Universal Display(US:OLED)2025-11-06 21:13Revenue Performance - Total revenue for the three months ended September 30, 2025, was $139.6 million, a decrease of 13.6% from $161.6 million in the same period of 2024[181]. - Total revenue for the nine months ended September 30, 2025, was $477.7 million, a decrease of 1.6% from $485.4 million in the same period of 2024[197]. Material Sales - Material sales decreased by 1% to $82.6 million for the three months ended September 30, 2025, compared to $83.4 million in 2024[182]. - Material sales decreased by 5% to $257.4 million for the nine months ended September 30, 2025, compared to $272.2 million for the same period in 2024, with a 4% decrease in unit material volume[198]. Revenue Sources - Revenue from royalty and license fees dropped by 29% to $53.3 million, primarily due to changes in customer mix and a $9.5 million out of period adjustment[183]. - Revenue from contract research services increased by 63% to $17.7 million for the nine months ended September 30, 2025, up from $10.8 million in 2024[202]. - Contract research services revenue increased by 1% to $3.7 million for the three months ended September 30, 2025[188]. Gross Margin - Gross margin decreased by $21.7 million to $104.1 million, with gross margin percentage declining from 78% to 75%[189]. - Gross margin decreased by $9.4 million to $364.9 million for the nine months ended September 30, 2025, with gross margin as a percentage of revenue decreasing to 76% from 77%[203]. Expenses - Research and development expenses increased to $36.3 million, reflecting higher contract research costs[190]. - Research and development expenses decreased to $107.6 million for the nine months ended September 30, 2025, compared to $110.9 million in 2024[204]. - Selling, general and administrative expenses rose to $18.0 million, driven by increased salaries and stock-based compensation[191]. Cash Flow and Investments - Cash provided by operating activities for the nine months ended September 30, 2025, was $179.7 million, down from $219.0 million in 2024[212]. - Cash used in investing activities decreased to $85.0 million for the nine months ended September 30, 2025, compared to $167.1 million in 2024[214]. - Working capital increased to $928.7 million as of September 30, 2025, from $774.4 million as of December 31, 2024[216]. Tax and Market Risk - The effective income tax rate was 19.4% for the nine months ended September 30, 2025, compared to 18.8% in 2024, with income tax expense recorded at $42.4 million[210]. - The company anticipates sufficient cash, cash equivalents, and short-term investments to meet obligations for at least the next twelve months[217]. - The company has no significant market risk exposure other than investments disclosed in "Fair Value Measurements"[224]. Foreign Exchange Risk - Substantially all revenue is derived from outside of North America, primarily in U.S. dollars, minimizing foreign exchange risk from routine customer sales[225]. - The company bears foreign exchange risk from fluctuations in the Korean Won to U.S. dollar exchange rate due to a withholding tax receivable[225]. Accounting Policies and Estimates - The company believes its critical accounting policies include revenue recognition, deferred revenue, inventories, and income taxes[221]. - Actual results may differ significantly from estimates made in the preparation of the Consolidated Financial Statements[220]. - The company has made estimates and judgments that affect reported assets, liabilities, revenues, and expenses[220]. Restructuring and Manufacturing - The company recorded $602,000 in restructuring costs due to the closure of the OVJP Corp facility in California[179]. - The new manufacturing site in Shannon, Ireland is expected to double production capacity upon full operation[180].