Good day, and welcome to UL Solutions' Second Quarter 2025 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Yijing Brentano, Vice President, Investor Relations. Please go ahead.

Thank you. Welcome, everyone, to our second quarter 2025 earnings call. Joining me today are Jenny Scanlon, our Chief Executive Officer; and Ryan Robinson, our Chief Financial Officer. During our discussion today, we will be referring to our earnings presentation, which is available on the Investor Relations section of our website at ul.com. Our earnings release is also available on the website. I would like to remind everyone that on today's call, we may discuss forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, among other things, statements about UL Solutions results of operations and estimates and prospects that involve substantial risks, uncertainties and other factors that could cause actual results to differ in a material way from those expressed or implied in the forward-looking statements. Please see the disclosure statement on Slide 2 of the earnings presentation as well as the disclaimers in our earnings release concerning forward-looking statements and the risk factors that are described in our annual report on the Form 10-K for the year ended December 31, 2024. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as required by law. Today's presentation also includes references to non-GAAP financial measures. A reconciliation of the most comparable GAAP financial measures can be found in the appendix to the earnings presentation. With that, I would now like to turn the call over to Jenny.

Good morning, everyone, and thanks for joining us. I'm pleased to say that the momentum we built over our first year as a public company continued in the second quarter of 2025 with growth across all segments and service offerings despite uncertainties for our customers globally. That's an important statement and frankly, a theme we've delivered in the last several quarters, positive contributions across segments, service lines and geographies. That balance reflects the durability of our business model and global scale of our offerings as well as the benefit of focusing the business on higher growth mega trends, including the global energy transition, the electrification of everything and digitalization. I'll cover three areas, and then I'll turn the call over to Ryan. First, our second quarter performance highlights; second, notable achievements and activities since we last reported; and finally, some perspectives on market conditions and our resiliency in the current macro environment. Our strong second quarter performance stems from enduring customer demand in our business across a wide range of market conditions. Based on our first half results and our current visibility into customers' ongoing new product development needs, we are affirming our full year 2025 outlook. I want to recognize our exceptional team members whose expertise and commitment to drive our continued success. Their dedication to our mission of advancing safety science and delivering outstanding customer service remains the foundation of our strong performance and represents a true competitive advantage. Ryan will dive into the numbers in a minute, so let me hit the high notes of our second quarter 2025 results. I'm particularly proud that we delivered record quarterly consolidated revenues that were up 6.3% as compared to the second quarter last year and up 5.5% on an organic basis. On an organic basis, our Industrial segment once again led the way, up 7%, followed by Consumer, up 4.7% and Software & Advisory up 3.2%. These results were achieved against a dynamic geopolitical and regulatory environment that impacted our customers' behavior. Profitability improved year-over-year with adjusted EBITDA growing 13.9% and adjusted EBITDA margin expanding by 170 basis points to the highest level since we became public in April of last year. Higher revenue and realized operating leverage were the key drivers. We generated $208 million of free cash flow through the first half of 2025 and our balance sheet remains robust. Next, let me highlight notable planned, ongoing and recently completed capacity expansions that address growth opportunities and mega trends in our key end markets. During the quarter, we successfully launched our European advanced battery testing laboratory in Aachen, Germany, representing an important expansion of our battery technology testing capabilities and European footprint. This purpose-built facility replaced a smaller facility from the 2024 BatterieIngenieure acquisition. It positions us strategically close to key European automotive customers and provides access to the region's deep engineering talent pool. This investment demonstrates our commitment to helping the automotive and power sectors safely innovate in a world increasingly reliant on battery storage while strengthening our global network of specialized testing facilities that spans North America, Europe and Asia Pacific. We also announced a significant expansion of our HVAC testing facility in Carugate, Italy to address rapidly growing European demand for comprehensive heat pump testing driven by the adoption of environmentally friendly refrigerants and evolving regulations. The expansion adds critical capabilities and positions us as a comprehensive service provider for manufacturers navigating the EU's climate initiatives, all while helping customers reduce testing lead times and accelerate market access. By offering both performance and safety testing at one Central European laboratory, we expect to enable faster time to market for products subject to safety and efficiency requirements in the high-growth sustainable technology sector. We launched a new testing and certification service for immersion cooling fluids used in data centers, addressing the critical safety and efficiency needs of data center facilities housing AI and other high-performance computing equipment. According to third-party research, power consumption by data centers is expected to increase from 4.4% of total U.S. electricity demand in 2023 to 12% by 2028. Operators urgently need safe and energy-efficient cooling solutions to maximize performance and reliability. Our new engineering evaluation and certification for immersion cooling fluids complements our existing programs for immersion tanks and systems. It's important to note that TIC services for data centers represent an important large and growing market for us as technologies continue to advance in computing and AI. The Grand View Research Group expects the data center construction market to grow at a 12% CAGR over the next five years. We believe that we are very well positioned to capitalize on the rapid growth of data centers by helping address the safety, sustainability and security concerns inherent in these complex environments. In fact, many of our operating units have service offerings in this space. The list is large as there are approximately 70 applicable standards to which we test, certify and inspect. Our go-to-market strategy highlights the broad and deep expertise we have in the full life cycle of data center infrastructure and system needs. Finally, let me provide an updated perspective on the resilience of our business model and how we are positioned to win even in periods of uncertainty. As a global leader of critical product safety science offerings, we support our customers wherever they research, develop and manufacture products worldwide. Our existing global footprint and testing capacity position us well to meet customer needs effectively across all locations. Our business model provides initial testing during new product development, followed by ongoing certification throughout a product's life cycle in the market, creating sustained revenue streams and deep customer relationships. Our customers are still bringing new products to market. We experienced an initial slowdown in customer projects when tariff levels were first announced early in the second quarter, as companies paused to assess the potential impact of the tariffs as well as other geopolitical issues. This pause was followed by accelerated ordering in June, demonstrating both the essential nature of our services and our customers' commitment to maintaining product development timelines. As a reminder, these dynamics may create incremental opportunities for us as tariffs drive customers to redesign products or relocate manufacturing, both of which often require recertification.

Thank you, Jenny, and hello, everyone. I also want to thank all of our team members for delivering another strong quarter and continuing the momentum we have maintained since coming to the public markets in April of last year. We are proud to report in our second quarter on a consolidated basis, a continuation of healthy growth, margin expansion and solid cash generation. As Jenny mentioned, revenues for the quarter were an all-time record, and it's encouraging to see that revenue growth once again occurred across all of our segments. Now let me dive into the details of the quarter. Consolidated revenue of $776 million was up 6.3% over the prior year quarter. The increase included favorable foreign exchange movements, particularly the euro and the Japanese yen, On an organic basis, revenue grew 5.5%. Cost of revenue as a percentage of revenue for the quarter increased 70 basis points to 50.6% due to higher depreciation and negative foreign exchange impacts. SG&A expenses as a percentage of revenue decreased 150 basis points to 31.4%, this was primarily driven by operating leverage as a result of revenue growth, partially offset by higher costs associated with internal projects. As a reminder, we recognized $9 million of performance-based incentive costs in the second quarter of 2024 related to cash-settled depreciation rights as we converted them to equity-settled compensation upon the date of our IPO. I would also like to point out that our cost of revenue and our SG&A were negatively impacted by changes in foreign exchange roughly offsetting the benefit on revenues. Adjusted EBITDA for the quarter was $197 million, an improvement of 13.9% year-over-year. Adjusted EBITDA margin was 25.4%, up 170 basis points from last year, primarily on strength in the Industrial segment. As Jenny mentioned earlier, this margin is the highest since we became a public company. Adjusted net income for the second quarter was $110 million, up 17% from last year. Adjusted diluted earnings per share was $0.52, up from $0.44 per share in the second quarter of 2024. Now let me turn to our performance by segment, starting with Industrial. Revenues in industrial rose 7.6% to $338 million or 7% on an organic basis, primarily driven by growth in ongoing certification services and certification testing. We saw particular strength in energy and automation. Increased lab capacity, including our new North American advanced battery lab in Auburn Hills, Michigan, contributed to the growth. Revenue also benefited by $3 million versus the prior year from favorable changes in foreign exchange. Adjusted EBITDA for the Industrial segment increased 20.6% to $117 million while adjusted EBITDA margin improved 370 basis points to 34.6%. The Industrial segment demonstrated strong operating leverage in the quarter, as the majority of incremental revenue flowed to incremental operating income. Now turning to the Consumer segment. Revenues in Consumer were $340 million, up 5.6% on a total basis and 4.7% on an organic basis. The increase was primarily driven by demand improvement in non-certification testing and other services. We saw particular strength across consumer technology, driven by increased demand for electromagnetic compatibility testing for consumer electronics and in retail. As discussed in our last call, we saw some moderation in consumer organic growth in the second quarter after a strong first quarter that likely benefited from, among other things, increased customer activity in the first quarter in anticipation of tariffs. Adjusted EBITDA for the quarter in Consumer was $65 million, an increase of 6.6%. Adjusted EBITDA margin for the quarter was 19.1%, an increase of 20 basis points. Organic growth and improved operational efficiency were the main drivers of the year-over-year improvement. In our Software & Advisory segment, revenues were $98 million, an increase of 4.3% on a total basis and 3.2% on an organic basis, our software service line within the Software & Advisory segment grew 6.0% on an organic basis. The improvement was driven by demand for our Ultra software portfolio including retail product compliance. Adjusted EBITDA for the quarter in Software & Advisory was $15 million, unchanged as compared to the second quarter of last year. Adjusted EBITDA margin for the quarter was 15.3%, a decline of 70 basis points due to unfavorable mix and higher employee compensation expense relative to revenue growth. Turning to our cash generation in the first six months. We delivered $301 million of cash from operating activities, up from $244 million in the year-ago period. Capital expenditures in the first half were $93 million compared to $113 million in the same period last year. I'm very proud of our global team for generating $208 million in free cash flow in the first half, primarily as a result of improved profitability in our core business. This compares to $131 million in the year-ago period, representing a 58.8% increase. In addition, we paid $26 million in dividends in the second quarter and $52 million year-to-date. We also paid down a net of $45 million of debt in the quarter, bringing our year-to-date debt pay down to $135 million. As of June 30, we held $272 million of cash and cash equivalents. Our investment-grade credit ratings underscore the strength of our balance sheet. Our robust balance sheet and cash flow generation give us great flexibility to invest in organic initiatives and accretive acquisitions that are intended to help produce best-in-class shareholder returns. Our investments in key capacity additions are intended to continue to align the business with the mega trends driving demand for our services. Now turning to our 2025 full year outlook. While we continue to navigate a dynamic geopolitical and macroeconomic environment, our diversified business model and strong market positioning enabled us to capitalize on emerging opportunities while managing potential risks effectively. We actively monitor these dynamics and their inputs on our customers to ensure we remain well positioned for continued success. Given our first half performance, solid visibility into our end markets and confidence in our strategic execution capabilities, we are pleased to affirm our 2025 full year outlook, and we remain optimistic about our ability to deliver sustained growth and value creation. As a reminder, we face increasingly challenging comparisons in the second half of 2025 versus the second half of 2024. We continue to expect 2025 consolidated organic revenue growth to be in the mid-single-digit range as compared to our full year 2024 results. Organic growth is based on constant currency and excludes acquisitions and divestitures. We continue to expect our adjusted EBITDA margin to be approximately 24% for the full year 2025. Our margin expansion strategy is supported by several key drivers: capturing operational leverage as we scale our top line growth, capitalizing on our Industrial segment's higher growth trajectory relative to the other business units and maintaining our focus on continuous productivity improvements. Additionally, we remain committed to identifying and executing strategic acquisitions in high-value markets that enhance our profitability profile and our earnings potential, while consistently evaluating opportunities to optimize our overall portfolio mix. Our outlook for capital expenditures in 2025 remains in the range of approximately 7% to 8% of revenue, with investments in new labs and software continuing as we seek to match strong customer demand in all three segments. Our expectations for our effective tax rate in 2025 remains approximately 26%. This compares to an effective tax rate of 16.9% in 2024 with the anticipated change due primarily to additional implementation of the OECD's Pillar 2 requirements, which affects how multinational corporations are taxed. Our Q2 and year-to-date performance demonstrates sustained business momentum with enhanced profitability and robust cash flow generation. The strength of our investment-grade balance sheet enables strategic capital allocation opportunities as we continue executing on our commitment to deliver exceptional returns for our shareholders.

Thanks, Ryan. As I'd like to highlight, we always have some very interesting things going on at UL Solutions. Two weeks ago, I had the honor of moderating a panel here in Chicago at the Global Quantum Forum. This was a two-day sold-out event, which brought together some of the leading minds from all over the world in this emerging field. Chicago is becoming an epicenter for development of this innovative computing method with the establishment of the Illinois Quantum and Microelectronics Park on the City South side. As so many of the panelists described, the potential for quantum computing to solve previously intractable problems is real and gaining momentum. Our role at UL Solutions in this technology revolution is to work with our customers to solve the safety, security and sustainability problems that always accompany any leading-edge technology, something we have been doing for more than 130 years. To sum up, our second quarter results demonstrate the continued strength of our business model. The strategic investments we have made and continue to make in key growth areas position us at the forefront of the mega trends driving demand for our services. The quarter also highlighted the essential nature of our safety science offerings as we successfully navigated dynamic market conditions. Our global footprint, our diversified revenue streams and our deep customer relationships continue to serve us well in an evolving environment. With strong cash flow generation and our investment-grade balance sheet, we remain well positioned to capitalize on strategic growth opportunities while delivering long-term value to shareholders. With that, we'll open the line for questions.

The first question comes from the line of Andrew Nicholas, William Blair.

This is Dan Maxwell on for Andrew today. Maybe to kick things off, get the tariff questions out of the way. Just curious if you guys are seeing any changes on client behavior or other trends worth calling out, including anything specifically related to clients managing their exposure to China.

Thanks, Dan. And it is an important question. And we started seeing this really in the fourth quarter and through the first quarter. Uncertainty in 2025 has caused some behavior shifts. There's been some pull-forward in the fourth quarter in our Industrial business and pull-forward in the first quarter in our Consumer business and there has been perhaps some slowdown in new product launches. But as greater certainty is entering the market, which is really what we believe we started to see in June. We believe that the typical response that our business has to tariffs will continue, helping our customers shift their supply chains and make decisions around where they want to conduct R&D and manufacturing of their products.

Great. And then for my follow-up. I appreciated your comments on the lab expansions in Europe. Maybe if you can just give us kind of a broader full business update on where you sit as far as overall lab capacity and then what you think maybe the next sort of large areas of investment on that front or otherwise in the business.

Absolutely. And we do really enjoy investing in organic growth. We've got good return on our invested capital from our history of this. And when we look at our lab capacity today, we don't report specific utilization rates, but it's safe to say that recent lab additions as well as continuous improvement in our existing labs are contributing to our improved results. And as you know, our Auburn Hills lab came online in the second half of last year, and Ryan highlighted that continued progress. We continue to focus on some key announcements of lab expansion. We have a Global Fire Science Center of Excellence that we announced, I think, in the first quarter, and we've been expanding our lab capacity in Mexico and putting improvements here in Northbrook. We've also, last quarter, announced some lab expansions in both Korea and Japan. So we continue to apply capital where our customers are bringing demand to our attention, and we'll continue to do so with discipline but also a growth mindset.

Next question comes from the line of Andrew Steinerman with JPMorgan.

It's Andrew. Ryan, I heard the way you framed the full year guide mid-single-digit organic constant currency revenue growth with sustained momentum and somewhat tougher comps in the second half. Like when I look at the tougher comps in the second half, I see them on an organic constant currency basis, it's about one point tougher than the second quarter you just reported. What I'm curious about is sort of numerically, in the first half of the year, you were at the very high end of mid-single-digit organic revenue growth. And to make mid-single digit for the full year, are you saying the second half of the year may be somewhat below mid-single-digit organic constant currency revenue growth to make mid-single digits for the full year?

Andrew, thank you very much for the question. And yes, we're pleased with our performance year-to-date. And you're right to point out the steepening comparisons in the second half. As a reminder, in the third quarter of last year our organic revenue growth was 9.3% and in the fourth quarter it was 9.5%. So those just create higher comparisons, but we're confident in how the business is progressing. Our focus has been on our outlook on a full-year basis. As Jenny mentioned, I think we're seeing a bit more market clarity and reductions in uncertainty, but it's not without uncertainty, and there continue to be announcements about changes that could affect the product development behaviors of our customers. So we remain confident but cautious.

Next question comes from the line of George Tong with Goldman Sachs.

You mentioned you saw a bit of pull-forward activity in both the Industrial and Consumer businesses ahead of tariffs. Is it possible to quantify the amount of pull forward in both of those segments and how you expect that to impact growth in the coming quarters?

Yes. And let's isolate the two distinctions and then Ryan will dig into the numbers. Where we saw a pull forward in Industrial appeared in the fourth quarter last year, and we talked about our ongoing certification services and, in particular, labels, where we believe some of our industrial customers may have been stocking up in advance of tariffs and then we've seen that now normalize. In Consumer, what we saw was perhaps a surge in getting shipments out before tariffs were going to hit, and we believe we saw that in the first quarter. So specifically quantifying, I'll look to Ryan.

Yes. So as a reminder, in the first quarter, our organic revenue growth for Consumer was 7.7% and what we just reported was 4.7%. And our underlying customer relationships, our ability to win business hasn't changed materially. There's just been some effect in the marketplace. But we view those as relatively short term. The fundamental drivers of new product innovation, of new technological development, of assortment provided by manufacturers, we don't see fundamental longer-term changes in those but changes in macroeconomic and government policy matters can affect short-term decisions.

Got it. That's helpful. And then with respect to margins, you saw very significant year-over-year margin expansion in the Industrial segment. How much additional runway do you see for margin expansion here and also in your other segments, Consumer and Software and Advisory?

The way that we phrased that is we see margin opportunity expansion in all three of our segments and then, of course, on a consolidated basis. We don't give segment-specific guidance. But we've made strong progress in the quarter and through the first half of the year. There were a couple of things in Industrial that were relatively minor. We mentioned in the second quarter of last year. We had both some IPO-related incentive recognition expense and in the second quarter of last year in Industrial, we had three M&A transactions, two acquisitions and one divestiture in a quarter. So there were some transaction-related expenses in the second quarter of last year that we're comparing against, but even isolating from those we had good margin expansion.

Next question comes from the line of Stephanie Moore with Jefferies.

Maybe a bigger picture question for you, Jenny. As you think about the growth in data centers and the computing required for these LLM models and the like. Can you maybe talk about how you view this mega trend as compared to other mega trends, for example, electrification of everything, digitalization and the like? So if you could just kind of frame what this opportunity could be for your business that would be helpful.

I enjoy discussing this topic because my first job involved building data centers at IBM 35 years ago. Data centers reflect the convergence of several key trends. The electrification of everything is crucial, and a study from NEMA released in April projects a 300% growth in data center energy consumption over the next decade. The energy sources involved will encompass both traditional fossil fuels and renewables like wind, solar, geothermal, hydro, and even nuclear power to support data centers. This impacts all of our industrial customers as they consider how to create equipment for various energy generation methods and how to enhance energy transmission. We've observed increased demand for high-voltage cable testing in our wire and cable business, along with a growing importance of energy storage systems, especially in the industrial sector. Additionally, ongoing innovations in computing aim to reduce the energy requirements of data centers. For instance, at the Quantum Forum last week, discussions focused on using quantum technology to address the electricity consumption needs of AI data centers. I see this digitalization trend as an integration of key mega trends such as electrification, sustainability, and digitalization, and it's exciting to contemplate the different ways it will reshape our world.

And then maybe just as a follow-up to that question. As you think about this emerging over time, does it suggest that you could see some incremental lab capacity investments or that needed to see that in order to capitalize on some of these trends? And then same question, but if it's not incremental lab capacity investments, are there areas from a capital allocation standpoint that you could maybe move into M&A-wise, that could further expand on this trend?

We are definitely considering both aspects. If we focus on cooling technology, there are various UL and IEC cooling standards available. We will keep exploring the most innovative ways to test these standards. If it seems necessary to increase our lab capacity, we will do so. We currently have labs that can accommodate this, but as new standards emerge, we may need new testing methods, and we are committed to staying ahead of those investments. Additionally, we are very enthusiastic about the strong relationships we have with many of our global and strategic accounts, which are crucial players in the data center ecosystem. This provides us with insights and opportunities to explore partnerships and potential future investments. We are genuinely excited to be at the forefront of all these developments.

Ms. Moore are you done with the questions?

Oh, yes, I am. Thank you. Appreciate it. Thank you.

Thank you, Stephanie. Always nice to hear from you.

Next question comes from the line of Josh Chan with UBS.

I was wondering if Jenny, you could elaborate on your June comments about the tariffs. What kind of improvement did you see in the market? And then just as a broader question, do you feel that customers are already having made decisions on post-tariffs? Or I'm kind of surprised by that because the environment is obviously still very fluid.

Yes. Great question on both fronts. So first, let me just talk about the arc of the quarter, and then I can talk about what we believe our customers may be deciding. The arc of the quarter, as we said, both in Industrial and Consumer and Software & Advisory that there was just softer than expected growth, softer-than-expected order volume in April and May. And then we did see a shift to pick up in June. In Industrial, throughout the quarter, we saw some real strength in power and automation in those industrial storage systems and in some of the high-voltage wire and cable. And in other areas, we saw things come back in June. In Consumer, typically, historically, the second quarter is our strongest revenue quarter and orders were soft in April and May. But our large retailers, the strength in that space continues to be real, and we saw that across the U.S. and in broader Asia. And in Consumer Technology, we saw really the pickup come back in June across U.S., U.K., and Asia, Greater China. So that's been the arc of the quarter. Given that as we evaluate what our customers believe. What we're seeing is as various decisions are being made across both tariffs and regulations. Customers are building confidence in what decisions they need to make. And while there's still, as Ryan said, a lot of uncertainty, a lot of things can change. There just seems to be a greater sense that there will be more clarity to what they can rely on in the future. And it's that reliance on the future that will allow them to continue to make their capital allocation decisions around new product development and R&D.

And then just to build on that through a dynamic period we're pleased that all of our team members around the world have delivered through the first half, 6.5% organic growth in a relatively uncertain time. So the team is performing well.

That's really helpful. And then I guess my follow-up is on that growth. So based on Ryan, your comment about the tougher comps in the second half, one could think that growth would decelerate from Q2 into the second half. But based on this improvement in June, do you think that could kind of offset the tougher comp narrative that was mentioned previously?

Yes. It's really difficult to isolate whether the shape of the quarter was just redistribution of activity that would otherwise happen in the quarter or it's a stepping-off point for the second half. And it continues to be a less certain environment than last year, but we're pleased with the progress. So at this point, we felt affirming guidance was something we were comfortable doing.

Next question comes from the line of Arthur Truslove with Citi.

I have a couple of questions. First, I wanted to ask about the pull forward in Q1 and the pause in customer activity following Liberation Day. I was surprised to hear this today because I don't recall this being mentioned in Q1. I'm curious about what new information has come to light regarding this. Secondly, regarding pricing, can you provide any details on how much of the pricing in Q2 contributed to organic growth? Additionally, I’m interested in understanding how advanced you are with your pricing strategy and how much more commercialization you have planned.

Thank you very much for the questions, Arthur. And then just first on the shaping. In the first quarter call, we did mention that we felt that the consumer business had some pull forward. In particular, we saw some increased activity in some areas of the world that were more tariff affected, and we saw an increase in relative activity on a sequential basis. So we did mention that last quarter. And then in regard to pricing, we had similar contributions from price and volume in our testing-related businesses, slightly more contribution from price, but pretty similar.

And let me just add one more thing on pricing because we've mentioned it before. We've been in the process of implementing our configure price quote. And it's not just a system, it's an entire set of processes. And so our teams have been very much moving through the implementation, not just of embedded analytics for their pricing decisions, but also changing our processes and the monitoring that we have on that as well as creating a pricing center of excellence. So we're continuing to focus on how we deliver value-based pricing for our customers.

Next question comes from Jason Haas with Wells Fargo.

This is Jun-Yi on for Jason Haas. There was a pretty sizable acquisition done by one of your competitors in the space earlier last month in the U.S. It sounds like they had some overlap with you guys. Just wondering if you took a look at that transaction and why you didn't pursue it? And if you foresee any competitive pressures? And then more broadly on just how the M&A pipeline looks today for you guys?

Thanks, Jun-Yi. We remain disciplined and active in the M&A environment. And our goal with any M&A is to fortify our focus on the product TIC business and the strategy that we have there and to make sure that anything that we add both services and capabilities is something that our customers globally will feel is something that deepens our value and our relationship with them. So indeed, we have eyes on many, many, many deals that come into the marketplace. And in any deal, there are parts that we can find interesting, and there are parts that may or may not fit with our business strategy. And we continue to be disciplined and active in thinking about M&A.

Great. And as my follow-up, it looks like Software & Advisory moderated a bit on an organic basis. So just curious if there's anything to call out there and overall trends you're seeing in that segment?

Yes. The challenge this quarter in software and advisory was really advisory. And I believe we said that last quarter as well. There's just been a weakness in advisory in the United States. And in particular, as policies are changing, there's some renewables advisory slowness in that piece. And as commercial real estate continues to be under some pressure, there's some pressure in our healthy buildings offerings there. But as Ryan mentioned, the organic growth for our software business was 6% and the changing regulations around CSRD in Europe slowed down some of our ESG software, but we expect that we'll see a pickup on that throughout the rest of the year.

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Jenny Scanlon, CEO, for closing remarks.

Thank you, everyone, for joining us today. As always, we appreciate your support, and we look forward to updating you on our progress next quarter.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.