My name is Lashana, and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to Fortive Corporation's conference call to discuss its proposed acquisition of ServiceChannel. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. I would now like to turn the call over to Mr. Griffin Whitney, Vice President of Investor Relations. Mr. Whitney, you may begin your conference. Thank you, Lashana. Good morning, everyone, and thank you for joining us on the call. With us today are Jim Lico, our President and Chief Executive Officer, and Chuck McLaughlin, our Senior Vice President and Chief Financial Officer. We present certain non-GAAP financial measures on today's call. Information required by SEC Regulation G relating to any historical non-GAAP financial measures is available on the Investors' section of our website, www.fortive.com, under the heading Investors' Quarterly Results. We completed the separation of our prior Industrial Technology segment through the spinoff of Vontier Corporation on October 9, 2020, and have accordingly included the results of the Industrial Technology segment as discontinued operations. The financial measures presented on this call are based on continuing operations. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we expect or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, and actual results might differ materially from any forward-looking statements that we make today. Information regarding these factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings, including our annual report on Form 10-K for the year ended December 31, 2020. These forward-looking statements speak only as of the date that they are made, and we do not assume any obligation to update any forward-looking statements. With that, I'd like to turn the call over to Jim. Thanks, Griffin, and good morning, everyone. Thank you for joining us on short notice. Before we get into the details of yesterday's announcement regarding the acquisition of ServiceChannel, I want to make a few comments about our second quarter. As you can see on slide three, we anticipate that for the second quarter, we will report total revenue growth of approximately 25% and core revenue growth of approximately 20%, which are both ahead of our prior guidance. In addition, we expect that our adjusted operating profit margin will be above the high end of our prior guidance. We are incredibly proud of the strength that we demonstrated in the second quarter and look forward to talking to you in more detail about our performance on July 29. Now, I'd like to take a few minutes to remind you of the strategic messages we outlined at our recent Investor Day in May. On slide four, you can see our three strategic segments. Each of our segments has an attractive financial profile, strong long-term growth characteristics, and resilient brands that give us the leverage points from which to build the business. Upon completion, ServiceChannel will become part of our IOS segment, extending our position and solutions that address the Facility and Asset Lifecycle workflow alongside Accruent and Gordian. You can also see this on slide five, where we show how our portfolio evolution over the past five years has positioned Fortive in higher growth markets. The work we have done since 2016 has positioned us in markets with long-term secular growth drivers that serve a total available market of greater than $40 billion. As we sit today, we have a long runway to address the opportunities in these markets and to do more to extend our positions with customers in their critical workflows. This acquisition is very much consistent with the M&A framework that we highlighted at our recent Investor Conference, which starts with identifying markets that have strong long-term secular drivers. In this case, we are acquiring a company that is highly complementary to Accruent and Gordian, which is well positioned to continue to take advantage of those significant market drivers. We are continuing to build a portfolio of strong, durable businesses with an opportunity to create tremendous customer value and achieve outstanding financial returns. Slide six gives you more of a sense of what ServiceChannel does. In this slide, you can see how the ServiceChannel's business spans the maintenance and repair workflow, providing broad solutions to customers across the workflow in areas such as spend optimization, work order management, staffing, compliance, and sustainability to enable customers to better manage their assets and solve their critical problems more easily. Importantly, ServiceChannel's workflow solution benefits from a positive flywheel dynamic, whereby adding more enterprise customers increases the appeal of ServiceChannel software to service providers, resulting in more service providers joining the network. In turn, a broader, deeper network of service providers increases the value of the software platform to facilities, owners, and operators, resulting in more enterprise customers and deeper customer value. On slide seven, you can see that ServiceChannel is a differentiated, scaled software business that accelerates our strategy in the Facility and asset lifecycle workflow within our Intelligent Operating Solution segment. By combining a leading repair and maintenance workflow software platform with an extensive, well-integrated network of service providers, ServiceChannel has carved out a highly differentiated position in the facilities' maintenance and repair market. ServiceChannel's existing customer base of facility owners and operators is one that we already know very well for our existing Facility and Asset Lifecycle businesses, Gordian and Accruent. The strength of ServiceChannel's reputation has been built on the high quality of its SaaS platform and the way it creates value for both facility owners and service providers. Annual recurring revenue today is approximately $117 million, and you can also see the high quality of this business through its 104% net dollar retention, which we believe still has further room for improvement. On slide eight, we double-click into the IOS segment. As you heard at our recent Investor Day, the IOS segment is focusing on scaling our offerings and enhancing our competitive advantage across three key workflows: Connected Reliability, Facility and Asset Lifecycle management, and Environmental, Health, and Safety. This acquisition is highly aligned with that focused IOS segment strategy, with ServiceChannel bringing the leading SaaS platform and data analytics offerings that are complementary to the strong positions we currently hold through Gordian and Accruent. ServiceChannel also possesses significant proprietary data assets and the opportunity to address a substantial future revenue opportunity from data analytics, which we are excited to accelerate through the application of the Fortive Business System and our efforts through the Fort. Importantly, we are very excited about the variety of avenues for value creation across our portfolio, as shown on slide nine. With the addition of ServiceChannel, we will significantly enhance our strong foundation in the Facility and Asset Lifecycle workflow with a larger addressable market opportunity, a broader set of software and service capabilities, and a much deeper, richer set of data monetized through the application of AI and machine learning in the years ahead. We already have Gordian's strength in Job Order Contracting and pre-construction data, as well as Accruent's broad set of facility management solutions. ServiceChannel now brings substantial opportunities to upsell and cross-sell to our current customers in the Facility and Asset Lifecycle space, enhancing our value proposition to customers. With the addition of ServiceChannel, we are well positioned to access approximately $100 billion of maintenance and repair spend in the United States. On slide 10, you can see how ServiceChannel directly enhances our strategic position in the Facility and Asset Lifecycle workflows. We're very excited about the progress that we've made at both Gordian and Accruent since we acquired these businesses in 2018, and we think they are well positioned to drive strong growth and margin expansion as they continue to compound in the years ahead. The addition of ServiceChannel is highly complementary to both of these businesses and immediately creates a greater than $500 million revenue position in Facility and Asset Lifecycle workflows with sustainable long-term competitive advantage. It also brings a very desirable financial and return profile with an expectation that we will achieve a 10% return on invested capital in year five and that the business will continue to compound beyond that 10%. Moving to slide 11. As we've shown over the past five years, we continue to build differentiated positions in our markets that leverage the foundation of our leading hardware and instrumentation offerings. The strength of our brands and installed bases across these leading hardware businesses provides us with key customer and market insights. These enable us to add strong positions in software-enabled and data-advantaged offerings, all of which are accelerated through the application of the Fortive Business system and our work at the Fort to add more value for our customers over time. Today's announcement represents another example of how we're executing on this strategy as we continue to layer in additional software and data analytics capabilities to enhance our ability to address the broader workflow needs of facilities, owners, and operators. With that, I'll pass it over to Chuck, who will take you through the financial profile of ServiceChannel and give you some color on our expected returns. Thanks, Jim, and good morning, everyone. We're now on slide 12. As a reminder, Fortive has entered into a definitive agreement to acquire ServiceChannel for approximately $1.2 billion. We expect the transaction to close in our third quarter and anticipate funding the acquisition primarily from cash on hand. As you've heard, ServiceChannel is a high-growth, scaled software asset with a long runway of growth ahead of it. We anticipate that it will add approximately 50 basis points to the growth profile of Fortive overall. Also, while the business had break-even EBITDA today, we expect this to rapidly increase with incrementals likely to be in the 60% range. Given this profile, we expect ServiceChannel to be approximately $0.04 accretive to our adjusted EPS and also accretive to free cash flow in our first full year of ownership. We expect the business to reach a 10% ROI and thus contribute approximately $120 million of free cash flow in year five. Following the acquisition, our balance sheet will remain in a position of strength with substantial capacity remaining to deploy. Before any additional deals, we would expect to end 2021 with net leverage of approximately 1.4 times. We'll continue to execute the Fortive Formula to drive strong value creation consistent with double-digit earnings growth. With that, I'll pass it back to Jim for some closing remarks. Before we move to questions, I want to express how excited we are with today's announcement. The acquisition of ServiceChannel adds a leading, scaled, high-growth software asset to our Facility and Asset Lifecycle workflow and extends the strong positions we already built through Accruent, Gordian, and Accruent. As we look forward, we will continue to execute on our strategy of increasing our positions in our customers' critical workflows. The addition of ServiceChannel is certainly a step in that regard. We look forward to welcoming the ServiceChannel teams at Fortive in the coming months. With that, I'll turn it back to Griffin. Thanks, Jim. That concludes our formal remarks. Lashana, we are now ready for questions. As a reminder, to ask a question, please press star, followed by the number one on your telephone. To withdraw your question, press the pound key. Please limit your questions to one question and one follow-up. Please stand by while we compile the Q&A roster. Your first question comes from the line of Andrew Obin with Bank of America. Hi, yes. Good morning. Good morning. You know, very curious to see what people will say because when I gave Tower SpecSales the parameters of the deal he came up with, quite a high valuation. Just curious to see what industrial people will say. But having said that, you know, this acquisition looks more like a growth, more of a growth platform versus Gordian, Accruent that are more mature. How do you think about managing the growth and investing in this asset over time to maximize the long-term return? Thank you. Yeah, Andrew, thanks. I think we feel very good, maybe at a high level first around the deal. We certainly feel good about the valuation in the sense of given the opportunities in software and the high-quality nature of this business, which we can talk about. We think we're in a very good position. I think we think of it in many respects like Gordian, very underpenetrated market until COVID. Gordian was growing at a strong double-digit rate. Quite frankly, this is an even more underpenetrated market with even more runway from a market perspective, as well as growth. But we think it's still a strong profit engine as well. Hence, we get to the ROI in five years, strong free cash flows, Chuck mentioned in the prepared remarks. And I think just as important is the fact that we think this is a Rule of 40 business, meaning the combination of growth and profitability by the second half of 2022. So this is not just a long-term growth play. We think the real strong earnings potential is there for the business. Obviously, it's an important scalable point right now. We think we can manage the business for growth and profitability. We think the business has done a great job doing that thus far. We think we can continue to do that going forward. Congratulations. Thanks. Thanks, Andrew. Your next question comes from the line of Scott Davis with Melius Research. Good morning, guys. Pretty early out there for you. Hey, we're customer-focused here, Scott. We thought we'd do one in the morning for you guys. We certainly appreciate it. To be clear, if you do a 10% return in year five, I don't think anybody's going to care about the valuation. Chuck, can you talk or Jim, can you talk about the global expansion opportunities? I mean, I assume that this thing's pretty much all local North America. Yeah, you're right, Scott. I think 95% North America, but they've started to extend into Europe. We always say that we think that's a real opportunity. Obviously, with things like Accruent, which is a more global business, particularly around Europe, the opportunity to leverage some opportunity there will be there, the knowledge of customers and that kind of thing. So we think the underpenetrated aspects of the market are both a vertical market comment, meaning even in its most penetrated markets, it's really in the 20% range. So across a range of other verticals in the U.S., it's still in the 10% range from an underpenetration perspective. Then you add on top of that probably a global aspect to that, global enterprise customers in some cases wanting to take us global, but also the opportunity to really invest in a global business, I think, is certainly there. So we think there's a range of growth potential here. We mentioned some of the other things in the prepared remarks like data analytics, a number of vectors here. The team there has done a nice job. We think we can accelerate that in much the same way we've done in businesses like Intelex as an example, where we've really built a global footprint there over the last couple of years. We think we can do the same thing here. Okay. And just as a follow-up, Jim, I mean, the history of Fortive is that your deals tend to come in kind of bunches. Maybe that was just kind of how it worked out. But could you speak to perhaps the pipeline of stuff you have out there and perhaps maybe your enthusiasm today versus just even a quarter ago? Yeah, we're absolutely busy. There are a lot of things going on for sure. I guess I always say we're busy, so maybe that's just the way I answer the question. But I do think there are a range of opportunities. We've been pretty focused on this to bring this one across the line. The team there has been incredibly helpful. It's going to be a great partnership. But yeah, we continue to remain very optimistic across the range of workflows that we talked about at the investor conference, that there's a number of opportunities there to really continue to build out the workflows that we really were trying to give everybody a sense of really the opportunity at the investor conference. Okay. Good luck. Thank you, guys. Thanks, guys. Thanks, Scott. Your next question comes from the line of Julian Mitchell with Barclays. Hi, morning and congratulations. Maybe just the first question to understand, the margins are low at present. Maybe give us some color as to the gross margins and the sort of R&D profile. I understand that there's a lot of heavy investment going on right now, and you can see the fruits of that in the revenue growth. But is there any kind of specific product launch looming? And then once that's done, the R&D should sort of drop off quickly thereafter. I think, Julian, a couple of things. One, the gross margin profile is certainly typical of a SaaS business. The contractor segment a little bit less, but I think at the end of the day, when we look at the investment, which I think is the nature of your question, we think we'll continue to invest in R&D here. I think that is very much going to continue to be an opportunity. They're just launching some new offerings. Their Scout offering, as an example, which sort of recommends the service providers, was just recently launched. It's a low revenue base right now, but should grow. So that's one example of some investment. But I think it's very much, I think, a story of when we look at the ability for them to scale the business to where it is today, to build out some of the resources relative to the contractor network, which we can take forward from a growth, which is just starting to get some growth potential. We think we're at that scalable point, right? We're over $100 million. That's a critical point for a business from a revenue standpoint. And while we will continue to make sure we invest in the business, we just think going forward, we have an opportunity to take some of that, more of that to the bottom line as we balance it out. Our cost of ownership, a lot of the growth has come from new logos. That's a slightly more expensive. Now, we really think the opportunity to grow the current install base. That's why we're confident in that dollar retention going up. They've created a number of opportunities around upselling and cross-selling that are just starting. So I think all of those are really more profitable, scalable approaches to growth. And they're just in the early days of getting that as they've built the business. So we think that's a great place to take it forward. We've demonstrated that success across all of our software businesses. We talked about it at investor conference, how we've really continued to drive that dollar retention really higher across the portfolio. So I think in all those cases, profitable growth is ahead of us. But we still think that sort of strong growth because of the underpenetrated market is certainly really a long-term growth potential of the business. Thanks very much. And maybe one quick follow-up. I think you talked about that $120 million free cash flow number in year five. When we're thinking of the trajectory of today's sort of break-even level to that number, is it fairly linear between now and then, or does it sort of hockey stick in year four and five? And is EBITDA really the biggest driver of that free cash number? Is there anything else material moving around? Julian, I take the second part first. EBITDA is the driver. There's not a big hockey stick, although I'd note that as the business gets bigger and bigger, there's a compounding impact here in this business where that mid-teens and bigger revenue base each year gets a bigger piece of cash flow. But there's not an inflection point. This makes, as we talked about, flowing through at 60% margins on the revenue going forward, and I think that should hold as we move forward here. Great. Thank you. Thanks, Julian. Your next question comes from the line of Jeff Sprague with Vertical Research Partners. Hey, thank you. Good morning, everyone. Hey, maybe picking up on the growth question, I just want to understand what the kind of the two or three-year view is. Are you suggesting that this dips down to kind of a mid-teens growth rate in the near term, or you're running more towards that 30-ish, and over time, you drift down to 15? And I guess just thinking about your deal assumptions, what is the kind of assumption for growth out to that year five ROIC bogey that you're giving us? Yeah. And Jeff, we note that this has been growing 30% if you look backwards going forward. And when we're talking longer term, we're talking five years, it'll settle into the teens. In the near term, it's going to be higher than that. I think that over the next five years, thinking of being in the next couple of years, it's going to have higher growth than the teens that we're trying to signal long term. The mid- to high-teens stick closer to 20% over five years, but higher than that in the first couple of years. And Jeff, I would just add to that that we get beyond five years, a little harder to predict. But given the network effect of this business, what we've tried to articulate and the competitive advantage it builds and the degrees of freedom that they, I think, built through the deep relationship with customers, this idea of continuing to build up the contractor network, I think you've seen some other businesses that have been able to accelerate growth during that time by continuing to build out value propositions with that kind of business model, similar to our business model at Gordian, probably even better in many respects from a degrees of freedom amongst a number of verticals. We just think there's real growth potential here. Certainly, really strong financial profile, as we said in the first five years, but no reason to think that we can't continue as we work on this to come up with even other ideas to accelerate the growth potential of the business. Even we think the compounding of this is a real compounder in the sense of the out years as well. And maybe you could elaborate on that a little bit more, Jim. It sounds like both sides of the equation are customers, the contractors, and the enterprise users of the product and the software. Can you just elaborate a little bit more on that, how the business model actually works and maybe the revenue or kind of profit differences on both sides of that equation? Yeah. So for sure, first of all, I think they've got a great SaaS platform. Jeff, I don't think we've done due diligence on a company where we saw such significant customer success relative to the product itself. The Net Promoter Score is in the 70s. It's just an outstanding product. And the deep voice of customer that we did on this was just unequivocally an outstanding product. And that's the SaaS product that it starts with. From that, you build a relationship with the contractor network that ultimately builds more spend. And so what really happens is over time is you take more and more of that facilities and maintenance spend through the SaaS platform. We get paid a percentage like we do in Gordian of the spend that goes through that. So that's our business model, right? It's the SaaS software. It's the tremendous data that really and richness of data that they've created that allows for the sort of network effect here. They're building out the contractor network, so there's an advantage as you scale this. Contractors get more business because they see more availability of opportunity. In some respects, it's almost a CRM for contractors in that sense. The deepness and the breadth of richness of data on the SaaS platform gives customers more ability from a transparency and cost standpoint. They see more things. It really helps them deal with, gives them deeper data insights, gives them more transparency about their spend, the quality of the spend. It does that. It helps the contractor from the standpoint of matching jobs. It's payment efficiency for them. And then you add the contractor network. It makes the software more appealing. As you get more enterprise customers, you provide more net opportunities to the contractor network, and that just builds on itself over time. So the network opportunity here is good. So we get paid on the software, the SaaS part of that, and we get paid as we increase spend through the contractor network on a percentage basis of that spend. So we're just early days on some other business models within that, like data insights and some other things. So what I described is how they receive revenue today, but there are additional opportunities with new products that they've launched here recently that we think also gives us more opportunity in the future. Great. Thanks. Thank you. Your next question comes from the line of Steve Tusa with J.P. Morgan. Hey, guys. Good morning. Good morning. Good morning. Just following up on Julian's question just on some of the details. I know you guys, I think, said it was kind of break-even in 2020. Is there much of a difference in just a level setup in 2021, what the EBITDA margin roughly is for '21, so we kind of have a starting off point? Yeah. I mean, there's been investment, as Jim talked about, several lines of business from 2020 into 2021, but it's low single digits in 2021. But the key here is that we feel that we're getting to a scale where you're going to start to leverage the infrastructure that they've built up here with the growth and that falling through. Do you expect kind of everybody to stay on board? You're talking about it being, I guess, somewhat integrated with those other platforms. What do you expect is kind of the management sticking around and the consistency of the personnel there? Yeah. We've had a great partnership with Cameron O'Reilly and Tom Buiocchi and Brett Pearson, who've been leaders of that core structure, leaders of the business for a bit. We've gotten to know the team in a little bit deeper way as well. We think we feel good about the team here going forward. We'll get into some of the integration opportunities. We've got an integration team in the sense of help them integrate into Fortive. We expect the business to be a separate operating company in that sense, Steve, but with some opportunities for leverageable synergies here between the businesses that, quite frankly, we'll create over time. I think we feel good about the team going forward. I think they're excited. We've done some early employee meetings yesterday, and really those were good. We'll continue to do those today. The feedback so far has been good. And I think the team, both on the Fortive side and on the ServiceChannel side, are excited to go forward. I think this idea of a $500 million business now around Facility and Asset Lifecycle with a variety of solutions to really bring to customers. In Gordian, it's really more of a vertical play around the state and local government and education, Accruent a little bit more focused in maybe places like some parts of retail. I think we've got some good vertical plays. We've got some wonderful broad plays around the network creation that I was describing a few minutes ago. So I think everybody sees the folks that have been in the industry see that opportunity and will get after it. So to your question, I think long-winded answer to a short question, we feel good about the ability to retain people. We've got some things in motion to make that work. We think that those things will work, and we feel good about the team going forward. I think they're inspired to really make this business even bigger going forward. It's not hard to imagine this being a billion-dollar platform here over the next several years or set of businesses in the next several years as we go forward. I think everybody, even in the early days, people are already seeing that both on our side and their side. Sorry, just one last detailed follow-up. I didn't quite hear the answer to Julian's question on R&D. I mean, should we assume it's in the 15%-20% of sales range? Yeah. I think it's in the mid-teens, if I remember the exact percentage. There's some movement in R&D in SaaS businesses because some investment kind of goes into sort of IT and cloud infrastructure. Some of it goes into R&D. But I think you could think about this as a mid-teens kind of R&D spend and similar to other software businesses. And we would expect to maintain that. Of course, we'll find some efficiencies in that, as we always do. FBS has a bunch of tools that will be appropriate for that as we see fit. But still early days in terms of working with the team around their best FBS opportunities. As you know well, we don't start with a roadmap. We work with the team on where their biggest opportunities are for FBS. And that'll really start as we close on the deal here in a few months. Yep. Great. Thanks a lot. Thanks, Steve. Thank you. Your next question comes from the line of Nigel Coe with Wolfe Research. Thanks. Good morning. Good morning, Nigel. Good morning. So Chuck, can you maybe just clarify the path to 40% margins? I thought I heard second half 2022, but that sounds way too early. So just maybe clarify that. But the real question is the infrastructure that you've put in place. 95% North American revenue mix, but I think you're present in 74 countries. So is there significant infrastructure built outside North America? And therefore, you're in good shape to blow this up outside of the US? Any color there would be great. Great. I'll take the first part, and then Jim can take the second part. The 40%, the Rule of 40, growth plus operating profit is what we would expect it to be in the second half next year, meaning the combination. If you think something, say, if we're around 20%-25% growth in the second half of next year, it'd be at least 15%. That's just the less predictable, and then it'll continue as you think about incrementals falling through at 60% from there, and relative to the investment, you're right, Nigel. We're selling in a number of countries. That's mostly enterprise customers who may have pieces of business in other countries. So we'll have some build-out in infrastructure as we scale the business internationally. But we'll also have some opportunity to leverage some investments that we made in other parts of the workflow. I think it's a little bit of a combo. I think they've built some scale globally. We'll build some additional scale, and we'll leverage some scale. It's really a combination of all that as we go forward. That's why I think we feel confident about the returns here going forward, is that this doesn't all have to be incremental investment. As Chuck mentioned, we see high VCM on the revenue gains as we go forward. We think, well, that continues. But with a business of this size now and its growth potential, we can continue to invest in the business while we also grow profitability. I think this managed investment opportunities around growth while still driving profitability is something that's a real potential in the business. It's a little akin to eMaint and what we've done at Intelex in a short period of time. We bought both of those businesses at break-even and very quickly got the profitability up by focusing on things that, while still driving the growth in those businesses, we were able to also continue to invest while providing FBS opportunities. You know the story from the investor conference around how we drove net dollar retention at Intelex as an example. We think there's lots of opportunity to continue to help the business grow, invest in it, but also scale profitability as Chuck just described. Great. And my follow-up is you've alluded to the synergies in the customer list between Gordian and Accruent and ServiceChannel. Is that a material part of the near-term, medium-term growth story, or is that maybe slightly additive but not that material? Any color there? I would say at this point, it's immaterial. But I think that's what's so exciting about this business. It's the growth potential of the business as a standalone business, the opportunity to drive significant financial returns on a standalone basis without having to rely on a whole bunch of synergies, but also seeing some opportunity for synergies that could potentially be in the model. So we'll get into it. We'll do our 100-day strategic plan. The teams are inspired to get after it. But I think that's what just speaks to the quality of the asset and the quality of the potential of the company here. Thanks, Jim. Thanks, Nigel. Did they hang up? Oh, we're going to hang up. Lashana, do we have any other questions? Your next question comes from the line of Josh Pokrzywinski with Morgan Stanley. Hi. Good early morning, guys. Hi, Josh. Jim, so just a question here on kind of the overlap with the existing platform. I guess there's some shared elbow room with ServiceChannel and Gordian and Corrigo and how many of these customers do you think have a use case of all three, or is there some sort of natural gravitation toward one, either as a standalone or maybe even at the exclusion of the other two? Yeah. I think what you find today, Josh, is there are going to be certain customers that are going to buy a CMMS, and they're going to do everything on their own. They're going to continue to source. They'll have a CMMS. We'll sell to those customers a little bit through eMaint, but mostly through our Accruent business. And we would sell a solution like Verisae as an example to a customer that's CMMS. There are also customers that maybe are going to outsource everything. But in the middle, where most of the market is, is people who want to have that service platform, and they want to have a network effect of managing a network that they know and can be assured is high quality and is low cost. And that's where that, as we said, there's about $100 billion of spend that goes into that market today. We can get a proportion of that that we can solidify through our SaaS offering, and then we can run that spend through the business model over time. So you're right. The market does segment around that. Some people want to do it alone, and we'll always do it alone. But I think what we've seen over time is the digital transformation is a big driver here. And really, facilities management is still seeing its early stages of digital transformation, the ability to bring data together to understand their network, understand their supply base, how to bring things on an enterprise basis in with best cost, transparency. And so we see that. That's really a big driver. Gordian is an example with that particular set of vertical customers. So we really think that that's really the opportunity. So there'll always be customers that'll segment. We have a very strong segmentation around where we see people play. And that's why we really will keep the businesses standalone because, in many cases, we'll have separate offerings that will go towards those customers. But at the same time, there'll be customers that maybe can potentially be converted or will want to convert, and we'll have an opportunity to be able to do that through the teams working together. Got it. That's helpful. And then just on the incrementals, I guess, what has been the experience in the time you guys have owned Gordian and Accruent in terms of kind of the incrementals from those starting points? I think Accruent's a slightly different story because of the natural aspects of the SaaS transition. But I think at Gordian, we've seen good continued contribution on the revenue side. Obviously, we got hit with some challenges with COVID in that vertical market. But we feel very good about the opportunity there. And I think this is also akin, as I mentioned before, Intelex is a good example here. The business is slightly similar size. Intelex a little smaller. But I think at the end of the day, the ability to bring that forward and grow the revenue profile in a strong way while at the same time driving some strong margin improvement in the early days, I think is a good and more recent example of how to do it and the success of doing it. Okay. Appreciate it. Congratulations, guys. Thanks, Josh. Your next question comes from the line of Markus Mittermaier with UBS. Good morning, Marcus. Yeah. Hi, good morning, everyone. Good morning. I wanted to come back, if I could, to the network effects chain that you've mentioned earlier. I suspect some of the secret sauce here is the 70,000 service providers that you have on network. And if I understand correctly, the company as of today largely focuses on retail and hospitality. So I'm kind of wondering, in terms of next leg of growth, it sounds like there's probably a lot outside of retail and hospitality that you can leverage these 70,000 that you have today. And then longer term, how do I think about replicating that? If that's, I assume, mostly U.S.-based, how long does it take to kind of replicate that type of network sort of more globally? Yeah. You're exactly right. They're mostly today in parts of multi-tenant that includes retail, restaurants. That's the bigger part of the business today. Broadening that out to more multi-tenant commercial facilities, commercial customers, warehousing is an opportunity, an example. Certainly, light industrial, probably also an opportunity. And then so a number of verticals. And as I said earlier, the penetration rate, none of those markets are over 20% penetrated. And the latter ones I was describing are more in the 5%-10% penetration rate. So in the U.S., so tremendous runway in which to continue to build out verticals. And then when you start to think about the global, we've gotten a couple of global customers that started in the U.S. and have taken us global. So there is real opportunity to build. And that's allowing us to build out a network. Once we build out a network in some of those countries in Europe as an example markets, then we have the opportunity then to grow the business off of that by selling the SaaS offering. So as we grow global enterprise customers, they'll take us into new countries that'll help us build the network of service providers. And that's the flywheel. That allows us to sell more SaaS, which allows for it to be more beneficial to service providers, which allows us to sell more SaaS. So that can get maddening if I keep saying that. But I think that's the sort of flywheel network effect that we think we can do. And it's very early days in anywhere outside of the early days in the United States, but it's very early days anywhere outside of the United States, as you described. Got it. That's very helpful. And then maybe a quick one, well, I hope a quick one. Let's see. You've mentioned the model ultimately is a mix of a percentage of the spend that goes through this offering and then a probably base fee for the software. Any sense, five years out, what the ratio is between these two? Is it sort of like 50/50, 20/80? How do I think about that between the base and the performance level, basically? Yeah. I mean, one of the nice things about part of this is, while it has a little bit of a gross margin impact on the dollars through the system, obviously, as you grow the enterprise network and you bring more spend through the system, that part of the business starts to grow a little faster. So I think it's part without almost no customer acquisition costs. And that's part of the sort of flywheel is it's not only a revenue growth profile, but it's also an earnings flywheel because as you secure those customers from a SaaS perspective and you bring more spend, you bring that spend through at maybe a slightly lower gross margin, but you bring it in at a higher operating margin. And so we think the gross margin profile of the business will be very good. But I think the operating margin profile will accelerate. And then probably five years out, you're probably in a more sort of 50/50 range of how that might look. But I mean, that's part of why we're so confident the earnings profile can be better, because of the network effect as it really accelerates the profitability of the business, if that makes sense. It does. Thanks so much. Thank you. Your next question comes from the line of Amit Daryanani with Evercore ISI. Good morning. Amit, are you there? Amit, your line is open. You know, you would think 16 months to a pandemic when we learn how to unmute well, but it's something that still escapes me. So sorry about that. We have that problem as well. Perfect. I guess I have two questions. One is hoping you just talk a little bit more on the net dollar retention. I think they're 104% right now. So where do you see that trending and any nuance between is that metric much higher with the bigger, more global enterprises versus smaller ones? Just any color there would be helpful. Well, I think number one is we think there's real potential for that number to go up. So I think first and foremost, opportunity. I think as you're growing the business, in the rate they've been, they've focused on new logo additions. And I think we bring some tools and data analytics around net dollar retention improvement. So I think we can add some value like we've done in Intelex and all of our other software businesses as we bought them. We think there's some opportunity to help them. And I think they'll do. They've been improving that number. We'll continue to help them. On a global basis, it has less to do with where you're at globally on net dollar retention. It really has more to do with, I think, the business model, if you will. And I think this business model is one in which, as the network effect gets deeper, the churn goes down, the pricing opportunities go up, and your ability to bring things through the model really improves net dollar retention. So we're confident that we can continue to improve it. But by the same token, we are, I think, I wouldn't talk down 104. 104 is a good starting number. The gross retention is good. So I think we're working off a great base here. The team's done a great job there. We just think it can be we think we improve it, and so do they. So I think we have a real common goal here to really make that number better. And I think when you combine that with all the other aspects of the business that are so strong, it really gives us the confidence in the model going forward. Got it. If I could just follow up, when I think about historically, I think you talked about this 30% growth over the last 10 years. I realize it's a lot of small numbers there, probably. But when I think of that versus the mid-teens growth as you talk about longer term, is there an expectation that your churn rates go up in this business? So maybe just talk to what's driving that delta. I think first, as we go out, as Chuck said before, as you go out the five years, you're sort of in the 20-ish range. I think you get beyond that, you start to get into some big numbers. I think some of it is that. I think when we get into years one and two here, we'll have a better sense of what years seven and eight look like. I think the growth potentials there, as I mentioned before, we haven't put in really any synergy revenue growth opportunities into the model. I think the degrees of freedom in the near term are outstanding. The team has built a great business. We feel very good about the long-term aspect. The financial returns already are very strong in years five through ten. There is opportunity probably in those years as well. But let's get into it and get through our 100-day plan and really work with the team a little bit. Certainly, we think those out years can be hopefully better. And we certainly aren't going to be constrained by that number. We're going to work to maximize the opportunity. There's no number that's too big for us here. We're going to maximize the opportunity in everything we do with the business. Perfect. Thank you. Congrats on the deal, guys. Thank you. Thank you. Your next question comes from the line of Andy Kaplowitz. Good morning, guys. Hi, Andy. Good morning. Jim, I know you put out the target of reaching 45%-50% recurring revenue forecast by year five recently, but given that ServiceChannel's essentially all recurring revenue and expected to grow quite fast, does this acquisition actually give you good confidence that you can meet or beat the target? The target's six weeks old or something like that. But I think at the end of the day, and we always said that we would have a combination of hardware and software acquisitions. So I think we want to make sure that we're not certainly following the investor conference where I think we gave everyone a vision of that. I think at the end of the day, we've come off with a great deal that, as you said, is almost all recurring revenue and certainly accelerates our recurring revenue. But I also want to make sure that we don't forget that in our communication with you and all of our investors, that we continue to say, "Hey, we're looking for hardware opportunities as well." And I suspect that there might be a few of those as well. Some of them have high recurring revenue, like ASP, obviously did. But I think when you look at it at the end of the day, real growth opportunities there at ServiceChannel. But yes, I think this certainly gives us more confidence that we can get to that target, obviously. And I think as we look at the range of opportunities, we have more ServiceChannel-like opportunities in our M&A funnel. If we were to secure those instead of other deals, then yeah, you'd probably say we'd get there sooner rather than later. But let's get through this a little bit longer before we start to think about a higher number. I had a feeling you'd say that, Jim. So just to follow up, in terms of ServiceChannel, how does Fortive's Facility and Asset Lifecycle suite of offerings compare to the competition at this point? I mean, I know you talked about it in previous questions a little bit, but is there anything you're still missing? And then when you talk about the $7 billion of annual enterprise spend for facilities, what is the penetration that you can have of that spend? I think we certainly aren't assuming 100% penetration in any way, shape, or form over the next five years. I think I would say there's a real organic opportunity here that we want to make sure we take advantage of. I think through the variety of means, there are some features and things like that that we can invest in. I think the one thing we definitely see a path to is the work that I described in the prepared remarks around FBS and The Fort, really bringing data. They're just bringing some new data analytics offerings. We think this network gives us a lot of opportunity for further data analytics. Some of that might be in the form of acquisitions, but there'll be a lot of organic opportunities there as well. But I wouldn't say we still see opportunities, particularly on a global basis, to continue to build out our capability here as well. So I think there's a range of opportunities within the Facility and Asset Lifecycle workflow that we could acquire into. But I would say this sort of pyramid that we have now with Gordian and Accruent and ServiceChannel is a tremendously strong and scalable opportunity for us going forward. So I think we feel really good about it. But we do have some opportunities to globalize the business, fill in some feature sets, accelerate some capability. We'll certainly look forward to some of those opportunities if they become available. Appreciate it, guys. Congratulations. Thanks, Andy. Your next question comes from the line of Andrew Buscaglia. Hey, guys. So yeah, congrats. It's good to see acquisition get over the finish line here. And I think it's a great it's definitely a great fit. That network effect is interesting. The question I had, though, is besides this opportunity, it probably attracts a lot of competition. I would think a lot of these kind of big management software companies would be interested in this area. So can you comment maybe exactly who ServiceChannel competes with? And then maybe when you were valuation, definitely going to be a source of discussion. Who would you comp this to? Is this like a Shopify with a network effect, sort of like maybe like an Etsy, something like that, but for construction? I think number one is, yeah, I mean, there are some competition out there. JLL has an offering at Corrigo, which competes in some cases. There's some other parts of the market where there is some competition in some smaller players as well. So I don't want to in any way, shape, or form suggest that there are other people trying to create this, particularly on the software-forward kind of sets of solutions or software solutions. I think when you look at the aggregator market, there are some folks that are also trying to aggregate the spend without the software or maybe have started from the aggregator place. Maybe they're trying to build a network. And there's some folks in that market. The large-scale enterprise players, you never know. So I would never rule out some of the folks I think that you're thinking about. But at this point, not there. But as you say, I don't want to ever rule out that sort of situation. But I think our competitive advantage and the scale that the team has built, as we described in some of the prepared remarks, and I think you see on some of the slides, will give you a sense of our building competitive advantage. So I think that's number one. I mean, the comps, we think when you comp this, large-scale, $100 million high recurring revenue network businesses have pretty high valuations, right? You could look at something like a ServiceTitan as an example that's a slightly different business and say, "That's something like this," slightly different approach to the business model from the sense of customers, but trying to build that same network effect. So there are some folks out there. I think if you compare many of those $100 million network effect businesses, you'd probably come to valuations that are much higher than what we've purchased here. But I think let's not get ahead of ourselves. We think that's why we feel good about the business. It's why we feel good about the return here. And I think ServiceChannel stands alone as an outstanding asset that we think we will do really strong things with that team and create tremendous opportunity for us going forward. Okay. Yeah, makes sense, and maybe, Jim, can you comment on the Q2? It looks like things are looking a little bit better. Can you go a little more into detail where what segment maybe you're seeing most of that outperformance, or is it pretty broad-based across all three? Yeah, I would say pretty broad-based. But I think what we saw was certainly as we got further into the quarter, I think we always had a strong organic guide. I think that was never the question, the fact that we've beat it, as we described. We'll get into more details, obviously. But we certainly saw the short-cycle businesses pick up a little bit, particularly at the end of the quarter, a little bit of supply chain. We're not getting that out as quickly as we were maybe a year ago. But we enter the second half with a good backlog, strong position. We'll get point of sale here pretty quickly, but we haven't got it yet. So we'll be able to talk about that on the earnings call. But we feel good about where things were at. It's relatively broad-based. And I think we feel good that we'll, I think, maybe the more important part of this is what we'll talk about here in a few weeks is about the second half. But I think we're entering, as we said, we wanted to get this out there so that everybody has a sense. We knew there'd be a question about where things stood. So we wanted to try to get you as much information as we have right now. But I think what we know to be true is that we're in a good place and we feel good about it. We'll certainly give you more detail around the regions and some of those things as we get here into the 29th. Got it. Thanks, Jim. Thank you. Your next question comes from the line of Scott Graham with Rosenblatt Securities. Good morning, Scott. Good morning. Thanks for taking my question, guys. Hey, Scott. Hey, I don't want to make too much of this. It's a $125 million acquisition, and I get the sales growth potential. I get all the positives. I think it's a nice deal for you guys. I guess I am struggling a little bit with how you get to the $0.04 of accretion in first full year because I'm kind of modeling a fairly substantial jump in EBITDA that's required, that even 60% incremental on 20% sales growth doesn't get me there. So I was just wondering if there's anything else that you could help shape kind of that jump for us, Chuck? I think there's a couple of things. It's just there's Mike putting a little bit more than 20%. I think he'll get there. That gets you pretty close to what you outlined. We can talk about a model in a follow-up call to help you get there. That's going to model that sales growth pretty easily. I'm happy to do that. Yeah, sure. So the other question I had is maybe for Jim. So Jim, with the size of the service provider network, the 500-plus enterprise customers, yet only $125 million in sales, I say only, it's just sort of like it looks like a mile-wide, inch-deep business, which has been suiting them just fine with the mid-teens growth. I guess my only question is, going forward, if you want to keep that mid-teens growth, do you have to invest in some of those relationships? I think a little bit I will try to cover a little bit of new stuff. Number one is I think they've just touched the surface on enterprise customers. I think that while you may have a big network, I think that speaks to the potential growth of the business, in that they've done an outstanding job at building a network for the potential size of the company. I think at the end of the day, accelerating, continue to accelerate new logos and new enterprise customers is an important part of the growth. We feel good about that and what they've done relative to what we've seen. As I mentioned, the product is outstanding. I think certainly what you should take away from that is the potential is there for the business. The network can continue to grow. But they've built on both ends, both a significant business. They've built out an enterprise network that's very good, ready for more business, and a company that's been very successful at securing new logos in order to feed that network over time. So I would say that's why that really speaks to the potential of the business in terms of the infrastructure and the work that they've done to build that out. And we think the business is in a great position in order to take advantage of that work they've done. Yep. Good fit. Thank you. Thank you. Thanks, Scott. Your next question comes from the line of Joe Giordano with Cowen and Company. Hey, good morning, guys. Thanks for taking my question. Hey, Joe. Hey. So when you're doing diligence around this, given it's such a fragmented landscape, are there 20 companies like this out there? How did you kind of isolate this one in particular and feel confident that this is the right this is the right one in a fragmented environment of maybe a lot of small players? I think it speaks to the nature of how we do market work. We've obviously done the market work on this workflow three or four years ago when we first did the Corrigo and Accruent deals. We've continued to evolve that market work and seek out industry players. As I mentioned, there's some segmentation here around how customers choose. So we've seen them in the marketplace. When customers have chosen a different direction rather than maybe a CMMS only, we've seen them in the marketplace, so we've known them. So it's a lot of different angles. I think it speaks to the quality of the market work that we do, though, that we've been able to identify these opportunities. And then, in many respects, your patience around the best ones. And I think this is an opportunity that became available. As I said, it's been a great conversation and partnership with the owners and the leaders there. And I think that's why we were able to secure the deal, really, because I think they understand this is a great home for the business. And they could have sold to anyone. I think they chose Fortive, obviously a strong offer, but also because they saw us as the best potential owner going forward. Thanks, guys. Your last question comes from the line of Cliff Ransom with Ransom Research. Thank you, folks. Better late than never. Can we talk a little bit about how the Fortive Business System impacts you? How are you applying the tenets of the Fortive Business System to your acquisition process and integration? Yeah, Cliff, great to hear your voice, by the way. So I think number one, a number of examples, obviously, as you know, from our investor conference, I'll pick a couple. I think there's a couple of places. One, we mentioned it a little bit. Certainly in that Net Dollar Retention, the ability to use data analytics and problem-solving tools that we've created, you know well, in the Fortive Business System. Those are perfect tools for identifying churn and reducing churn. So that's one opportunity. Our product development, our Lean Software development system always resonates well, I think, with acquisitions. We've seen some opportunity there as well. We believe there's always opportunity to really continue to take the tenets, the core tenets of Lean Software development into new businesses. Our structure and our mentoring and our ability to bring that in. Our Gordian business will, with Bill Pollock, Cliff, is probably our top one of our top businesses for applying the Fortive Business System across the portfolio. Bill Pollock and the team there will help the ServiceChannel team as they become part of Fortive. We really see tremendous opportunity. As you know, we'll go in with where we think there's some opportunities from a due diligence perspective. We'll certainly work with the team to help them understand the tools. Immersion is an important part of that. We've already identified the folks, the FBS resources that will be helping that team. As we get closer to the close here, we'll get working with them to really get things off to a good start. So I really think it's the lessons we learned and we outlined in May across the board that really give us the strength and conviction that we know that these tools work in these kinds of businesses. I think we also, so I think, and not to be undone is the Fort, our data analytics capability. We built a real capability there with that team. And that team can certainly facilitate, as we talked about, a lot of the proprietary data sets that exist at ServiceChannel. Our team is really looking forward to helping and working together with them to find opportunities to utilize those data sets in new and unique ways. Have you been able to? Can you give us a couple of examples of? I'm going to use the word cross-pollinate when you begin to cross-sell and cross-reference between ServiceChannel and Gordian and Accruent. Can you give us some hard examples of how that benefited Gordian and Accruent? How does that give you confidence that you can do it with a third player in that same enterprise customer? Yeah, it's a great question. I think, yeah, certainly a number of customers you probably know, we've actually moved. And it was really the Gordian and Accruent team that decided that there were a couple of businesses, product lines within Accruent that really were better served in Gordian. So we moved over, as an example, our VFA business. We've actually moved it over to Gordian as a better shepherd of the business because of the customer set relative to the facility planning part of Gordian, which really helps customers in early stages understand how they're going to do the changes to their facility. So I think that's a real example of really the teams coming together and not only working together from a synergy perspective, but actually saying, "Hey, these product lines actually should be in the Gordian offering and in the Gordian organization." So I think that's our best example that business is off and running and we think in better hands. So there's a number of customer examples that we've had and a few examples in hospitals is an example where we've had some shared learnings and shared opportunities as well. So I think those are probably our best examples, Cliff. I think we've got a number of other ones. I think our businesses I think when we create this natural teamwork, we tend to get the best results. And that's what we're confident we can do this with three teams. I'm starting to get back to the Gemba a little bit, and I'll talk to Whitney about trying to take a closer look. Thank you very much for that explanation. Thanks, Cliff. Great to talk to you. Thanks. Thanks for the questions. I think that's it. Thanks, everybody, for the time, and on such short notice, we really appreciate your questions, your enthusiasm. Hopefully, you get a sense from Chuck and I that we're incredibly excited. As I mentioned, the ServiceChannel team is going to be a great addition. We're excited to have them join us as part of Fortive and really to be a part of our future success. We look forward to sharing a number of more details about the quarter and the second half in our July 29th earnings call, and we certainly take some questions if need. Griffin and the team are available as we talked about, so have a great day. Still early here on the West Coast, but have a wonderful day, and we'll look forward to talking to you soon. Thanks. Ladies and gentlemen, this does conclude today's conference call. You may now all disconnect. Everyone, have a great day.