UL Solutions 2025 Q2 Earnings Misses Targets as Net Income Falls 8.5%

UL Solutions reported its fiscal 2025 Q2 earnings on Aug 5, 2025, showing revenue growth but a decline in earnings. The company met its guidance for the quarter but did not raise its full-year outlook.

Revenue

Total revenue for UL Solutions rose 6.3% year-over-year to $776 million in the second quarter of 2025, driven by performance across all key segments. The Industrial segment contributed $338 million, reflecting continued demand for safety and testing services. The Consumer segment also delivered strong results, generating $340 million. Complementing these was the Software and Advisory segment, which added $98 million to the top line, underscoring the company’s digital transformation and ESG consulting efforts.

Earnings/Net Income

Earnings per share (EPS) for the quarter declined to $0.45, a 11.8% drop from $0.51 in the same period last year. Net income also fell to $97 million, a decrease of 8.5% compared to $106 million in 2024 Q2. Despite this contraction, the company has maintained profitability for three consecutive years, highlighting the resilience of its business model.

Price Action

The stock of UL Solutions has seen continued downward pressure, with a 10.10% drop on the latest trading day, a 10.72% decline over the past week, and an 8.56% slide month-to-date.

Post-Earnings Price Action Review

Despite the earnings miss, a historical strategy of buying UL Solutions shares after a revenue increase has historically yielded substantial returns. Over the past three years, the strategy of purchasing shares on the earnings release date and holding for 30 days generated a 100.42% return—far outperforming the 0.00% benchmark. This highlights the market’s long-term confidence in the company’s performance following revenue growth, even amid near-term earnings challenges.

CEO Commentary

Jennifer F. Scanlon, CEO, highlighted the company’s Q2 achievements, emphasizing the 6.3% revenue increase across all segments and geographies. She praised the business's resilience amid global uncertainties and outlined strategic investments in European battery testing, HVAC labs, and data center cooling solutions. While acknowledging short-term customer behavior shifts due to tariffs, Scanlon remained optimistic about long-term opportunities driven by supply chain relocations and product redesigns. Her tone was cautiously optimistic, underlining confidence in the business model's durability and growing customer demand for safety science solutions.

Guidance

UL Solutions reaffirmed its full-year 2025 guidance, projecting mid-single-digit organic revenue growth (excluding acquisitions, divestitures, and FX), an adjusted EBITDA margin of approximately 24%, CAPEX of 7–8% of revenue, and an effective tax rate of ~26%. CFO Ryan Robinson noted Q2 adjusted EBITDA of $197 million and $208 million in free cash flow for the first half of the year. The company plans to leverage operational leverage, Industrial segment growth, and productivity improvements to meet margin targets while pursuing strategic acquisitions and disciplined capital allocation.

Additional News

Recent non-earnings news includes the declaration of a $0.13 per share quarterly dividend, the launch of a new Advanced Battery Testing Center in Aachen, Germany, and the expansion of European HVAC testing to address the growing heat pump market. Additionally, UL Solutions expanded its software platform with the latest ULTRUS™ software releases, supporting business growth and sustainable practices. In collaboration with Fujitsu, the company will help Japanese enterprises meet new climate disclosure standards, offering comprehensive ESG reporting solutions. These developments highlight the company's ongoing focus on innovation, regulatory compliance, and global market expansion.