What You Need To Know About UL Solutions' IPO

UL Solutions, an applied safety science company, aimed to raise up to $812 million in its initial public offering (IPO), with its Securities and Exchange Commission (SEC) filing Tuesday giving potential investors a first look into the company's key business metrics.

The IPO is to consist of 28 million shares that are expected to be priced between $26 and $29 per share. The stock is set to trade under the ticker symbol "ULS" on the New York Stock Exchange (NYSE).

The company is the latest to announce plans to go public, alongside Rubrik, a cybersecurity company backed by Microsoft, amid a flurry of IPOs including Reddit (RDDT) and Astera Labs (ALAB).

What Does UL Solutions Do?

UL Solutions provides testing, inspection, and certification services, as well as software products and advisory offerings, to ensure the safety and security of clients' products.

"Take a walk through your house, your office, your favorite restaurant—the areas where you live, work and play," UL Solutions Chief Executive Officer (CEO) Jenny Scanlon wrote in the filing. "Chances are you’ll find the trusted UL Mark almost everywhere because the UL Mark is everywhere, letting you know that billions of products, used by billions of people in billions of places, comply with safety standards worldwide."

The company has been offering safety solutions since it was founded in 1894 with a focus on electrical and fire hazards.

"Back then, the focus of our work was all about electricity. Today, the breadth and depth of our work is about that and so much more," Scanlon wrote, explaining that the company's scope has broadened to include safety, security, and sustainability.

The company is made up of two business segments: Testing, Inspection, and Certification (TIC) and Software and Advisory (S&A).

First Look at Financials Shows Declining Income

The UL Solutions S-1 filing offered potential investors a look into the company's financials. The company reported its revenue was $2.68 billion in 2023, up from $2.52 billion in 2022. Net income was $276 million in 2023, down from $309 million the prior year.

UL Solutions said its "attractive business model has allowed [it] to deliver a long track record of stable growth and profitability."

The company reported it had more than 80,000 customers in 2023 and said that about 70% of those customers used both of its "complementary TIC and S&A offerings."

UL Solutions broke down its revenue by segments, showing that its certification-related activities generate the most revenue.

The company reported that Certification Testing accounted for roughly 27% of revenue in 2023, while Ongoing Certification Services represented 33%. Non-certification Testing and Other Services made up 30% of revenue and Software accounted for 10%.

Emerging Tech Could Increase Demand

UL Solutions said in its IPO filing that emerging technologies continue to drive demand for TIC services.

The company said that it held around 7% of the total outsourced product TIC market, which it valued at around $38 billion in 2022.

UL Solutions said that the "demand for outsourced TIC services is increasing" in part due to emerging tech, explaining that "as technologies converge and product complexity increases, the risk profile of products increases."

As the technology advances, it "drives the ongoing need for TIC services to support compliance with evolving standards and regulations," benefiting UL Solutions.