Earnings call transcript: Universal Display Q2 2025 sees revenue growth

Universal Display Corporation reported its earnings for the second quarter of 2025, showcasing a robust financial performance with revenue growth and improved margins. According to InvestingPro data, the company maintains impressive gross profit margins of 75.86% and strong financial health metrics. The stock experienced a decline in aftermarket trading, dropping 2.55% to $140.52, though analysis suggests the stock may be undervalued at current levels. The company’s revenue for the quarter reached $172 million, an increase from $159 million in the same period last year, while net income stood at $67 million, or $1.40 per diluted share. The company also raised its full-year revenue guidance to a range of $650-$700 million.

Key Takeaways

• Universal Display’s Q2 2025 revenue increased to $172 million, up from $159 million in Q2 2024.
• The company raised its full-year revenue guidance to $650-$700 million.
• Stock price fell 2.55% in aftermarket trading following the earnings announcement.
• Gross margins improved to 77%, up from 76% in the previous year.
• Universal Display is advancing in blue phosphorescent OLED panel commercialization.

Company Performance

Universal Display demonstrated solid performance in Q2 2025, with revenue increasing to $172 million, reflecting a year-over-year growth. The company’s focus on innovation, particularly in blue phosphorescent OLED panels, is paving the way for enhanced energy efficiency in OLED displays. InvestingPro analysis reveals the company holds more cash than debt on its balance sheet and maintains a healthy current ratio of 8.05, indicating strong operational efficiency. Subscribers can access 10+ additional ProTips and comprehensive financial metrics through the Pro Research Report. The operational efficiencies are also evident in the improved gross and operating margins, which rose to 77% and 40%, respectively.

Financial Highlights

• Revenue: $172 million, up from $159 million in Q2 2024
• Net Income: $67 million
• Earnings per share: $1.40 per diluted share
• Gross Margins: 77%, up from 76% in the previous year
• Operating Margin: 40%, up from 36% in the previous year
• Cash and Investments: $932 million
• Quarterly Dividend: $0.45 per share

Market Reaction

Following the earnings release, Universal Display’s stock price fell 2.55% in aftermarket trading to $140.52. This decline comes despite the company’s strong financial performance and raised revenue guidance. With a beta of 1.55 and a P/E ratio of 27.87, InvestingPro data indicates the stock shows higher volatility than the market average. The company maintains a solid dividend growth rate of 12.5% year-over-year, demonstrating commitment to shareholder returns. The stock’s performance is below its 52-week high of $214.57, indicating room for recovery.

Outlook & Guidance

Universal Display has revised its full-year 2025 revenue guidance upward to a range of $650-$700 million, reflecting confidence in its growth trajectory. The company anticipates continued expansion in the IT, automotive, and foldable device markets, supported by new OLED manufacturing capacity from partners like Samsung Display, BOE, and Visionox.

Executive Commentary

CEO Steve Abramson highlighted the significance of the company’s advancements in OLED technology, stating, "We believe our phosphorescent blue is a game changer." He emphasized the growing intelligence and interconnectivity of consumer devices, reinforcing Universal Display’s commitment to leading the OLED ecosystem.

Risks and Challenges

• Supply chain disruptions could impact production and delivery timelines.
• Market saturation in mature segments may limit growth potential.
• Economic downturns could affect consumer spending on OLED-equipped devices.
• Rising competition in the OLED space may pressure pricing and margins.
• Regulatory changes in key markets could introduce compliance challenges.

Q&A

During the earnings call, analysts inquired about the potential of foldable phones, which offer 2-3 times the material content compared to traditional phones. The company also addressed questions about the blue emitter revenue, which amounted to $1.1 million in Q2, and the application of tandem OLED architecture primarily in IT and automotive segments. For detailed analysis of Universal Display’s market position and growth potential, investors can access the comprehensive Pro Research Report, which provides expert insights and advanced metrics for over 1,400 US stocks.

Full transcript - Universal Display (OLED) Q2 2025:

Sherry, Conference Moderator: Good day ladies and gentlemen and welcome to Universal Display Corporation second quarter 2025 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 listen only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance, please push zero on your telephone keypad. 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 Corporation’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 Corporation. Any redistribution, retransmission or rebroadcast of any portion of this call in any form without the express written consent of Universal Display Corporation is strictly prohibited. Further, this call is being webcast live and will be made available for a period of time on Universal Display Corporation’s website. This call contains time sensitive information that is accurate only as of the date of the live webcast of this call, July 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 any investments in the Company’s securities. Universal Display Corporation 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 million and net income of $67 million 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 million to $700 million. 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 markets.

According to Omdia market research, OLED IT units are forecasted to more than double to 48.6 million units in 2027 from 23 million units in 2024. Smartphones and TVs are also projected to maintain their upward trajectory, with anticipated growth rates of 11% and 10%, 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 billion 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 the 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 Omdia, 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 2.8 million units in 2024 to 9.1 million 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&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 AI/ML-driven R&D 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. Our 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 fully 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 in 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, 5G, and always-on connectivity. This evolution is fueling unprecedented demand for energy efficient technologies. Our UniversalPHOLED 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.

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 million compared to $159 million in the second quarter of 2024. For the year, as Steve shared, we believe revenues will be in the range of $650 to $700 million. Amid ongoing macroeconomic uncertainty, this guidance reflects our best current assessment. We now estimate that our 2025 ratio of materials to royalty and license fees will be in the ballpark of 1.3 to 1. Our total material sales were $89 million in the second quarter compared to material sales of $95 million in the second quarter of 2024. Green emitter sales, which include our yellow green emitters, were $64 million. This compares to $72 million in the second quarter of 2024. Red emitter sales were $24 million. This compares to $23 million in the second quarter of 2024.

As we’ve discussed in the past, material buying patterns can vary quarter to quarter. Second quarter royalty and license fees were $76 million compared to the prior year’s $60 million. Adesis second quarter revenue was $7.5 million compared to $3.5 million in the second quarter of 2024. Second quarter cost of sales was $39 million, translating into total gross margins of 77%. This compares to $38 million and total gross margins of 76% in the second quarter of 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 million in the second quarter of 2025 and 2024. We now expect 2025 OpEx to decrease year over year by a low single digit percentage. Operating income was $69 million in the second quarter, translating an operating margin of 40%.

This compares to the prior year period of $56 million, an 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 second quarter of 2025. We expect our effective tax rate for the year to be approximately 19%. Second quarter 2025 net income was $67 million or $1.40 per diluted share. This compares to $52 million, or $1.10 per diluted share in the comparable period in 2024. We ended the quarter with approximately $932 million in cash, cash equivalents and investments. Our Board of Directors approved a $0.45 quarterly dividend which will be paid on September 30, 2025 to shareholders of record as of the close of business on September 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, Universal Display Corporation 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. This 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 Corporation’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. With that, operator, let’s start the Q and A.

Sherry, Conference Moderator: Thank you, Mr. Everson. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for questions. 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 Rashudi with Needham and Company. Please proceed.

Steve Abramson, President and Chief Executive Officer, Universal Display Corporation: 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? Assuming we’re going to 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. We certainly do see incremental revenue just based on the surface area and the square area of those displays. Depending on the type of foldable, there can be up to kind of close to 2 to 3x in that range, the material compared to a traditional single layer phone. It’s certainly a really exciting market and a growing market. 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. It’s a great market and one that we’re monitoring very closely and supporting our customers in their development.

Steve Abramson, President and Chief Executive Officer, Universal Display Corporation: 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. When I want to write a book or review a PowerPoint or whatever, I can just fold it out. It’s really the only phone I need to carry with me when I travel. It’ll be interesting to see how this market develops. Quick question on blue. Usually you guys give some revenue numbers.

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: For the blue development.

Steve Abramson, President and Chief Executive Officer, Universal Display Corporation: Emitter revenue, what was it in a quarter, can you say?

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Yeah, we recorded $1.1 million of blue revenues in the quarter, so that’s $2.2 million through the six months.

Steve Abramson, President and Chief Executive Officer, Universal Display Corporation: Okay, thank you.

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: I’ll jump back in the queue. Thanks, Jim.

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

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Thank you for taking my question.

Steve Abramson, President and Chief Executive Officer, Universal Display Corporation: 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: Yeah, thanks, Martin. The contract research revenue is the revenue generated by our Adesis business. That’s a business we acquired a number of years ago, contract research organization as well as a contract manufacturer. They’ve had a number of recent successes with some customers that have resulted in increased revenues. Very pleased with their business, you know, year to date. We expect good things going forward as well from Adesis.

Steve Abramson, President and Chief Executive Officer, Universal Display Corporation: 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 a number of companies in the life sciences industry primarily, and it’s due to some of the manufacturing and CRO contracts that they have in that side of the business.

Steve Abramson, President and Chief Executive Officer, Universal Display Corporation: Got it. A second question on the topic of 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 ML have helped you to advance material research and benefit your customers? Thanks. The OLEDs is a very complicated device and has a lot of different physical and chemical and other scientific properties. By using AI ML with the appropriate algorithms, it can speed up the determination of what the most likely pathways for success would be. We build up a very large OLED database for AI/ML, and machine learning is pretty dependent on the size and the quality of the databases. Thanks, Steve.

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

Sherry, Conference Moderator: As a reminder, to star one on your telephone keypad if you would like to ask a question. Our next question is from Brian Lee with Goldman Sachs. Please proceed.

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. The revenue guidance for the year, I mean, you’ve had a really strong first half, so you kind of 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 this year. Could you maybe kind of walk us through what you’re seeing out there in the marketplace as to why seasonality again is less pronounced, less second half improvement than what you’ve historically seen or if there’s any kind of conservatism being baked in here. Just trying to understand what the seasonality is looking like.

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Yeah, thanks. Thanks, Brian. Good question. 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. 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. As we look at kind of upside and downside scenarios, we 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. It felt appropriate to raise guidance by $10 million on the low side. I think we’re hearing from our customers that they’re expecting the rest of the year to continue to be as planned. Nothing’s appearing off course.

As we mentioned back on the May call, we did have some tariff-related buying that went on in April. That was mostly pulling really from May and June, all within Q2. Maybe a little bit of pull in from Q3, but not a significant amount. The full year still is very much on track.

Yeah, no, that’s super helpful, Brian. I guess that was going to be my second question. I mean, China seasonally for multiple years in a row has always kind of been down for you in Q2 versus Q1. China was out in terms of, you know, revenue contribution for Q2. I presume they’re the ones that were the bulk, if not all, of the pull in in April. Even if you think about the pull in coming from May and June, it’s just a lot of abnormal seasonality for that region. What are your thoughts on inventory? Do you have visibility into the channel there? Could they have pulled forward from, you know, 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 it being more pull forward than you anticipated at the time when you gave that color.

Yes. We do get, I’d say, pretty limited information on inventory from our customers. I mean, some anecdotal information here and there. I think an important thing to note is that our Chinese customers have always had pretty variable ordering patterns. There’s not really been a consistent pattern over a long period of time to point to. 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. We’re hearing consistent feedback from the customers on what the rest of the year looks like in their forecast.

Okay, fair enough. I’ll pass it on. Thanks everyone.

Thanks.

Sherry, Conference Moderator: Our next question is from Scott Searle with Roth Capital Partners. Please proceed.

Steve Abramson, President and Chief Executive Officer, Universal Display Corporation: Hey, good afternoon. Thanks for taking the questions. First, just wondering what you’re seeing in design activity from a tandem OLED architecture standpoint and what end markets you’re seeing the most interest in activity. 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 Gen 8.6 OLED fabs from both BOE and Samsung Display 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 2027.

Thanks.

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Thanks, Scott. Starting on the tandem question, the tandem architecture is primarily used to date in the IT and automotive segments of the business. It, as you know, is 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. Right now only approximately 4% or 5% thereabouts of the OLED displays that are produced for the IT segment are OLED. We have a lot of growth opportunity. 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 end of 2023 to end of 2025, the installed capacity would increase by 10% to 15%.

Roughly part of that increase would relate to the Gen 8.6 fabs coming online. 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. I don’t have a specific percentage for you, but we’re hearing positive feedback from our customers on their utilization. I think the key thing for the next few years is these Gen 8.6 fabs that we’ve been talking about from Samsung Display, BOE, and Visionox. Those are the three that have been announced and are moving forward. They all are kicking off a multi-year CapEx cycle that we expect in the next few years in large part to meet the demand for the IT segment.

Steve Abramson, President and Chief Executive Officer, Universal Display Corporation: Hey Brian, if I could follow up quickly on the tandem OLED architecture front? In IT, are most customers and most OLED designs implying a tandem OLED architecture?

Brian Millard, Chief Financial Officer and Treasurer, Universal Display Corporation: Thanks. I think it’s going to continue to be a little bit of a mix. Tandem is certainly a more complex and more costly display to manufacture. Tandem really only started in the last 12 to 18 months, so it’s relatively new and there’s been single layer OLED products in the IT market for a number of years now.

So.

Going forward, it’s possible that maybe the tandem OLED architecture is used in more premium offerings, but we think we’ll continue to see a mix going forward of both tandem and single.

Steve Abramson, President and Chief Executive Officer, Universal Display Corporation: Great, thanks. We’ll get back in the queue.

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

Sherry, Conference Moderator: Thank you. This concludes our question and answer session. I would like to turn the program back over to Brian Millard 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.

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

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