Rollins, Inc. (ROL): Q2 Revenue Surge, Cash Conversion and the M&A-Driven Growth Engine

Q2 Acceleration: Revenue of $999.5 million (+12.10%) and robust cash conversion set the tone#

Rollins, [ROL], opened the second half of 2025 with a powerful topline print: Q2 revenue of $999.5 million, up +12.10% year‑over‑year, driven by +7.3% organic growth and +4.8% from acquisitions, according to the company’s Q2 release and presentation. The quarter also produced adjusted EBITDA margin of 23.1% and free cash flow of $168 million with a reported 119% free‑cash‑flow conversion for the quarter, underscoring the cash‑generative nature of the business even as certain cost pressures emerged Rollins Q2 2025 Presentation — Investing.com; Rollins, Inc. Reports Second Quarter 2025 Financial Results — PR Newswire.

That Q2 print is the most material near‑term development for Rollins: it confirms that the company’s dual growth model — steady organic penetration plus disciplined tuck‑in M&A — is producing both durable revenue expansion and convertibility into cash. The combination explains why Rollins remains characterized as a defensive, cash‑generative roll‑up in a highly fragmented market.

Performance in context: FY 2024 and trailing metrics show continued scale and cash discipline#

Putting the quarter into the full‑year context, Rollins’ FY 2024 financials show sustained expansion. For FY 2024, Rollins reported revenue of $3.39B, operating income of $659.27M and net income of $466.38M, with gross profit of $1.67B and EBITDA of $771.13M (filing dated 2025‑02‑13) Rollins FY 2024 filings — TradingView SEC 10‑K analysis. Calculating year‑over‑year performance from the company’s reported figures yields FY 2024 revenue growth of +10.43% (3.39B vs 3.07B in 2023) and net income growth of +7.23% (466.38M vs 434.96M in 2023). Those underlying growth rates align with the company’s mid‑single to high‑single digit organic targets when M&A is layered on.

Free‑cash‑flow dynamics are central to Rollins’ story. For FY 2024, free cash flow totaled $580.08M and, when compared to net income of $466.38M, implies a full‑year free‑cash‑flow conversion of +124.39% (580.08 / 466.38). That level of conversion demonstrates operational cash quality and supports both the firm’s dividend policy and continued tuck‑in acquisitions. The company paid dividends of $297.99M in 2024, a payout ratio we calculate at ~63.89% of net income, consistent with the company’s declared payout approach [Rollins FY 2024 cash flow statement — TradingView].

Financial summary table (income statement snapshots)#

The table above is derived from the company’s annual filings and shows a multi‑year trend of revenue and operating leverage expansion. Operating margins have ticked up modestly over the period while net margins have remained in the mid‑teens, reflecting both pricing power and variability in non‑operational items (taxes, interest, and one‑offs).

Balance sheet and liquidity (calculated snapshots)#

From the 2024 year‑end balance sheet we compute a current ratio of 0.69x (442.62M current assets / 645.16M current liabilities) and a year‑end debt/equity of ~0.61x (812.53M total debt / 1,330M equity). Note that certain commonly reported TTM ratios (debt/equity 0.67x or netDebt/EBITDA 1.05x) reflect different timing and TTM aggregates; recalculating using year‑end GL balances yields netDebt/EBITDA ≈ 0.94x (722.9 / 771.13) for FY 2024. These differences highlight the importance of consistent denominators when comparing leverage metrics.

What the numbers say about the growth engine: organic plus M&A#

Rollins’ growth is a deliberate blend of organic expansion and bolt‑on acquisitions. Management reported Q2 organic growth of +7.3% with +4.8% contribution from acquisitions, a mix that produced the +12.10% headline. That mix is instructive: organic growth at mid‑single digits in a recurring revenue, subscription‑like service reduces execution risk, while acquisitions—primarily tuck‑ins—accelerate geographic density and immediate revenue contribution.

Historically, Rollins’ M&A activity shows a pattern of relatively small, frequent tuck‑ins rather than a reliance on large transformational deals. That approach preserves integration payback profiles: acquisition payouts are generally financed from free cash flow and modest debt, with acquisition spend in 2024 and recent years showing as acquisitions net of ~$153.4M (2024) and ~$350.95M (2023) in the cash flow statement. Those investments have supported revenue growth while keeping net leverage in the low‑to‑mid single digits relative to EBITDA.

Margin dynamics: pricing power vs transitory cost pressure#

Adjusted EBITDA margin in Q2 slipped to 23.1% from 23.6% year‑over‑year, a modest contraction driven principally by rising insurance and claims costs. At the FY level, Rollins maintained operating margin of 19.45% and an EBITDA margin of approximately 22.76% in 2024. The margin story is nuanced: the company preserves price‑realization ability (often referenced as CPI + ~3–4% in contracts), which supports gross margins, but certain variable operating costs—insurance claims in particular—create episodic pressure on adjusted margins.

The key cushion for Rollins is cash conversion. Even with the slight compression in adjusted EBITDA percent for the reported quarter, the firm produced strong free cash flow both at the quarterly and annual level. That cash flexibility is the mechanism that funds tuck‑ins, dividends, and modest buybacks while keeping leverage manageable.

Capital allocation: dividends, buybacks and disciplined tuck‑ins#

Rollins’ FY 2024 cash flow shows dividends paid of $297.99M and share repurchases (small relative to dividends in 2024) of $11.61M. Historically, buybacks have been used opportunistically (e.g., larger repurchases in prior years), while the dividend has been a consistent returning mechanism. The FY 2024 dividend outflow implies a payout ratio of ~63.9%, which is high for a growth roll‑up but consistent with the company's preference to return significant cash to shareholders while continuing disciplined M&A.

From a capital allocation lens, the critical questions are balance: can Rollins continue to fund tuck‑ins without undermining liquidity, and is acquisition discipline preserved when competition for targets tightens? The FY 2024 balance sheet — with net debt of $722.9M and netDebt/EBITDA (FY) ≈ 0.94x — suggests adequate headroom for continued small‑to‑medium tuck‑ins without materially stretching leverage, provided free cash flow remains strong.

Competitive positioning and moat durability#

Rollins operates in a highly fragmented North American pest control market where national scale, route density, brand strength (notably Orkin), and cross‑sell capabilities generate meaningful advantages. The company’s multi‑brand strategy and national account footprint allow it to compete for large commercial contracts while preserving local brand relevance for residential segments. These structural advantages translate into predictable renewal rates and pricing power, which in turn support the company’s margin resilience and high recurring revenue share.

Relative to peers, Rollins tends to report higher density in core markets and better cash conversion — two practical sources of differentiation. The competitive landscape does feature capable players (e.g., Terminix, Rentokil, regional specialists), but Rollins’ history of integrating tuck‑ins quickly and extracting route efficiencies underpins a defensible position in the U.S./Canada markets.

Where the risks live#

Rollins’ key near‑term vulnerability is operating expense volatility, primarily from insurance and claims costs and, to a lesser extent, labor/technician availability and wage inflation in local markets. Those items can compress adjusted EBITDA margins episodically and, if persistent, could pressure free cash flow unless pricing realization keeps pace.

A second risk is acquisition pricing. Rollins’ model depends on repeatable tuck‑ins with attractive payback. If private seller valuations rise materially or competition for targets intensifies, acquisition returns could compress. In that scenario, the company would need to rely more heavily on organic growth and productivity improvements to sustain consolidated growth rates.

Finally, the company’s relatively low current ratio (~0.69x) indicates short‑term liquidity is anchored by operating cash flows rather than large current asset cushions. Management’s demonstrated cash generation has historically mitigated this, but it bears watching in a more stressed macro environment.

Reconciling valuation and reported multiples (not a recommendation)#

At the time of the provided snapshot, Rollins’ market capitalization was $27.46B with a share price of $56.67. Using those figures and the company’s FY 2024 EBITDA of $771.13M, we calculate an enterprise value (EV) of roughly $28.19B (Market Cap + Total Debt 812.53M − Cash 89.63M) and an EV/EBITDA (FY 2024) ≈ 36.56x. This calculated EV/EBITDA is higher than the TTM EV/EBITDA figure of 35.22x reported in the vendor metrics; the difference is explainable by timing, the use of TTM EBITDA versus a single fiscal year, and different market‑cap snapshots used by each calculation.

Similarly, our price‑to‑sales calculation using the snapshot market cap and FY 2024 revenue yields ~8.10x (27.46B / 3.39B), versus the vendor TTM price‑to‑sales of 7.69x. These variances are not errors in the underlying business but reflect timing and denominator choices, and they illustrate the need to align the numerator (market cap) and denominator (TTM revenue/EBITDA) when making valuation comparisons.

Key indicators to watch (operational and financial)#

Several measurable indicators will signal whether the Q2 print is the beginning of a sustained trajectory or a cyclical bump. First, watch organic revenue growth each quarter — the company targets mid‑single to high‑single digit organic growth, and sustaining >7% organically would be a meaningful positive. Second, track adjusted EBITDA margin trends, especially whether insurance and claims costs moderate or persist. Third, monitor free cash flow conversion and the ratio of acquisitions funded by cash versus incremental debt. Fourth, integration payback on recent tuck‑ins (acquisition net and realized synergies) will indicate whether M&A remains accretive to cash return.

What this means for investors#

Rollins is demonstrating the classic attributes of a cash‑generative roll‑up operating in a recurring‑revenue, low‑elasticity service category. The Q2 2025 acceleration to $999.5M (+12.10%) with strong FCF conversion reiterates the structural story: organic demand durability, pricing power, and a repeatable M&A playbook. At the same time, episodic margin pressure from insurance claims and the company’s high dividend payout ratio mean stakeholders should monitor margin stability and capital allocation trade‑offs.

For investors seeking to understand the company’s trajectory, the essential takeaways are straightforward: the business is scaling and converting profits into cash at a high rate; acquisition discipline and integration speed remain central to sustaining consolidated growth; and margin variability tied to claims and insurance is the principal operating risk to watch.

Key takeaways#

Rollins combines recurring revenue and disciplined M&A to deliver sustained topline growth and robust cash flow. FY 2024 and Q2 2025 metrics show: revenue momentum (+10.43% FY 2024; +12.10% Q2 2025), FY free cash flow conversion of +124.39%, net debt/EBITDA (FY) ≈ 0.94x, and a dividend payout ratio ≈ 63.9%. These factors support continued tuck‑ins and shareholder returns, while margin sensitivity to insurance claims and acquisition pricing remain the principal execution risks.

Conclusion — measured implications, not a recommendation#

Rollins’ Q2 results reinforce the company’s long‑standing strategic axis: organic penetration plus disciplined tuck‑ins, supported by reliable cash conversion. The financials show a company that is scaling revenue while preserving cash generation sufficient to fund dividends and steady M&A. The near‑term focus should be on whether margin headwinds from insurance abate and whether acquisition valuation dynamics allow Rollins to continue securing accretive targets. If those conditions hold, the firm’s combination of brand strength, route density and cash conversion creates a durable operating platform with modular growth levers.

All figures and calculations above are derived from Rollins’ reported quarterly and annual statements and the Q2 presentation and release cited throughout: Rollins, Inc. Reports Second Quarter 2025 Financial Results — PR Newswire; Rollins Q2 2025 Presentation — Investing.com; and Rollins FY filings summarized in public reporting Rollins FY 2024 filings — TradingView SEC 10‑K analysis.