Executive Summary

Q3 2025 delivered solid growth and margin expansion: revenue $783M (+7.1% YoY), Adjusted EBITDA $217M (+18.6% YoY) with margin up 270 bps to 27.7% and GAAP diluted EPS $0.49; Adjusted EPS $0.56 .
Broad-based strength: Industrial (+8.2% total, +7.3% organic), Consumer (+5.9% total), and Software & Advisory (+7.5% total) with notable demand tied to data center infrastructure and automation .
Management raised FY25 outlook: organic revenue growth to 5.5–6.0% (from “mid-single digit”), Adjusted EBITDA margin improvement to ~25% (from ~24%), capex trimmed to 6.5–7.0% of revenue, and ETR to 25–26% .
Announced restructuring: ~3.5% workforce reduction and exit of ~1% revenue from nonstrategic lines; $42–$47M pretax charges (mostly Q4’25), expected to lift annual operating income by $25–$30M once complete by Q1’27 .
Key potential stock catalysts: raised guidance, visible cost program for margin expansion, and new AI safety certification service (UL 3115) opening incremental TAM in AI-driven products .

What Went Well and What Went Wrong

What Went Well
- Record profitability as a public company: Adjusted EBITDA margin reached 27.7% (+270 bps YoY), driven by higher revenue and operating leverage, led by Industrial .
- Segment breadth: Industrial and Consumer margins expanded (Industrial Adj. EBITDA margin 35.9%, Consumer 20.6%), while Software & Advisory surged on strong advisory project completions (Adj. EBITDA +60% YoY) .
- Strategic launch: AI safety certification (UL 3115) positions ULS as a trusted arbiter for AI-enabled products, addressing robustness, transparency, and safety in a fast-growing area .
- Management tone: “We once again produced superior performance across all key metrics… demonstrating the strength of our business model” – CEO Jennifer Scanlon . “Adjusted EBITDA margin… 27.7%, our highest level as a public company” – CFO Ryan Robinson .
What Went Wrong
- Income tax rate headwind: Net income margin expansion “partially offset by an increased income tax rate” .
- Advisory remains lumpy: Q3 benefited from unusually high advisory project completions; management cautioned this may moderate in Q4 and early 2026 .
- Restructuring implies near-term friction: ~$42–$47M pretax charges mainly in Q4’25 and a 2026 organic revenue headwind from exiting ~1% of revenue, with most OI benefits realized in 2027 .

Financial Results

Overall performance and trend comparison

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Revenue ($M)	$731	$705	$776	$783
Net Income ($M)	$94	$71	$97	$106
Net Income Margin (%)	12.9%	10.1%	12.5%	13.5%
Diluted EPS (GAAP)	$0.44	$0.33	$0.45	$0.49
Adjusted EPS	$0.49	$0.37	$0.52	$0.56
Adjusted EBITDA ($M)	$183	$161	$197	$217
Adjusted EBITDA Margin (%)	25.0%	22.8%	25.4%	27.7%

Vs. Wall Street consensus (S&P Global)

Metric (Q3 2025)	Consensus*	Actual*	Company-Reported Actual
Revenue ($M)	770.9*	783.0*	783.0
Primary EPS ($)	0.471*	0.56*	Adjusted EPS $0.56
EBITDA ($M)	197.5*	201.0*	Adjusted EBITDA $217

*Values retrieved from S&P Global. Note: S&P “Primary EPS” aligns with normalized/adjusted EPS, and S&P EBITDA differs from company “Adjusted EBITDA.”

Segment performance (Q3 2025 vs Q3 2024)

Segment	Revenue Q3’24 ($M)	Revenue Q3’25 ($M)	Adj. EBITDA Q3’24 ($M)	Adj. EBITDA Q3’25 ($M)	Adj. EBITDA Margin Q3’24	Adj. EBITDA Margin Q3’25
Industrial	317	343	106	123	33.4%	35.9%
Consumer	321	340	62	70	19.3%	20.6%
Software & Advisory	93	100	15	24	16.1%	24.0%

Revenue by major service category (Q3 2025 vs Q3 2024)

Service Category	Q3 2024 ($M)	Q3 2025 ($M)
Certification Testing	206	224
Ongoing Certification Services	238	252
Non‑certification Testing & Other	220	235
Software	67	72
Total	731	783

Additional cash/BS items

Nine‑month Free Cash Flow $317M; Op. Cash Flow $456M; Capex $139M .
Total debt $547M; cash $255M and short‑term investments $44M at 9/30/25 .
Q3 dividend paid: $0.13/share ($26M) ; next dividend of $0.13 declared for Dec. 8 (record Nov. 28) .

Guidance Changes

Metric	Period	Previous Guidance (Q2’25)	Current Guidance (Q3’25)	Change
Organic revenue growth (cc)	FY 2025	“Mid single digit”	5.5%–6.0%	Raised/Specified
Adj. EBITDA margin improvement (organic)	FY 2025	~24%	~25%	Raised
Capital expenditures	FY 2025	7%–8% of revenue	6.5%–7.0%	Lowered
Effective tax rate	FY 2025	~26%	25%–26%	Slightly Lower
M&A / Portfolio actions	FY 2025	Continue pursuit	Continue pursuit	Maintained
Dividend per share	Quarterly	$0.13 (paid in Q3)	$0.13 (declared for Dec 8)	Maintained

Restructuring plan: $42–$47M pretax charges (mostly Q4’25); ~3.5% workforce reduction; exit ~1% of 2025 revenue lines; expected OI lift $25–$30M annually when complete by Q1’27 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3 2025)	Trend
AI/technology initiatives	Expanded ULTRUS releases (PFAS, ESG, AI features)	Launched AI safety certification (UL 3115) and AI marketing claim verification; patent for ML AI scoring	Accelerating
Supply chain/tariffs/macro	Affirmed FY outlook despite uncertainty	Q3 cadence “relatively steady”; Q4 faces tough comp due to 2024 pull‑forward ahead of tariffs	Normalizing near‑term; tough Q4 comp
Data center exposure	Not highlighted in Q1 PR; Q2 cited energy/automation demand	Strong demand in energy storage, high‑voltage cable, built environment for data centers	Strengthening
Pricing	N/A	Testing services growth split relatively evenly between price and volume; ongoing certification services benefited from pricing	Supportive
Regional trends	Broad-based growth across segments	Growth across regions; slightly more U.S. contribution in Q3	Steady with U.S. tilt
Battery testing	Investments in MI and Germany (Q2 commentary)	Utilization solid; shift toward industrial energy storage faster than expected; EV headwinds noted	Mix shift to ESS
Advisory	Modest in Q2 (flat Adj. EBITDA)	Q3 spike from project completions; renewables advisory strong; Healthy Buildings still a headwind	Lumpy; near-term strength
Capital intensity	7–8% guide (Q1/Q2)	Lowered to 6.5–7% on timing	Moderating in 2025

Management Commentary

CEO Jennifer Scanlon: “We once again produced superior performance across all key metrics, regions and service offerings… demonstrating the strength of our business model and the critical nature of the work we perform.”
CFO Ryan Robinson: “Adjusted EBITDA margin… 27.7%, our highest level as a public company… Given our year‑to‑date performance and current visibility… we’re pleased to strengthen our full‑year financial outlook.”
On AI certification: “Establishing the safety of AI‑embedded products is absolutely vital for fostering public confidence and helping ensure the responsible and widespread adoption of beneficial AI technologies.” – CEO, AI certification launch .
On pricing: “Overall [testing] grew 7.7% and there was relatively similar contribution from both price and volume… Ongoing certification services particularly benefited from pricing.” – CFO .

Q&A Highlights

Tariffs and cadence: Q3 demand was steady; Q4 growth will lap unusually strong Q4’24 (industrial OCS pull‑forward ahead of tariffs) .
Restructuring details: ~3.5% workforce reduction; exit ~1% of revenue lines that are less profitable; OI improvement of $25–$30M expected by 2027; moderate 2026 effect as revenue and costs step down together .
Software & Advisory: Q3 upside from high project completions and utilization; management cautions lumpiness may normalize next quarters; renewables advisory strong; Healthy Buildings remains pressured by CRE .
Data centers: Significant activity across energy storage systems, high‑voltage cabling, and fire protection tied to AI compute growth and thermal/cooling complexity .
Pricing vs volume: Testing growth split roughly evenly; annual pricing actions support ongoing certification services .

Estimates Context

Q3 2025 vs consensus (S&P Global): revenue $783.0M vs $770.9M*; Primary EPS $0.56 vs $0.471*; EBITDA $201.0M* vs $197.5M* (company Adjusted EBITDA $217M) .
Q4 2025 outlook (consensus): revenue $781.9M*; Primary EPS $0.446*; # of estimates: revenue 9*, EPS 8*; management expects Q4 growth to be lower than FY run‑rate due to tough comps and possible moderation in Software & Advisory .
*Values retrieved from S&P Global.

Where estimates may adjust:

Likely upward bias to FY25 Adjusted EBITDA margin assumptions (~25% vs prior ~24%) given sustained operating leverage and restructuring tailwind timing .
Q4 revenue/EPS trajectories may be trimmed modestly given tough Q4’24 comps highlighted by management .

Key Takeaways for Investors

Quality beat with breadth: Topline +7.1% and sharp margin expansion lifted Adjusted EPS to $0.56, aided by pricing and leverage across segments .
Guidance raised: FY25 organic growth now 5.5–6.0% and ~25% Adjusted EBITDA margin; capex moderated to 6.5–7% on timing, supporting FCF conversion .
Structural margin actions: Restructuring should focus the portfolio and deliver $25–$30M annual OI by 2027; expect near‑term Q4 charges and a small 2026 organic growth headwind from exiting ~1% of revenue .
Secular tailwinds: Data center power/cooling and electrification themes are funneling demand to Industrial and Consumer workstreams (energy storage, high‑voltage cables, EMC) .
New services unlock TAM: AI safety certification (UL 3115) enhances competitive differentiation in certifying AI‑enabled products .
Watch the quarter-to-quarter: Advisory strength is lumpy and could normalize in Q4; management explicitly flagged tougher Q4 comps in Industrial OCS .
Capital deployment: Debt reduced, liquidity solid; consistent $0.13 dividend continues alongside targeted capacity investments .

UL Solutions Inc. (ULS)·Q3 2025 Earnings Summary