Universal Display Corporation Q4 FY2025 earnings call

• 2025 had record revenue, operating and net income. • OLED adoption expanded across consumer electronics. • Expanded R&D, IP framework, global infrastructure. • OLED industry entering new phase with diverse architectures. • R&D platform active with robust pipeline, AI and ML as accelerators. • Blue phosphorescent material engagement with customers. • Market forecasts show OLED growth in various sectors. • OLED industry entering capacity expansion phase with Gen 8.6 facilities coming online. • 2026 outlook includes revenue range, gross margin range, R&D and SG&A expense growth, operating margin range, tax rate expectation, and dividend increase.

2025 revenue was $651 million. Material sales were $353 million, royalty and license revenues were $275 million, Adesis revenues were $23 million. Fourth quarter 2025 revenue was $173 million, up 7% from prior year. Material sales were $96 million, green emitter sales $74 million, red emitter sales $21 million. Royalty and license fees in fourth quarter were $73 million. Adesis revenue for fourth quarter 2025 was $4.8 million. Gross margin for 2025 was 76%, for fourth quarter 2025 was 76%. Operating income for 2025 was $249 million, operating margin 38%; for fourth quarter 2025 was $67 million, operating margin 39%.

• 2026 revenues expected to be in range of $650 million to $700 million. • Materials to royalty and licensing revenues ratio expected to be ~1.3:1. • Total gross margins expected to be ~74% to 76% due to higher raw material pricing. • R&D and SG&A expenses expected to grow mid- to high single-digit year-over-year. • 2026 operating margins expected to be in range of 34% to 37%. • Effective tax rate for 2026 expected to be ~19%. • Dividend increase with $0.50 per share payment on March 31, 2026.

Q: Big picture on blue phosphorescent material outlook, bottlenecks and progress visibility.

A: Brian Millard said they're on the right path, working with customers, progress in customers' hands, blue revenue still developmental.

Q: Follow-up on blue revenue visibility.

A: Blue revenue still developmental, modeling around past few years.

Q: Big picture on inventory trends, seasonality, cumulative catch-up payments.

A: Tariff buying in China worked through, seasonality expected second half stronger, cumulative catch-up due to third-party data revisions.

Q: Capacity adds, Gen 8.6 lines, benefits and guidance.

A: New fabs come online in Q2, incorporated in guidance, second half weighted.

Q: Competitive environment in China, revenue concentration.

A: Increased competition, investing in China, strong patent position.

Q: Contract talks with LG.

A: Working on new contract, progressing.

Q: Calendar 2026 revenue guide, underlying assumptions.

A: Aligns with industry area growth, considers various end markets, factors in memory pricing and IT/foldable demand.

Q: Royalty modeling for 2026.

A: Expect materials to licensing ratio around 1.3:1.

Q: Cumulative catch-up context.

A: Across all customers, not end market specific.

Q: Guidance, incorporating own view on smartphone shipments.

A: Foundation in customer forecast and industry projections.

Q: Gross margin, raw material costs.

A: Iridium and other raw materials cause gross margin impact, no significant pricing adjustments.

Q: Gross margin outside raw material costs.

A: Volume pricing caused slight decrease, cost structure considered in customer agreements.