Universal Display Corporation Q1 FY2026 earnings call

Steve Abramson mentioned that while the near-term backdrop has become more challenging, the long-term view remains unchanged. The company operates a high-margin business model with strong free cash flow generation, longstanding partnerships, and a strong balance sheet. They are applying AI and machine learning to enhance material discovery. They highlighted a shift in the industry towards a system-level approach to support advanced OLED architectures. They announced new long-term agreements with TNMA and LG Display. They also discussed progress in phosphorescent blue and other emissive materials, and the incorporation of their phosphorescent material into a commercial green PSF product.

Revenue for the first quarter of 2026 was $142 million, compared to $166 million in the first quarter of 2025. Total material sales were $84 million in the first quarter compared to $86 million in the first quarter of 2025. Green emitter sales were $64 million in both periods. Red Emitter sales were $20 million in the first quarter of 2026 compared to $21 million in the first quarter of 2025. First quarter royalty and licensing fees were $54 million compared to $74 million in the prior year period. Adesys revenue in the first quarter was $4.3 million, compared to $6.6 million in the first quarter of 2025. First quarter cost of sales was $36 million, resulting in a total gross margin of 75%. Operating expenses, excluding cost of sales, were $63 million in the first quarter, compared to $58 million in the prior year period. Operating income for the quarter was $43 million, representing an operating margin of approximately 30%. Net income for the first quarter was $36 million, or 76 cents per diluted share, compared to $64 million, or $1.35 per diluted share, in the first quarter of 2025.

Based on current forecasts, they expect second quarter revenue to be sequentially higher than the first quarter and the second half of the year to be stronger than the first half. They revised the full-year revenue guidance range to $630 to $670 million from prior $650 to $700 million. They expect the effective tax rate to be approximately 20% for the full year. The Board authorized a new $400 million share repurchase program and declared a cash dividend of 50 cents per share for the second quarter.

Q: Guidance revision, capacity, smartphone pressures.

A: Guidance changed due to macro environment. Capacity plans moving forward. Premium smartphones more insulated but OLED has exposure to mid and low end.

Q: China revenue contribution, trends.

A: China revenues lumpier, strong position, expected to pick up.

Q: Hybrid architectures.

A: Hybrid combines phosphorescent and fluorescent technology to get best of both.

Q: OPEX, Blue paper, China tariff stockpiling.

A: OPEX trending mid single digit growth. First blue paper in quite some time. Largest tariff stockpiling in April last year.

Q: China linearity, hybrid architecture commerciality.

A: Historically yield issues with fab ramps, materials usage more efficient. Hybrid architectures commercially performing.

Q: Guidance breakdown, capacity input, IP protection.

A: Guidance reflects macro environment change. Confident in new FABs consuming materials. Firmly protect IP with over 7,000 patents worldwide.