Good morning. The Roper Technologies Conference Call will now begin. Today’s call is being recorded. All participants will be in a listen-only mode. [Operator Instructions] I would like now to turn the call over to Zack Moxcey, Vice President of Investor Relations. Please go ahead.

Good morning. Thank you all for joining us as we discuss the Fourth Quarter and Full Year Financial Results for Roper Technologies. We hope everyone is doing well. Joining me on the call this morning are Neil Hunn, President and Chief Executive Officer; Rob Crisci, Executive Vice President and Chief Financial Officer; Jason Conley, Vice President and Controller; and Shannon O’Callaghan, Vice President of Finance. Earlier this morning, we issued a press release announcing our financial results. The press release also includes replay information for today’s call. We have prepared slides to accompany today’s call, which are available through the webcast and are also available on our website. Now if you please turn to slide two. We begin with our safe-harbor statement. During the course of today’s call, we will make forward-looking statements, which are subject to risks and uncertainties as described on this page, in our press release and in our SEC filings. You should listen to today’s call in the context of that information. And now, please turn to slide three. Today, we will discuss our results for the quarter and year, primarily on an adjusted non-GAAP basis. Reconciliations between GAAP and adjusted measures can be found in our press release and in the appendix of this presentation on our website. For the fourth quarter, the difference between our GAAP results and adjusted results consist of the following items, amortization of acquisition related intangible assets, purchase accounting adjustments to acquire deferred revenue and related commission expense, and lastly transaction related expenses for completed acquisitions. And now, if you please turn to slide four, I’ll hand the call over to Neil. After our prepared remarks, we will take questions from our telephone participants. Neil?

Thanks, Zack. And good morning, everyone. Thanks for joining us, and we hope everyone is doing well. For today's agenda, we'll walk through our 2020 financials and operational highlights, then we'll turn to our 2020 segment detailed results and discuss our 2021 segment-by-segment outlook and end with our 2021 enterprise guidance prior to discussing your questions. Next slide, please. As we look back on 2020, it was quite a year. Our businesses performed at a very high level during this period. Revenues grew 3% with organic revenue declining a single percent. EBITDA also grew 3%, and free cash flow grew 16%. This cash flow performance, $1.7 billion is just astounding. This is a testament to many things, notably our asset light business model, the intimacy we have with our customers and the high level of skill and execution of our field teams. This cash flow is just simply a great result. Perhaps more important, 2020 was a year of forward progress for our company. We exit 2020 as a better company, a company with higher quality revenue streams, a company with improved future innovation prospects and a company with whose portfolio was enhanced with $6 billion of capital deployment. To this end, we saw our software recurring revenues increase mid single digits in 2020 and were benefited by high levels of retention and acceleration to the cloud. We continue to be benefited by having close intimate relationships with our customers. Most often, our software is mission-critical to our customer’s operations. In addition, we continue to strategically invest throughout our portfolio during the year. Based on our historical experience, we find times of market disruption the best time to double down on innovation and market investments, which in turn will drive market share gains in the years to come. Finally, we…

Thanks, Neil. Good morning, everyone. Turning to page eight, while looking at our Q4 income statement performance. Total revenue increased 8%, as we eclipsed $1.5 billion of quarterly revenue for the first time. Organic revenue for the enterprise declined 2% versus prior year. EBITDA grew 7% in the quarter to a record $552 million. EBITDA margin was down 40 basis points versus prior year at 36.6%. Tax rate came in at 19.9%, a little lower than last year's 21.6%. So all-in, this resulted in adjusted diluted earnings per share of $3.56 which is above our guidance range. Next slide. Turning to page nine, reviewing the Q4 results by segment. Neil will discuss the full year 2020 segment performance in more detail later, so just touching on some of the Q4 highlights here by segment. Application Software grew 35% with the addition of Vertafore. Organic for the segment was minus 2% with mid single digit recurring revenue growth continuing. Sharp declines in our CBORD & Horizon businesses, serving K-12 and higher education impacted the segment, as many schools unfortunately remain closed. For network software systems, plus 2% organic growth with our Software businesses, putting up a very solid plus 4% organic. The TransCore was flat versus prior year. For Measurement & Analytical Solutions, plus 1% organic growth, as we start to see some sequential recovery at Neptune in our Industrial businesses. Segment margins were impacted a bit by the acceleration of some product and channel investments at Verathon as we discussed coming into the quarter, and it's really been a conceptual [ph] year for Verathon overall. Lastly, for Process Technologies, a 21% organic decline, with margins holding up well at 31.3%. And once again here, we started to see some early signs of improvement after a couple of years of declines.…

Thanks, Rob. Let's turn to our recap for 2020. To help orient you to this page, we're comparing a full year outlook from last April to that of what actually happened. It's worth reminding everyone that we felt our businesses and our business model had the level of recurring revenue, customer intimacy and the business leadership required to guide in the face of the COVID uncertainty, both in terms of supply and demand. In aggregate, we thought our full year organic revenues to be plus or minus flat, and we came in at down minus 1%. The TransCore New York project is the primary reconciling item between being down a touch and being flat or slightly up, and more on this in a minute. We guided DEPS to be between $11.60 and $12.60 and came in at $12.74. Looking back on this, we are very proud of our team's ability to look forward and operate through the uncertainty of last year. Also, there is no better example of the durability of our model than this past year. With that, let's walk through the macro drivers across each of our four segments. Relative to Application Software, this segment played out as anticipated and was up 1% on an organic basis for the year. Specifically, we saw recurring revenue up mid single digits, aided by very strong retention rates, as well as an acceleration to the cloud. As a reminder, recurring revenue in this segment is about 70% of our revenue stream. Perpetual revenues, about 10% of this segment's revenue were under pressure as expected. We saw this revenue stream down mid teens as new logo opportunities and wins were pushed and delayed. That said, cross-selling activity remained active for much of 2020. Relative to services revenue, we anticipated some pressure tied…

We will now go to our question-and-answer portion of the call. [Operator Instructions] The first question today comes from Deane Dray of RBC Capital Markets. Please go ahead.

Thank you. Good morning, everyone.

Hey, good morning, Deane.

Good morning, Deane.

Hey, I really appreciate all the new disclosures you're providing here, especially pages 14 and 20. Those bridges between your original guidance, what you delivered and then the organic bridge on 20 is really helpful, a lot of granularity there. And if we were to start, just because the New York City contract is such a high profile and it did have a swing factor, can you give us a sense of how much - just remind us the revenue you're expecting for the year, how much of it could land in the first quarter? And just confirm there's been no change in scope?

Yeah. So - hey, Deane, good morning. It's about $100 million for the full year. And in the first quarter, we only have about $10 million to $15 million in there. As we mentioned, there's a bit of a pause, but now it's started up and running again, and the scope is unchanged.

Got it. And if you were to highlight all the areas where you're seeing improvement in licenses and the services pipeline, what's at the high end in terms of the businesses today?

Deane, maybe I can ask you to sort of rephrase the question. I want to make sure that we fully understand the question.

Yeah. Just in terms of the licenses revenues that you're seeing today, you've taken us through where some of the challenges have been. What's on the upper-end of your guidance where you would see potentially the - how it would play out on the positive side?

Sure. Okay. So I appreciate the question. I think we understand it now. So the total perpetual revenue for our core businesses, the Software businesses that have been in the portfolio for a while was down obviously, in 2020. We expect about - the recovery in ‘21 to be about half of what we are down. We're seeing strength, you know, we've seen continued strength all year in the perpetual - in 2020 in the perpetual book of business, in Deltek's GovCon business. As I talked about in the prepared remarks, we're seeing - showing [ph] in some activity in their professional services end markets that's encouraging. These are the architects, the engineers, the contractors, the marketing services firms, the consulting firms, those - that book of business. In addition, the other large parts of the perpetual book are at Aderant and PowerPlan. Aderant has its own unique set of competitive factors where the customers have to – the customers that have not upgraded their software from - the competitive customers have not upgraded the software have to upgrade, and we're winning a large percentage of those. And so all that activity just got pushed to the right a bit, and that's somewhat encouraging and pipeline activity is positive there. And then PowerPlan's pipeline activity is full. It has a handful of large opportunities in it, which are obviously hard to predict the exact timing. But we actually like the pipeline build across, the companies that have the primary book of perpetual business.

Okay. That's helpful. And just as my follow-up question would be for Rob. Do you have specific deleveraging plans for the year that you could share with us in terms of where and how? You said you'd be paying down the revolver, but just are there specific goals that you can share for 2021?

Sure. So it will be, as you know, when we're in deleveraging mode, all the free cash flow goes towards deleveraging. So we pay a dividend. That will continue. But essentially, the rest of the free cash flow goes towards deleveraging. So that's a rough - probably after you paying a dividend, roughly $1.5 billion in deleveraging is probably a good ballpark number.

Next question comes from Christopher Glynn of Oppenheimer. Please go ahead.

Yeah. Thanks, good morning.

Good morning.

So congrats on all the capital allocation last year. I am just curious, you're getting a lot of inbounds after some of your sub-segment divisions. Given you had some real emphasis on quality and fullness of the pipeline, there's certainly liquidity in the markets. So wondering if your calculus has shifted towards any non-operating cash flow to fund the deleverage and trade back into the pipeline a little sooner?

Yeah. I appreciate the question. We - it's very routine for us to get inbounds. I've been here almost 10 years. And there's a handful of, what I would say, meaningful and credible inbounds in any given year. Like we said for years, though, it's just very difficult to make the math work because when we sell a business, just look back at Gatan, you sell a business to a strategic buyer, we leak taxes, then you have to redeploy it, it's just hard with a compounding orientation to make that math work. Certainly, the lower tax rate sort of helped in the Gatan timing. So yes, we get inbounds. I would not say the activity in the last few quarters has ramped up more than it's been over the decade I've been here. But yeah, there's always inbound inquiry.

Any appetite to entertain that was the other part of that question.

Yeah. I think it's the appetite. We've never not had the appetite. It just comes down to the math and doing what's best in our view, according to our math for our shareholders. So it's - the appetite has – that remained unchanged.

Understood. Thanks.

You're welcome.

The next question is from Steve Tusa of JPMorgan. Please go ahead.

Hey, guys. Good morning.

Hey, Steve.

The free cash was pretty strong in the fourth quarter, like almost 95% of EBITDA. Last couple of fourth quarters, it's been around 80%. What was the kind of overdrive there? And then when it comes to cash and EBITDA, how much did roughly did Vertafore add?

Vertafore was around 90% or so of both cash and EBITDA. And yeah, as I mentioned earlier, Steve, just great working capital performance across the portfolio, very broad-based. You're getting your software renewals, which were very strong in the fourth quarter. There is certainly is some benefit, right from those more cyclical businesses being a little bit softer, right? And that lowers working capital overall. But just great working capital performance. Our cash taxes year-over-year were about flat. So it really was all on working capital.

Got it. And then within the guidance, I guess, you didn't really quite - you don't usually guide for free cash flow for next year. I think you said $1.5 billion. Is that - is the $1.5 billion after the dividend? And then does that include any of the tax benefit that you guys bought with Vertafore, the benefit of that?

Yeah. So the $1.5 billion is deleveraging number, so that's an estimate. That's after paying dividends. So for next year, yeah, you're right, we don't guide free cash flow. We always have very strong conversion. As you know, we expect that very high conversion to continue. As I mentioned, those working capital trends are very stainable, right? It's the culture. It's the type of businesses we buy. As the software businesses grow, their working capital continues to go down, so that all should continue. In terms of the tax attributes, yes, there are some tax attributes related to Vertafore, which we disclosed, a little over $100 million. So there'll be some benefit from that coming in '21. There's also, like many other multi-industry and really all companies, right, we benefited some from deferral of payroll taxes. So that I'll go back the other way next year as you're starting to pay those payroll taxes again. So those are sort of – the business sort of counter [ph] each other a little bit. But we feel great about cash flow next year. But we don't guide as you know. Operator Next question comes from Allison Poliniak of Wells Fargo. Please go ahead.

Hi, guys. Good morning.

Good morning, Allison.

Good morning, Allison.

Just want to talk to you, obviously, the theme of reopening seems pretty pervasive in a number of your businesses. Could you help me understand maybe the progression of some of those businesses that you're thinking about if we, in fact, we do start to reopen here? Is it sort of an outsized bump, as things start to get back to work? Or is it more of a progression out of that, any thoughts?

Well, I'll give you the – it’s Neil. I'll give you the headline, and I'll let Rob sort of add his color on the back end. So it's not like a step function bump-up. It is a sort of sequential improvement throughout the year. Obviously, when you roll past Q1, the comps get a whole lot easier. So that's part of what the last three quarters of the year will look like as well. When you look at it on a company by - sorry segment-by-segment basis, just rolling through, basically, it's the perpetual book of business and the associated services that come with that for Application Software that ramps back up. In Network, they're really - for the Network businesses, it's a little bit of ramp back at foundry. It's a little bit of ramp back at iTrade. But the other businesses were pretty steady as she goes, DAT, ConstructConnect, et cetera. TransCore stands by itself. It's tied principally to two things, one is the New York project completing, and second, the return of traffic volumes and the associated tags that go with them. For the MAS segment, it's Neptune just sequentially coming back and importantly, getting the access to the indoor meters in Northeast, US and Canada. I said in the prepared remarks, market share was super steady, maybe plus a little bit in that business last year. It's just access - our customers getting access to do retain replacements. Verathon will have a difficult headwind because of the capital place we talked about. But the other Medical Product businesses just rotate up in a sequential basis. And then finally, the Industrial businesses do the same. Process is much like Industrial, just a cyclical rebound, modestly higher oil prices helped. But you have all this in the energy businesses, you have all this deferred maintenance that's got to get done. There's a lot of - there's sort of - there were some restocking orders in the fourth quarter there and then some pipeline activity like we got to get in and do the maintenance in a handful of these important customers. So that would be sort of the color of the ramp, but no step function. But Rob, what would you add if anything?

No, I think that's right. We're assuming Q1 is very much clearly still in the middle of pandemic and then things improve from there.

Got it. And then in line with that, obviously, we've been under this closure for a significant amount of time. Any concerns of the financial impact of some of your existing customers that you would anticipate that ramp from or not at this point?

I would say no. And I think the – I mean, obviously, there's going to be small pockets here and there. We're very – most of our customers across the portfolio, most are enterprise level. A very small percentage of our software companies would be in the small, medium size where it may be more subject to some sort of macro sort of headwinds or business uncertainty. I think the data point we point to is just the incredible cash flow. I mean, we got paid by our customers, right, and so last year. And so what we do is just critical to what they do. And no, I don't think there's going to be down…

Yeah. The pockets of areas that are hit as we talked about, right colleges and universities, most of those customers we tend to have larger customers there. So we're not too worried about our schools being in financial trouble overall. And then on like the iTrade network side, they have customers that are in the food area. So there certainly could be an impact from some smaller restaurants and some of those issues in that market. But overall, not really a meaningful impact meaningful impact to us.

Next question comes from Joe Giordano of Cowen. Please go ahead.

Hey, guys. Good morning.

Good morning, Joe.

Good morning, Joe.

I'm in the market to refinance my mortgage at 1% blended, so can you guys help me out with the…

I have a guy in Florida, I never run through [ph] We will count that as the first question, by the way.

And then on the net working capital, obviously, that keeps getting more and more negative and more interesting. But with the current portfolio, where is that – what is like the maximum that, that can get to without doing more deals into that further push it that way?

Yeah. So I think if you go to our working capital page, page 10, you'll see all the benefit here. Q4 to Q4 was on the liability side, right? We're basically equal to – on the asset side, which is that, that indicates to us and we go business-by-business, it's structural and driven by an increasing mix towards software. So that's the first thing I'd say. Second is when you look at the art of the possible, if you think about a business that is 100% SaaS recurring revenue that's prepaid a year ahead, let's say, that you bill on January 1st and you take 90 days to get paid, that company is going to have 75% of its revenue. That's negative net working capital, right? And we certainly have a couple of businesses that don't quite get to 75%, but they approach 40% or 50%. So as we become more software and our legacy perpetual business becomes more Saas, you're going to see this number get higher. Will it ever get to 40% to 50%? No, it won't. But it will keep inching higher. It should over the next 5 to 10 years. We don't have a target. It's not that we're trying to drive the business to be x percent negative. We just have an incentive system and a culture that we get a little bit better every year on this metric.

That's definitely helpful to frame that up. Thanks. A follow-up would be on – I'm sorry, on Vertafore. How is that business doing since you've been there? Have you noticed anything like kind of - what kind of initial changes have been instituted, if any? And like when we did our diligence that was definitely a market like where - that business was a leader, but there was - that whole market seemed right for some change there. And how are you guys approaching that, are there upstarts that you look at? Is it an internal change that drives the market forward? Like how are you just approaching that business now?

Yeah. So the most important thing that I think we can say in regards to Vertafore that matter, any acquisition is that, you know, if we had to summarize what we do is we buy these amazingly great businesses and then provide them environment to get better over a long period of time. So as a result, there is not a short-term. We've got to do these five things to improve the business. That's not in our strategic M&A strategy. That said, the business is – and the piece of research you did we thought was quite good and reflective of ours. It's basically a duopoly. We share a market with one principal competitor on the agency side. Fortunately, for us, just after the business - we acquired the business and closed, we won the largest deal in the market in the last three or four years and assured partners. There was a press release that went out a handful of weeks ago. So we're delighted about that. It's a slow ramp over a couple of years, a couple, three years. I think that's just an indication of the quality of the business that Vertafore and the products they have. But also the customer, in that case, was reassured by being - by Vertafore being owned by Roper who is just a long-term owner that's not going to look to sell the business in a handful of years. And therefore, you can make the right investments. If there is one thing that we're, you know, if you well doing in the short run is based on our diligence and similar to work you did is, we wanted to allocate a little bit more to R&D, which we have done. That's reflected in the numbers we've given you from the very beginning. And so that's going to take a few years to play out, just continuing to add functionality and add features and ways to monetize their customer base.

Hey, and Joe, just on the - obviously, the company has performed very, very well since we own it. But just to clarify my last answer, the 90 of EBITDA, that's since we own the business, there's a month in there as well. It wasn't all in the fourth quarter. But it was 90 of cash in the fourth quarter.

The next question from Blake Gendron with Wolfe Research. Please go ahead.

Yeah, thanks. Good morning. I want to follow-up on that R&D comment, actually, kind of in the broader context of your portfolio. So COVID was disruptive for a number of reasons, structurally with the end markets and I would imagine competitively. In addition to Vertafore and maybe ramping R&D there, are there any opportunities to ramp R&D across some of the other business units, simply because there's new market opportunities as a result of the pandemic moving forward? I know it's hard for us to really fully appreciate all the changes that will stick structurally across all your business units. But I'm just wondering if we should expect R&D to ramp a little bit across the portfolio, not just Vertafore?

Yeah. So a few things I'd say there to begin with. First is when we engage with each of our businesses strategically, we talk to them broadly about how to grow sustainably with CRI-accretive growth over a long arc of time. Answering the two questions of where to play and how to win, but then when you get into how to win, it is - sometimes it's a product answer. A lot of times, it's a go-to-market or market, go-to-market effective sort of answer. So it's not - our strategic orientation of each business doesn't narrow into innovation from the get-go. That said, obviously, innovation and R&D, more mostly a D shop [ph] mostly development across our software and product businesses. You have seen and likely will continue to see a modest increase in R&D spend as a percent of revenue for years to come. In ‘19, it was about 7.5%, last year, it's about a little over 8%. This coming year, probably going to add about 100 basis points, to be a little over 9%. There's Vertafore mix in there that they have a little bit higher percentage, as compared to some of our other businesses. But I think you will see and are seeing an increase in innovation there. So – I’d sort of stop there. I mean, if you have any follow-ups, we're happy to do it. But the short answer is yes. I guess there's one other thing. If you compare Roper's, the 8% or 9% of revenue that we spend in R&D compared to other software companies, it appears low. When you look at our Software businesses, we're right in line with the peers. We're between 10% and 15%, 17% depending on the company. The Application businesses tend to be on the higher side of that. The Network businesses tend to be on the lower side of that. And the reason the mix for Roper is low is because we have quite a bit of revenue in TransCore, MHA and others that effectively don't have any R&D in our business model. So it's always important to point out when we get asked a question about R&D.

That's helpful to think about the framework there. I wanted to shift to Deltek. I thought it was interesting when you mentioned GovCon's stability versus maybe some of the professional services being impacted by COVID. The GovCon, I would imagine you're dealing with large enterprise customers. So we should expect it to be kind of stable in addition to just general government spending being stable? On the professional side, is it just a matter of reopening? Or is there anything we can think about with respect to customer size, large versus SMB? And then maybe end markets specifically that we should be looking at for the recovery? Is it just non-residential construction on the AEC side? How should we think about Deltek improvement in 2021 and beyond?

I’ll give you a gold star for getting like seven questions into one question. So I'm going to do our best to try to come - tick through these. So on Deltek, it is - it's important to note. It is a combination of large enterprise and the smaller end of the GovCon space that's been super strong throughout the year. It's not just been at the high end. And yes, we expect that to just continue, as the - it's not tied to infrastructure, per se. These government contractors go toward the fast currents of government spend is. It's gone from military to educations, maybe infrastructure. They just go to where it is, that might drive some M&A activity, by the way, which is generally good for us. On the Professional services side, the book of business here is broad. But if there are pockets of concentration, it's in architects, engineers and contractors. Obviously, the contractors, mostly non-res contractors, in this case, they are the ones that are a little bit worried, and they've sort of tightened up a little bit more. It's the architects and engineering firms that have shown some green shoots here in Q4. In addition, marketing services firms is a leading niche for Deltek, and those businesses also have started to fall. So I think that checked off your questions. If we missed one or two, we're happy to follow-up with you after the call.

The next question comes from Julian Mitchell of Barclays. Please go ahead.

Hey. Morning everyone. This is Joao on for Julian.

Hey, good morning.

Maybe to start with, could we get your thoughts on maybe margin expectations for the segment? Obviously, a lot of movement in the software margins in 2020, kind of a lot of mix shift you guys are calling out on that slide 20, so I just wanted to get your thoughts there?

Yeah. I mean, we can go through the segments in detail later on. But I mean, overall, our margins are relatively flat year-over-year in the guide. I think there's a little bit of a core decline in the margins, given a lot of the cost will come back post-COVID, travel and things that didn't happen, very modest decline there. And then the Vertafore revenue comes in at a higher margin. So overall, margins were relatively flat. And then we'd expect some improvement in the bottom sort of the more cyclical type stuff and process, we should get some nice bounce back as that starts to grow in margins.

And if I could just add one thing there, sort of piggybacking your question with the last one. Core EBITDA margins are going to be down a bit because, as Rob said, these costs are coming back in. It's hard to spend money on travel and customer meetings, for instance, last year, and we expect some of that to come back in this year. That said, I sort of call it like a trap of leadership. We're increasing our R&D as a percent of revenue by about the same amount that we expect the core margins to come down. So there's going to be - some teams and some companies may choose to hold margins, and they're going to have to - there's opportunity cost inside the business somewhere. In our case, we're very specifically and intentionally not doing that versus coming to that trap. And then obviously, we get the benefit of the Vertafore mix coming in. So on - in aggregate, margins should be flat to up a touch.

Perfect. Thanks. And then maybe on the services piece of Application Software, you guys talk about kind of rebuilding that pipeline. What does that process look like? And any thoughts on some of the cadence or just kind of expectations beyond that sort of flat growth you guys guided for?

Yeah. I think - so what you have here is a dynamic where the most - first as a precursor. Most - the vast majority, I should say of our services work in the application segment are tied to new implementations, whether they're SaaS or on-premise. So if you look back and think through what happened sequentially in 2020, very quickly in the shutdown, the license activity, the perpetual activity slowed down. So you had low license activity basically through Q4. The services book of business has a little bit of a backlog, right? So the services were continued in Q2, continued a little bit in Q3, completed the in-flight projects. And then it sort of slowed down a handful of months behind the license activity. So when you comeback on this side, the license activity will pick up sooner, but then you got to - and the services work will follow back behind it. So you've essentially had a slower ramp down and a slower ramp up for services. So that's why you see it flattish where you can see growth in the perpetual book.

Your next question comes from Alex Blanton of Clear Harbor Asset Management. Please go ahead.

Hi. Good morning.

Good morning, Alex.

Good morning, Alex. Good to hear you.

I wanted to ask, could you characterize your acquisition intentions for 2021? You had said earlier that it would be primarily - would be deleveraging for 12 to 18 months. But today, you mentioned that you had a very active, robust pipeline of potential acquisitions with many opportunities, so has there been a change in your intentions there in terms of deleveraging? How would you characterize the acquisition outlook for this year?

Thank you, Alex for the question. So I would share two things with you. First is, maybe more than a couple of things. So we are active. The pipeline is active. We are spending time with - learning businesses, spending time with all the sponsors that we have relationships with to understand what the cohort of opportunities looks like. Importantly, every sizable transaction that we've completed since 2016, we have had a chance to meet the management teams at least once, if not multiple times, anywhere between 6 months and 18 months before we completed the transaction. So the work that we're doing now is principally focused on that. These are getting to understand businesses well before they're ready to be transacted, right? So businesses we're meeting this month are likely going to be businesses that we may acquire at the end of this year, or into the first half of next year. So it's the early pipeline work is the first thing I would say. Second is we're absolutely committed to deleveraging or unwavering on that. Third thing, if the right deal came through, there's always a way to figure that out. But that's not our primary focus. Our primary focus is the early part of the pipeline build, as well as the deleveraging.

Okay. And secondly, how would you characterize the makeup of these companies that you're getting to know. What industries? Is it still primarily software? Are you still going in that direction?

Absolutely. It's – again, we're characterized, our M&A pipeline and process characterized by buying businesses that are better than us through the – our quantitative cash return lens. So that yields mostly software informatics types businesses. They're a combination of a wide variety of end markets, a wide variety of SaaS versus perpetual business models. But yeah, it's essentially what the capital deployment over the last 7 to 10 years. It's what our pipeline is characterized by that same type of business.

This concludes our question-and-answer session. We will now return back to Zack Moxcey for any closing remarks.

Thank you, everyone, for joining us today. We look forward to speaking with you during our next earnings call.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.