Universal Display’s third quarter results drew a significant negative reaction from the market, as both revenue and GAAP earnings per share fell short of Wall Street expectations. Management attributed the shortfall to customer order timing, with pull-ins occurring earlier in the year and a $9.5 million out-of-period adjustment reducing royalty and license fees. CEO Steven Abramson noted that material sales remained steady year over year, but royalty revenues declined due to these timing effects. The company also pointed to ongoing macroeconomic uncertainty as a factor contributing to softer-than-anticipated performance.
Is now the time to buy OLED? Find out in our full research report (it’s free for active Edge members).
Universal Display (OLED) Q3 CY2025 Highlights:
- Revenue: $139.6 million vs analyst estimates of $166.1 million (13.6% year-on-year decline, 15.9% miss)
- Adjusted EPS: $0.92 vs analyst expectations of $1.19 (22.4% miss)
- Adjusted EBITDA: $55.22 million vs analyst estimates of $68.47 million (39.6% margin, 19.3% miss)
- The company reconfirmed its revenue guidance for the full year of $675 million at the midpoint
- Operating Margin: 30.9%, down from 41.5% in the same quarter last year
- Inventory Days Outstanding: 515, up from 452 in the previous quarter
- Market Capitalization: $5.75 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Universal Display’s Q3 Earnings Call
- Brian Lee (Goldman Sachs): Asked about the drivers behind the expected strength in fourth quarter revenue and whether any timing or product cycle factors would carry over into next year. CFO Brian Millard attributed the forecast to customer order visibility and new capacity coming online.
- Brian Lee (Goldman Sachs): Inquired about the flat year-over-year full-year outlook and how the company sees growth resuming in 2026. Millard pointed to new capacity announcements and onetime items in 2024 that made for challenging comparisons.
- Brian Lee (Goldman Sachs): Sought updates on the renewal of the LG Display contract and the impact on blue OLED commercialization. Millard confirmed ongoing negotiations and long-term partnership expectations without providing a timeline for blue OLED adoption.
- Manish Mava (Susquehanna International Group): Asked about Universal Display’s share of the bill of materials for tandem displays and the pricing outlook for blue OLED. Millard said the company’s materials remain a small portion of overall display costs and confirmed a premium price is expected for blue OLED.
- Martin Yang (Oppenheimer & Company): Queried whether guidance changes were driven by specific end markets like smartphones or IT. Millard responded that the IT segment presents the most significant growth opportunity, particularly with new capacity and larger display formats.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be closely monitoring (1) the pace at which new Gen 8.6 OLED manufacturing facilities in Korea and China reach operational status, (2) any concrete progress or commercial milestones for Universal Display’s phosphorescent blue emitter, and (3) shifts in customer order patterns as indicators of underlying demand. Developments in IT and automotive OLED adoption will also be key signposts for sustained growth.
Universal Display currently trades at $120.89, down from $135.29 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).
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