinued given the strategic action to merge the Sunquest business into our CliniSys business, both of which are reported in our Application Software reportable segment.
Added
Segment Reporting The Company’s segment reporting structure is based on business model and delivery of performance obligations.
Removed
Considering the planned merger and updated market comparisons, the royalty rate utilized in the quantitative impairment assessment of the trade name was 0.5% as compared to a royalty rate of 3.5% used in the prior year.
Added
To determine the reasonableness of the estimated fair values, we review the assumptions to ensure that neither the income approach nor the market approach provides significantly different valuations. If the estimated fair value exceeds the carrying value, no further work is required and no impairment loss is recognized.
Removed
The royalty rate reduction was the significant assumption that resulted in a non-cash impairment charge of $94.4 recognized as a component of “Impairment of intangible assets” within the Consolidated Statements of Earnings. The assessment of fair value for impairment purposes requires significant judgments to be made by management.
Added
The fair value of our equity investment in Indicor is updated on a quarterly basis and its impact is reported as a component of “Equity investments activity, net” in our Consolidated Statement of Earnings. 23 Results of Continuing Operations All currency amounts are in millions unless specified, percentages are of net revenues Percentages may not sum due to rounding.
Removed
The following table sets forth selected information for the years indicated.
Added
Equity investments activity, net, was a gain of $165.4 for the year ended December 31, 2023 due primarily to $140.9 associated with the change in fair value of our equity investment in Indicor and $32.5 of dividend distributions received from Indicor, partially offset by the proportionate share of net loss associated with our investment in Certinia of $5.2 in accordance with the equity method of accounting.
Removed
Gross margin decreased to 68.8% for the year ended December 31, 2022 as compared to 69.4% for the year ended December 31, 2021 due primarily to increased headcount to support growth, and a higher mix of SaaS and professional service revenue across a number of businesses.
Removed
The growth of 9.8% in organic revenues was primarily due to our water meter technology business and medical products businesses.
Removed
Gross margin decreased to 56.9% in the year ended December 31, 2022, as compared to 59.2% in the year ended December 31, 2021, due primarily to higher material, component and freight costs as our businesses navigate the widespread global supply chain challenges.
Removed
SG&A expenses as a percentage of net revenues decreased to 23.8% in the year ended December 31, 2022, as compared to 25.7% in the year ended December 31, 2021 due primarily to improved operating leverage on higher organic sales.
Removed
The resulting operating margin was 33.2% in the year ended December 31, 2022 as compared to 33.4% in the year ended December 31, 2021. Corporate expenses increased by $19.3 to $209.2, or 3.9% of revenues, in 2022 as compared to $189.9, or 3.9% of revenues, in 2021.
Removed
The dollar increase was due primarily to higher professional service and acquisition related expenses partially offset by lower compensation expense. Impairment of intangible assets was $94.4 for the year ended December 31, 2021, due to the strategic action to merge the Sunquest business into our CliniSys business resulting in impairment of the Sunquest trade name.
Removed
Other income, net of $24.6 for the year ended December 31, 2021, was composed primarily of a gain on sale of minority investment of $27.1. 25 During 2022, our effective income tax rate was 23.1% as compared to our 2021 rate of 22.0%.
Removed
Backlog increased 25.3% to $2,912.6 at December 31, 2022 as compared to $2,325.1 at December 31, 2021.
Removed
Organic growth in backlog was 18% and acquisitions contributed 8% which was partially offset by foreign exchange impact of 1%. 2022 2021 Change Application Software $ 1,796.3 $ 1,541.9 16.5 % Network Software 507.5 448.3 13.2 Technology Enabled Products 608.8 334.9 81.8 Total $ 2,912.6 $ 2,325.1 25.3 % Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 Net revenues for the year ended December 31, 2021 were $4,833.8 as compared to $4,022.4 for the year ended December 31, 2020, an increase of 20.2%.
Removed
The components of revenue growth for the year ended December 31, 2021 were as follows: Application Software Network Software Technology Enabled Products Roper Total Revenue Growth 32.5 % 14.4 % 6.5 % 20.2 % Less Impact of: Acquisitions/Divestitures 23.2 2.1 — 10.9 Foreign Exchange 0.2 1.0 0.6 0.5 Organic Revenue Growth 9.1 % 11.3 % 5.9 % 8.8 % In our Application Software segment, net revenues for the year ended December 31, 2021 were $2,366.7 as compared to $1,785.8 for the year ended December 31, 2020.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIf these currency exchange rates had been 10% different throughout 2022 compared to currency exchange rates actually experienced, the impact on our net earnings would have been approximately 1%. The trading price of our common stock influences the valuation of stock award grants and the effects these grants have on our results of operations.
Biggest changeIf these currency exchange rates had been 10% different throughout 2023 compared to currency exchange rates actually experienced, the impact on our net earnings would have been approximately 1%. We are exposed to equity price risk as it relates to the change in fair value of our equity investment in Indicor.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to interest rate risks on our outstanding revolving credit borrowings, and to foreign currency exchange risks on our transactions denominated in currencies other than the U.S. dollar. We are also exposed to equity market risks pertaining to the traded price of our common stock.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to interest rate risks on our outstanding revolving credit facility borrowings, and to foreign currency exchange risks on our transactions and balances denominated in currencies other than the U.S. dollar. We are also exposed to equity market risks pertaining to the traded price of our common stock.
Our credit facility contains a $3,500.0 variable-rate revolver with no outstanding borrowings at December 31, 2022. Several of our businesses have transactions and balances denominated in currencies other than the U.S. dollar. Most of these transactions or balances are denominated in euros, Canadian dollars or British pounds.
Our unsecured credit facility contains a $3,500.0 variable-rate revolver with $360.0 of outstanding borrowings at December 31, 2023. Several of our businesses have transactions and balances denominated in currencies other than the U.S. dollar. Most of these transactions or balances are denominated in British pounds, Canadian dollars, or euros.
At December 31, 2022, we had $6,700.0 of fixed rate borrowings with interest rates ranging from 1.00% to 4.20%. At December 31, 2022, the prevailing market rates for each of our long-term notes was at least 0.7% but no more than 4.1% higher than the fixed rates on our debt instruments.
At December 31, 2023, we had $6,000.0 of fixed-rate borrowings with interest rates ranging from 1.00% to 4.20%. At December 31, 2023, the prevailing market rates for each of our long-term notes was at least 0.3% but no more than 4.1% higher than the fixed rates on our debt instruments.
Net revenues recognized by companies whose functional currency was not the U.S. dollar were 11% of our total revenues in 2022 and 89% of these revenues were recognized by companies with a functional currency that was either the euro, Canadian dollar or British pound.
Net revenues recognized by our companies whose functional currency is not the U.S. dollar were approximately 11% of our total net revenues in 2023 and approximately 90% of these net revenues were recognized by our companies with a functional currency that is either the British pound, Canadian dollar, or euro.
The stock price also influences the computation of potentially dilutive common stock to determine diluted earnings per share. In addition, the stock price also affects our employees’ perceptions of programs that involve our common stock. The quantification of the effects of these changing prices on our future earnings and cash flows is not readily determinable. 30
In addition, the stock price also affects our employees’ perceptions of programs that involve our common stock. The quantification of the effects of these changing prices on our future earnings and cash flows is not readily determinable. 29
Added
This equity investment is accounted for under the fair value option with its fair value updated on a quarterly basis and its impact reported as a component of “Equity investments activity, net” in our Consolidated Statement of Earnings.
Added
A hypothetical 10% decrease in the fair value of our equity investment in Indicor based on the balance at December 31, 2023 would result in a non-cash charge within non-operating income of approximately $67.6. See Note 10 of the Notes to Consolidated Financial Statements included in this Annual Report for additional information on this equity investment.
Added
The trading price of our common stock influences the valuation of stock award grants and the effects these grants have on our results of operations. The stock price also influences the computation of potentially dilutive common stock used in the determination of diluted earnings per share.

Other ROP 10-K year-over-year comparisons