Universal Display(OLED) - 2025 Q2 - Quarterly Results

Executive Summary & Company Overview This section provides an introduction to Universal Display Corporation, highlighting its record Q2 2025 financial performance, revised revenue guidance, and its leadership in OLED technology Introduction and Key Highlights Universal Display Corporation announced record financial performance for the second quarter of 2025, leading to an upward revision of the low end of its 2025 revenue guidance. The company anticipates significant growth driven by the expanding OLED IT market and broader adoption across consumer electronics and automotive sectors - Universal Display Corporation reported record financial performance in the second quarter of 2025[3] - The low end of the 2025 revenue guidance range has been raised, now projected to be $650 million to $700 million[3] - The OLED industry is believed to be entering a dynamic new phase of expansion, driven by increasing demand in the nascent OLED IT market (tablets, laptops, monitors) and broader adoption in consumer electronics and automotive applications[3] About Universal Display Corporation Universal Display Corporation is a global leader in the research, development, and commercialization of organic light emitting diode (OLED) technologies and materials. The company holds over 6,500 patents and licenses its proprietary UniversalPHOLED® technology, which enables energy-efficient and eco-friendly displays and lighting solutions - Universal Display Corporation is a leader in the research, development, and commercialization of OLED technologies and materials for display and solid-state lighting applications[13] - The company owns, exclusively licenses, or has the sole right to sublicense more than 6,500 patents issued and pending worldwide[13] - UniversalPHOLED® phosphorescent OLED technology enables the development of energy-efficient and eco-friendly displays and solid-state lighting[13] Forward-Looking Statements This section serves as a cautionary note, indicating that statements regarding future adoption, development of technologies, expected results, and OLED market growth are forward-looking. These statements are subject to various risks and uncertainties that could cause actual results to differ materially, as detailed in the company's SEC filings, particularly the 'Risk Factors' section of its Form 10-K - Statements in the document relating to projected adoption, development of technologies, expected results, and OLED market growth are forward-looking financial statements[16] - Readers are cautioned not to place undue reliance on forward-looking statements, as they are subject to risks and uncertainties that could cause actual results to differ materially[16] - These risks and uncertainties are discussed in greater detail in Universal Display Corporation's periodic reports on Form 10-K and Form 10-Q filed with the SEC[16] Second Quarter 2025 Financial Results This section details Universal Display Corporation's financial performance for the second quarter of 2025, including revenue, cost of materials, and key profitability metrics Q2 2025 Financial Highlights Universal Display Corporation reported an 8.4% increase in total revenue for Q2 2025, reaching $171.8 million, primarily driven by a significant 27.0% rise in royalty and license fees, leading to a diluted EPS of $1.41 | Metric | Q2 2025 ($ million) | Q2 2024 ($ million) | YoY Change (%) | | :-------------------------- | :----------- | :----------- | :------------- | | Total Revenue | 171.8 | 158.5 | 8.4% | | Material Sales | 88.7 | 95.4 | -7.1% | | Royalty & License Fees | 75.7 | 59.6 | 27.0% | | Cost of Material Sales | 34.2 | 35.5 | -3.7% | | Total Gross Margin | 77% | 76% | 1 p.p. | | Operating Income | 68.5 | 56.4 | 21.5% | | Effective Income Tax Rate | 19.8% | 19.3% | 0.5 p.p. | | Net Income | 67.3 | 52.3 | 28.7% | | Diluted EPS | 1.41 | 1.10 | 28.2% | - The decrease in material sales was primarily due to changes in customer mix and lower unit material volume for emitter materials[4] - The increase in royalty and license fees was primarily the result of changes in customer mix, partially offset by lower unit material volume[4] Q2 2025 Revenue Comparison Total revenue for Q2 2025 increased to $171,794 thousand, driven by a 27.1% increase in royalty and license fees, offsetting a 7.1% decline in material sales | Revenue Type | Q2 2025 ($ thousand) | Q2 2024 ($ thousand) | YoY Change | | :---------------------- | :----------------------- | :----------------------- | :--------- | | Material sales | $88,650 | $95,442 | -7.1% | | Royalty and license fees | $75,667 | $59,551 | 27.1% | | Contract research services | $7,477 | $3,512 | 112.9% | | Total revenue | $171,794 | $158,505 | 8.4% | Q2 2025 Cost of Materials Comparison Gross margin on material sales for Q2 2025 decreased to 61% from 63%, reflecting a 7.1% decline in material sales revenue despite a 3.8% reduction in cost of material sales | Metric | Q2 2025 ($ thousand) | Q2 2024 ($ thousand) | YoY Change | | :---------------------------------- | :----------------------- | :----------------------- | :--------- | | Material sales | $88,650 | $95,442 | -7.1% | | Cost of material sales | $34,154 | $35,491 | -3.8% | | Gross margin on material sales | $54,496 | $59,951 | -9.1% | | Gross margin as a % of material sales | 61% | 63% | -2 p.p. | First Half 2025 Financial Results This section presents Universal Display Corporation's financial performance for the first half of 2025, covering revenue, cost of materials, and overall profitability H1 2025 Financial Highlights For H1 2025, total revenue increased by 4.4% to $338.1 million, driven by a 16.7% increase in royalty and license fees, resulting in a diluted EPS of $2.76 | Metric | H1 2025 ($ million) | H1 2024 ($ million) | YoY Change (%) | | :-------------------------- | :----------- | :----------- | :------------- | | Total Revenue | 338.1 | 323.8 | 4.4% | | Material Sales | 174.8 | 188.7 | -7.4% | | Royalty & License Fees | 149.2 | 127.8 | 16.7% | | Cost of Material Sales | 68.1 | 69.6 | -2.2% | | Total Gross Margin | 77% | 77% | 0 p.p. | | Operating Income | 138.2 | 119.3 | 15.8% | | Effective Income Tax Rate | 19.7% | 19.3% | 0.4 p.p. | | Net Income | 131.7 | 109.2 | 20.6% | | Diluted EPS | 2.76 | 2.29 | 20.5% | - The decrease in material sales was primarily due to lower unit material volume for emitter materials and changes in customer mix[7] - The increase in royalty and license fees was primarily the result of changes in customer mix, partially offset by lower unit material volume[7] H1 2025 Revenue Comparison Total revenue for H1 2025 increased to $338,071 thousand, primarily due to a 16.8% increase in royalty and license fees and a 94.4% surge in contract research services | Revenue Type | H1 2025 ($ thousand) | H1 2024 ($ thousand) | YoY Change | | :---------------------- | :----------------------- | :----------------------- | :--------- | | Material sales | $174,805 | $188,726 | -7.4% | | Royalty and license fees | $149,236 | $127,819 | 16.8% | | Contract research services | $14,030 | $7,219 | 94.4% | | Total revenue | $338,071 | $323,764 | 4.4% | H1 2025 Cost of Materials Comparison Gross margin on material sales for H1 2025 was 61%, a 2 percentage point decrease from the prior year, driven by a 7.4% decline in material sales revenue | Metric | H1 2025 ($ thousand) | H1 2024 ($ thousand) | YoY Change | | :---------------------------------- | :----------------------- | :----------------------- | :--------- | | Material sales | $174,805 | $188,726 | -7.4% | | Cost of material sales | $68,103 | $69,587 | -2.1% | | Gross margin on material sales | $106,702 | $119,139 | -10.4% | | Gross margin as a % of material sales | 61% | 63% | -2 p.p. | Business Outlook and Shareholder Information This section outlines Universal Display Corporation's updated 2025 revenue guidance, dividend declaration, and details for the upcoming financial results conference call Revised 2025 Revenue Guidance Universal Display Corporation revised its 2025 revenue guidance to a range of $650 million to $700 million, reflecting an increase in the lower end of the previous projection - The Company has increased the lower end of its previous revenue guidance for 2025[10] | Metric | 2025 Guidance ($ million) | | :------------- | :-------------- | | Revenue Range | $650 million to $700 million | Dividend Announcement Universal Display Corporation announced a third-quarter cash dividend of $0.45 per share on its common stock. The dividend is scheduled for payment on September 30, 2025, to shareholders of record as of September 16, 2025 | Metric | Value | | :-------------------- | :------ | | Cash Dividend per Share | $0.45 | | Payable Date | September 30, 2025 | | Record Date | September 16, 2025 | Conference Call Information Universal Display will host a conference call on Thursday, July 31, 2025, at 5:00 p.m. Eastern Time to discuss the financial results. A live webcast will be available on the company's Investor Relations website, with dial-in options provided for participants - A conference call will be hosted on Thursday, July 31, 2025, at 5:00 p.m. Eastern Time[12] - The live webcast can be accessed under the events page of the Company's Investor Relations website at ir.oled.com[12] - Participants can dial 1-877-524-8416 (toll-free) or 1-412-902-1028 to join the live call[12] Consolidated Financial Statements (Unaudited) This section provides the unaudited consolidated balance sheets, statements of income, and statements of cash flows for Universal Display Corporation Consolidated Balance Sheets As of June 30, 2025, total assets increased by 5.4% to $1,931,698 thousand, driven by a 12.3% rise in current assets, leading to a 6.1% increase in shareholders' equity | Metric | June 30, 2025 ($ thousand) | December 31, 2024 ($ thousand) | Change | | :-------------------------------- | :------------------------------- | :--------------------------------- | :------- | | Total Current Assets | $1,010,802 | $899,831 | +12.3% | | Total Assets | $1,931,698 | $1,832,333 | +5.4% | | Total Current Liabilities | $125,555 | $125,410 | +0.1% | | Total Liabilities | $217,086 | $215,808 | +0.6% | | Total Shareholders' Equity | $1,714,612 | $1,616,525 | +6.1% | - Short-term investments increased from $393,690 thousand to $429,404 thousand, and accounts receivable increased from $113,648 thousand to $147,043 thousand[19] - Retained earnings significantly increased from $934,655 thousand to $1,023,184 thousand[19] Consolidated Statements of Income For the six months ended June 30, 2025, net income increased by 20.6% to $131,708 thousand, driven by a 4.4% increase in total revenue and a 15.8% rise in operating income | Metric | Q2 2025 ($ thousand) | Q2 2024 ($ thousand) | H1 2025 ($ thousand) | H1 2024 ($ thousand) | | :---------------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Total Revenue | $171,794 | $158,505 | $338,071 | $323,764 | | Cost of Sales | $39,203 | $38,328 | $77,337 | $75,297 | | Gross Margin | $132,591 | $120,177 | $260,734 | $248,467 | | Total Operating Expenses | $64,051 | $63,740 | $122,530 | $129,158 | | Operating Income | $68,540 | $56,437 | $138,204 | $119,309 | | Income Before Income Taxes | $83,878 | $64,890 | $163,994 | $135,387 | | Net Income | $67,264 | $52,337 | $131,708 | $109,190 | | Diluted EPS | $1.41 | $1.10 | $2.76 | $2.29 | | Cash Dividends Declared Per Share | $0.45 | $0.40 | $0.90 | $0.80 | - Research and development expenses decreased from $74,811 thousand in H1 2024 to $71,258 thousand in H1 2025[21] - Royalty and license expense significantly decreased from $1,774 thousand in H1 2024 to $231 thousand in H1 2025[21] Consolidated Statements of Cash Flows Net cash provided by operating activities decreased by 40.8% to $82,498 thousand in H1 2025, primarily due to increases in accounts receivable and inventory | Metric | H1 2025 ($ thousand) | H1 2024 ($ thousand) | Change | | :------------------------------------ | :----------------------- | :----------------------- | :------- | | Net cash provided by operating activities | $82,498 | $139,169 | -40.8% | | Net cash used in investing activities | $(34,487) | $(93,471) | +63.1% | | Net cash used in financing activities | $(51,187) | $(44,827) | -14.2% | | (Decrease) Increase in Cash & Equivalents | $(3,176) | $871 | -464.6% | | Cash & Equivalents, End of Period | $95,804 | $92,856 | +3.2% | - The decrease in net cash from operating activities was significantly impacted by a $33,395 thousand increase in accounts receivable and a $25,261 thousand increase in inventory[23] - Net cash used in investing activities decreased due to higher proceeds from the sale and maturity of investments ($185,000 thousand in H1 2025 vs. $97,620 thousand in H1 2024)[23]