Universal Display Corporation Q2 FY2025 earnings call

• The company delivered record performance in Q2 with revenue of $172 million and net income of $67 million. - Raised the low end of 2025 revenue guidance to $650 million to $700 million. - OLED market shows robust long-term growth driven by expanding product portfolios and adoption in consumer electronics and automotive. - New Gen 8.6 OLED fabs from Samsung Display, BOE, and Visionox are expected to come online, boosting medium-sized OLED manufacturing. - Automotive OLED display shipments projected to grow over 300% from 2024 to 2029. - Foldable display shipments expected to more than double by 2029. - R&D with AI/ML platform advancing phosphorescent OLED materials. - Recorded $1.1 million in blue revenues in Q2, with $2.2 million over 6 months. - Board approved a $0.45 quarterly dividend.

In the second quarter of 2025, Universal Display Corporation achieved revenue of $172 million and net income of $67 million or $1.41 per diluted share. Material sales were $89 million in Q2 2025, down from $95 million in Q2 2024. Green emitter sales (including yellow green) were $64 million, compared to $72 million in Q2 2024. Red emitter sales were $24 million, up from $23 million in Q2 2024. Royalty and license fees were $76 million in Q2 2025, versus $60 million in the prior year. Adesis' second quarter revenue was $7.5 million, compared to $3.5 million in Q2 2024. Gross margins were 77% in Q2 2025, up from 76% in Q2 2024. Operating expenses excluding cost of sales were $64 million in both Q2 2025 and 2024. Operating income was $69 million, resulting in an operating margin of 40%, compared to $56 million and 36% in the prior year period. The company ended the quarter with approximately $932 million in cash, cash equivalents, and investments.

• Raised the low end of 2025 revenue guidance to $650 million to $700 million. - Expect 2025 operating margins to be at the upper end of the 35% to 40% range. - Effective tax rate for 2025 expected to be approximately 19%. - Board approved a $0.45 quarterly dividend payable on September 30, 2025.

• Macro uncertainties persisting which could impact the OLED industry. - Variability in material buying patterns quarter-to-quarter. - Dependence on customer adoption of new OLED technologies and form factors.

Q: How much benefit does the company see from foldable phones compared to traditional smartphones?

A: Brian Millard stated there's incremental revenue due to larger surface area, with material usage up to 2-3x that of traditional phones. Steve Abramson shared personal experience with foldable phones being very convenient.

Q: What was the blue revenue in the quarter?

A: Brian Millard said blue revenues were $1.1 million in the quarter, totaling $2.2 million over 6 months.

Q: Why was contract research services revenue higher this quarter?

A: Brian Millard attributed it to Adesis' recent successes with customers in the life sciences industry.

Q: Thoughts on China's revenue contribution in Q2 and inventory?

A: Brian Millard noted Chinese customers have variable ordering patterns, and while there was tariff-related buying in Q2, they expect the rest of the year to be on track with limited inventory visibility.

Q: Tandem architecture in IT and industry capacity?

A: Brian Millard said tandem is a mix in IT, with it being more complex and costly, and Gen 8.6 fabs will help meet IT demand, with industry utilization strong and multiyear CapEx cycle expected for Gen 8.6 fabs.