Earnings call transcript: Universal Display beats Q2 2025 forecasts, stock dips

Universal Display Corporation (OLED) reported its second-quarter earnings for 2025, surpassing analyst expectations with an earnings per share (EPS) of $1.41, compared to the forecast of $1.17. Revenue reached $171.5 million, exceeding the projected $161.65 million. The company maintains strong financial health, earning a "GOOD" rating from InvestingPro’s comprehensive analysis. Despite the positive earnings surprise, the company’s stock fell 1.18% in after-hours trading, closing at $145.39, with current analysis suggesting the stock may be slightly undervalued based on InvestingPro’s Fair Value model.

Key Takeaways

• Universal Display’s Q2 EPS and revenue exceeded forecasts by 20.51% and 6.09%, respectively.
• The company’s stock declined 1.18% in after-hours trading despite strong earnings.
• Revenue guidance for the full year was raised to $650-$700 million.
• Breakthroughs in OLED technology and strong market growth projections were highlighted.
• Operating margin improved to 40% from 36% year-over-year.

Company Performance

Universal Display demonstrated robust performance in Q2 2025, with revenue increasing from $159 million in the same quarter of the previous year to $172 million. The company’s net income rose to $67 million, up from $52 million in Q2 2024. These gains were driven by advancements in OLED technology and increased demand in key markets such as consumer electronics and automotive displays.

Financial Highlights

• Revenue: $171.5 million, up from $159 million in Q2 2024.
• Earnings per share: $1.41, up from $1.17 forecasted.
• Gross margin: 77%, up from 76% in Q2 2024.
• Operating margin: 40%, up from 36% in Q2 2024.
• Cash and investments: $932 million.
• Quarterly dividend: $0.45 per share.

Earnings vs. Forecast

Universal Display’s actual EPS of $1.41 significantly beat the forecast of $1.17, marking a 20.51% surprise. Similarly, revenue of $171.5 million surpassed the expected $161.65 million by 6.09%. This performance indicates a strong quarter relative to historical trends, where the company has consistently outperformed expectations.

Market Reaction

Despite the earnings beat, Universal Display’s stock fell by 1.18% in after-hours trading, closing at $145.39. With a beta of 1.51, the stock shows higher volatility than the broader market. Analyst targets range from $160 to $213, suggesting potential upside. The stock remains well below its 52-week high of $224.28, indicating potential room for recovery. InvestingPro’s detailed analysis reveals 10 key investment factors for OLED, including valuable insights about its market position and growth potential.

Outlook & Guidance

The company raised its full-year revenue guidance to a range of $650-$700 million, reflecting confidence in continued growth. Universal Display is focusing on expanding its Gen 8.6 OLED manufacturing capabilities and anticipates significant growth in foldable and innovative display technologies. The company projects EPS of $5.02 for FY2025 and $5.63 for FY2026, with revenue forecasts of $670.45 million and $749.1 million, respectively.

Executive Commentary

CEO Steve Abramson highlighted the significance of the company’s advancements, stating, "We believe our phosphorescent blue is a game changer." He emphasized the increasing intelligence and interconnectivity of consumer devices, which are driving demand for advanced OLED technologies. CFO Brian Millard noted, "We’re hearing from our customers that they’re expecting the rest of the year to continue as planned."

Risks and Challenges

• Supply chain disruptions could impact production and delivery timelines.
• Market saturation in mature segments may limit growth potential.
• Macroeconomic pressures and geopolitical tensions could affect global demand.
• Competition from other display technologies may challenge market share.
• Visibility into customer inventory levels remains limited, adding uncertainty.

Q&A

During the earnings call, analysts inquired about the potential impact of foldable phones on material usage, with executives noting that these devices could use 2-3 times more material than traditional smartphones. Questions also focused on the adoption of tandem architecture in IT and automotive segments, as well as expectations for industry utilization and capacity expansion.

Full transcript - Universal Display (OLED) Q2 2025:

Conference Moderator: Good day, ladies and gentlemen, and welcome Universal Display Corporation’s Second Quarter twenty twenty five Earnings Conference Call. My name is Sherry, and I will be your conference moderator for today’s call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to Darice Liu, Senior Director of Investor Relations. Please proceed.

Darice Liu, Senior Director of Investor Relations, Universal Display Corporation: Thank you, and good afternoon, everyone. Welcome to Universal Display’s second quarter earnings conference call. Joining me on the call today are Steve Abramson, President and Chief Executive Officer and Brian Millard, Chief Financial Officer and Treasurer. Before Steve begins, let me remind you that today’s call is a property of Universal Display. Any redistribution, retransmission or rebroadcast of any portion of this call in any form without the expressed written consent of Universal Display is strictly prohibited.

Further, this call is being webcast live and will be made available for a period of time on Universal Display’s website. This call contains time sensitive information that is accurate only as of the date of the live webcast of this call, 07/31/2025. During this call, we may make forward looking statements based on current expectations. These statements are subject to a number of significant risks and uncertainties, and our actual results may differ materially. These risks and uncertainties are discussed in the company’s periodic reports filed with the SEC and should be referenced by anyone considering making investments in the company’s securities.

Universal Display disclaims any obligation to update any of these statements. Now I would like to turn the call over to Steve Abramson.

Steve Abramson, President and Chief Executive Officer, Universal Display Corporation: Thanks, Darice, and welcome to everyone on today’s call. We are pleased to deliver record performance in the second quarter with revenue of $172,000,000 and net income of $67,000,000 or $1.41 per diluted share. As we look to the full year, we are raising the low end of our 2025 revenue guidance range to $650,000,000 to $700,000,000 The OLED market continues to demonstrate a robust long term growth trajectory fueled by expanding product and increasing adoption across consumer electronics and automotive markets. While macro uncertainties may continue to persist, we believe that the OLED industry is entering a dynamic new phase of expansion, primarily fueled by growing OLED demand in tablets, laptops, and monitors, where OLEDs are estimated to be less than 5% of the current IT market. According to Omnia Market Research, OLED IT units are forecasted to more than double to 48,600,000 units in 2027 from 23,000,000 units in 2024.

Smartphones and TVs are also projected to maintain their upward trajectory with anticipated growth rates of 1110% respectively over the same period. Beginning next year, the first gen 8.6 OLED fabs from Samsung Display and BOE are expected to come online, marking a pivotal shift in medium sized OLED manufacturing, capacity, and capability. In addition, it was recently reported that Visionox’s Gen 8.6 OLED fab in Hefei designed with a production capacity of 32,000 plates per month, is progressing ahead of schedule. LG Display approved almost $1,000,000,000 to boost its OLED technology capabilities and capacity at its Paju Korea plant and Vietnam module facility. And TCL China Star is evaluating plans for a new gen 8.6 OLED plant.

Another driver of medium sized OLED demand is automotive displays, which were a highlight at SID display week in May. On the trade show floor in San Jose, concept vehicles showcased a vision for the future of in vehicle display technology, featuring innovations such as transparent sunroof and window display panels, slidable rear seat monitors, and expansive pillar to pillar dashboards. Panel makers offered a glimpse of how OLEDs are poised to redefine the on road experience through design, functionality, and immersive visual performance. According to Omnia, OLED adoption in the automotive sector continues to expand, particularly among luxury brands and new energy vehicles. The market research firm projects that automotive OLED display shipments will grow by more than 300% from 2,800,000 units in 2024 to 9,100,000 units in 2029.

OLED technology continues to reshape design possibilities for consumer electronics. Also at display week, panel makers showcased an array of foldable, rollable, stretchable, and even polygonal displays. These innovations highlight the flexibility of OLEDs and its ability to enhance how users engage with devices across various categories. UBI Research reports that with more OEMs anticipating to enter the foldable device market and existing brands planning to expand their foldable product lines, foldable shipments are expected to more than double by 2029 compared to last year. On the r and d front, our decades of deep expertise and proprietary knowledge continue to fuel bold ideas and scalable solutions.

From early stage research to commercial volume production, we’re advancing the frontier of phosphorescent OLED materials and technologies. Central to this effort is our proprietary AIML platform, which strengthens our discovery and development process. Established more than a decade ago, our internal computational team models molecular interactions at the atomic level, accelerating lead optimization and enhancing development pathways. This enables us to efficiently broaden our portfolio of next generation reds, greens, yellows, blues, and hosts to meet the evolving needs of our customers and the broader display and consumer electronics market.

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Our

Steve Abramson, President and Chief Executive Officer, Universal Display Corporation: end to end innovation expands our leadership position and delivers technologies that support the OLED industry’s growth trajectory. Regarding blue, as we noted in our May earnings call, the verification of commercialization level performance of blue phosphorescent OLED panels on a mass production line by one of our customers marked a major milestone in our development journey. While the specific timing for the debut of our Folate Blue in commercial products will be guided by the OLED market, this achievement represents a critical step forward in our roadmap and underscores the significant progress we’ve made. We believe our phosphorescent blue is a game changer, not only for our customers and the broader OLED industry, but also for consumers and for us as a company. As we look across the broader market, consumer devices are becoming increasingly intelligent and interconnected, driven by AI, five g, and always on connectivity.

This evolution is fueling unprecedented demand for energy efficient technologies. Our universal full of materials are at the heart of this transformation. Our broadening portfolio of power saving OLED materials and technologies helps extend battery life, reduce thermal load, and enable next generation features in smartphones, wearables, IT devices, automotive displays, and more. And with our phosphorescent blue, we’re poised to unlock up to an additional 25% improvement in OLED display energy efficiency, ushering in a new era of sustainable performance. On that note, let me turn the call over to Brian.

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Thank you, Steve. And again, thank you everyone for joining our call today. Revenue in the second quarter was $172,000,000 compared to $159,000,000 in the 2024. For the year, as Steve shared, we believe revenues will be in the range of $650,000,000 to $700,000,000 Amid ongoing macroeconomic uncertainty, this guidance reflects our best current assessment. We now estimate that our 2025 ratio of materials to royalty and licensing revenues will be in the ballpark of 1.3 to one.

Our total material sales were $89,000,000 in the second quarter compared to material sales of $95,000,000 in the 2024. Green emitter sales, which include our yellow green emitters, were $64,000,000 This compares to $72,000,000 in the 2024. Red emitter sales were $24,000,000 This compares to $23,000,000 in the 2024. As we’ve discussed in the past, material buying patterns can vary quarter to quarter. Second quarter royalty and license fees were $76,000,000 compared to the prior year’s $60,000,000 Adesis’ second quarter revenue was $7,500,000 compared to $3,500,000 in the 2024.

Second quarter cost of sales was $39,000,000 translating into total gross margins of 77%. This compares to $38,000,000 in total gross margins of 76% in the 2024. We continue to believe that total gross margins for the full year will be in the range of 76% to 77%. Operating expenses, excluding cost of sales, were $64,000,000 in the 2025 and 2024. We now expect 2025 OpEx to decrease year over year by a low single digit percentage.

Operating income was $69,000,000 in the second quarter, translating an operating margin of 40%. This compares to the prior year period of $56,000,000 and operating margin of 36%. We now expect our 2025 operating margins to be at the upper end of our 35 to 40% guidance range. The income tax rate was 20% in the 2025. We expect our effective tax rate for the year to be approximately 19%.

Second quarter twenty twenty five net income was $67,000,000 or 1.41 per diluted share. This compares to $52,000,000 or $1.1 per diluted share in the comparable period in 2024. We ended the quarter with approximately $932,000,000 in cash, cash equivalents and investments. Our Board of Directors approved a $0.45 quarterly dividend, which we paid on 09/30/2025, to shareholders of record as of the close of business on 09/16/2025. Our capital allocation program reflects our expected continued positive cash flow generation and commitment to return capital to our shareholders.

With that, I’ll turn the call back to Steve.

Steve Abramson, President and Chief Executive Officer, Universal Display Corporation: Thanks, Brian. Since our inception, UDC has been driven by a bold vision and the resilience to transform challenges into opportunities for growth. Through disciplined execution and a focused strategic approach, we built a company that is agile, resilient, and forward thinking. Over the years, we’ve remained committed to our growth framework anchored by a robust and expanded global infrastructure, a flexible and adaptive supply chain, deepening customer relationships, and a steadfast dedication to innovation and product leadership. The strategic foundation empowers us to respond swiftly to change, anticipate industry shifts, and continue delivering breakthrough OLED technologies and materials that are shaping the future of displays and lighting.

I would like to thank each of our employees for their drive, desire, dedication, and heart in elevating and shaping Universal Display’s accomplishments and advancements. We are committed to being a leader in the OLED ecosystem, achieving superior long term growth and delivering cutting edge technologies and materials for the industry, for our customers and for our shareholders. And with that, operator, let’s start the Q and A.

Conference Moderator: Thank you, Mr. Eriksen. Our first question is from Brian Lee with Goldman Sachs. Please proceed. Actually, we lost Brian.

So we’ll move on to our next question, which is Jim Ricchiuti with Needham and Company. Please proceed.

Jim Ricchiuti, Analyst, Needham and Company: Hi, thanks. Good afternoon. Maybe I’ll start with a question on some of the discussion around the new form factors potentially for smartphones since I think you alluded to it, Steve, in your introductory remarks. How much benefit do you see does the company see from a foldable phone, you know, assuming we’re gonna see more of these hit the market, versus traditional smartphones? I assume there’s more content, but I wonder if you can give us some additional color on that.

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Yeah. Hi, Jim. It’s Brian. So we we certainly do see incremental revenues just based on the surface area and the square area of those displays. Depending on, you know, the type of foldable, there can be, you know, up to up to kind of, you know, close to three two to three x in that range, the material compared to a traditional single layer phone.

So it’s certainly a really exciting market and a growing market. So we know that our customers are very focused on the foldable market. Many in the OEM community either have launched or are planning to launch foldable phones, in the coming years. So it’s a great market and one that we’re monitoring very closely and and supporting our customers in their development.

Steve Abramson, President and Chief Executive Officer, Universal Display Corporation: And, Jim, I’ve been using the foldable phone since they first came out a while ago. And they’re just great because I can use the phone with the main screen, for normal conversations. And when I wanna write a book or or or review a PowerPoint or whatever, I can just fold it out. So it’s really the only phone I need to carry with me when I travel.

Jim Ricchiuti, Analyst, Needham and Company: It’ll be interesting to see how how this market develops. Quick question on Blue. Usually, you guys give some revenue numbers for the Blue development emitter revenue. What was it in the quarter, can you say?

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Yeah. We recorded $1,100,000 of Blue revenues in the quarter, so that’s $2,200,000 through the six months.

Jim Ricchiuti, Analyst, Needham and Company: Okay. Thank you. I’ll jump back in the queue.

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Thanks, Jim.

Conference Moderator: Our next question is from Martin Yang with Oppenheimer and Company. Please proceed.

Martin Yang, Analyst, Oppenheimer and Company: Thank you for taking my question. First question on contract research service revenue. This quarter is a little higher than normal. Can you talk about why?

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Yes. Thanks, Martin. The contract research revenue is the revenue generated by our Adhesives business. So that’s a business we acquired a number of years ago, contract research organization as well as a contract manufacturer. So they’ve had a number of recent successes with some customers that have resulted in increased revenues.

So very pleased with their business, you know, year to date, and we expect good things going forward as well from Adhesives.

Martin Yang, Analyst, Oppenheimer and Company: So that’s, a factor of their own customers doing better, which is not related to your core business. Is that right?

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Correct. Entirely unrelated to our OLED business. They serve, you know, a number of companies in the life sciences industry, primarily, and it’s due to, you know, some of the manufacturing and CRO contracts that they have in that side of the business.

Martin Yang, Analyst, Oppenheimer and Company: Got it. A second question on the topic of a l AI and ML. You highlighted your long history of using those tools and techniques. Maybe can you give us a more concrete example of how using AI and ML have helped you to advance material research and benefit your customers? Thanks.

Steve Abramson, President and Chief Executive Officer, Universal Display Corporation: Well, the OLEDs is a very complicated device. It has a lot of different physical and chemical and other scientific properties. By using AIML with the appropriate algorithms, it can speed up the determination of what the most likely pathways for success would be. And we’ve built up a very large OLED database for AIML and machine learning is pretty dependent on the size and the quality of the databases.

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Thanks, Steve. That’s it for me. Thanks, Martin.

Conference Moderator: Our next question is from Brian Lee with Goldman Sachs. Please proceed.

Brian Lee, Analyst, Goldman Sachs: Hey, everyone. Good afternoon. Thanks for taking the questions. I jumped on a little bit late, so apologies in advance if some of this has been covered. But the revenue guidance for the year, I mean, you you’ve had a really strong first half.

So if you kinda back into the midpoint, it’s implying kind of a flattish revenue line for the second half at the midpoint. I know last year you had a pretty abnormal seasonal pattern of revenue given the product cycle in the first half of the year that was new. Year, could you maybe kind of walk us through what you’re seeing out there in the marketplace as to why seasonality, again, is is less pronounced, you know, less second half, improvement than what you’ve historically seen or or if there’s any kind of conservatism being baked in here? Just trying to understand what, what the seasonality is looking like.

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Yes. Thanks, Brian. Good question. So we as you said, certainly, the first half of the year has come in quite strong and a little bit stronger than we had originally planned for the year. And I think as we look at the rest of the year, we’re hearing that the full year should be pretty close to what we had originally planned.

And as we look at kind of upside and downside scenarios, just felt like as we were preparing for this call and this release that there wasn’t really a likely scenario where we were going to be in that bottom end. So it felt appropriate to raise guidance by $10,000,000 on the low side. And I think we’re hearing from our customers that they’re expecting rest of the year to continue to be, you know, as planned. So, nothing’s appearing off course. As we mentioned back on the May call, we did have, you know, some tariff related buying that went on in April.

So that was mostly pull in really from May and June, so all within q two. Maybe a little bit of pull in from q three, but not a significant amount. But the full year, you know, still is is very much on track.

Brian Lee, Analyst, Goldman Sachs: Yeah. No. That’s, that’s super helpful, Brian. I guess that was gonna be my second question. I mean, China seasonally for, you know, multiple years in a row has always kind of been down for you in q two versus q one.

And, you know, China was outstanding in terms of, you know, revenue contribution for q two. I I presume they’re the ones that were the bulk, if not all of the the pull in in April. But even if you think about the pull in, you know, coming from from May and June, it’s just a lot of, you know, abnormal seasonality for that region. So what are your thoughts on like inventory? Do you have visibility into the channel there?

Could they have pulled forward from you said maybe a little bit of Q3, but just given the volume of revenue that they contributed in Q2, just wondering if you have any thoughts on kind of inventory as well as maybe, you know, it being, more pull forward than than you anticipated at the time when you you gave that color.

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Yes. So we do get, you know, I’d say, pretty limited information on inventory from our customers. I mean, some some anecdotal, you know, information here and there. I think an important thing to note is that our Chinese customers have always had, you know, pretty variable ordering patterns. So there’s not really been, a consistent pattern over, you know, a long period of time to look to point to.

But based on what we know right now, we think, as I said, there was some tariff related buying in Q2. We think it was mostly intra quarter. But we’ll see how the rest of the year plays out. But we’re hearing consistent feedback from the customers what the rest of the year looks like in their forecast.

Brian Lee, Analyst, Goldman Sachs: Our

Conference Moderator: next question is from Scott Searle with ROTH Capital Partners.

Scott Searle, Analyst, ROTH Capital Partners: Hey, good afternoon. Thanks for taking the questions. First, just wondering what you’re seeing in design activity from a tandem architecture standpoint and what end markets you’re seeing the most interest in activity? And second, in terms of overall capacity, I’m wondering if you could give us some updated thoughts in terms of where current industry utilization is at. And then in terms of some of the new capacity coming online in 2026, we’ve got 8.6 Gen fabs from both BOE and Samsung coming on board.

I’m wondering what that does to your overall industry capacity model? And what other big projects are coming behind that in 2017? Thanks.

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Thanks, Scott. So starting on the Tandem question. The Tandem architecture is primarily used to date in the IT and automotive segments of the business. So, IT, as you know, is, you know, quite low from a penetration perspective and one of the key growth drivers that we see and the industry sees in the next few years. So right now, only approximately 4% or 5% thereabouts of the OLED displays that are sorry, of the displays that are produced for the IT segment are OLED.

So we have a lot of growth opportunity. And the Gen 8.6 fabs that you mentioned coming online next year will be key to adding more capacity to meet that demand in the IT segment. That additional capacity we had estimated earlier this year that some of the additional capacity from 2023 to 2025, the installed capacity would increase by 10% to 15%. So that’s kind of roughly part of that increase would relate to the Gen 8.6 fabs coming online. And then on the industry utilization, our customers continue to do quite well.

They’re all growing their OLED businesses. And we believe industry utilization is quite strong at this point. Don’t have a specific percentage for you, but we’re hearing positive feedback from our customers on their utilization. And I think the key thing for the next few years is these Gen 8.6 fabs that we’ve been talking about from Samsung, BOE and Visionox, those are the three that have been announced and are moving forward. They all are kind of kicking off a multiyear CapEx cycle that we expect in the next few years, in large part to meet the demand for the IT segment.

Scott Searle, Analyst, ROTH Capital Partners: Hey, Brian. If I could follow-up quickly on the Tandem architecture front in IT, are most customers and most OLED designs implying a Tandem architecture? Thanks.

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: I think it’s going to be continue to be a little bit of a mix. You know, Tandem is certainly a more complex and more costly display to manufacture. You know, it really Tandem and IT really only started in the last, you know, twelve to eighteen months, so it’s relatively new. And there’s been single layer OLED products in the IT market for, you know, a number of years now. So going forward, you know, it’s possible that maybe the tandem structure is used in more, you know, premium offerings, but we think we’ll continue to see a mix going forward of both tandem and single.

Scott Searle, Analyst, ROTH Capital Partners: This

Conference Moderator: concludes our question and answer session. I would like to turn the program back over to Brian Miller for any additional closing remarks.

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Thank you for your time today. We appreciate your interest and support.

Conference Moderator: Thank you. This concludes today’s conference call. You may now disconnect.

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