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DATE

Thursday, July 30, 2026 at 5:00 p.m. ET

CALL PARTICIPANTS

  • Senior Director of Investor Relations - Darice Liu
  • President and Chief Executive Officer - Steven V. Abramson
  • Chief Financial Officer and Treasurer - Brian Millard

TAKEAWAYS

  • Revenue -- Universal Display Corporation (OLED +0.25%) reported $152 million, compared to $172 million in the second quarter of 2025, which management noted benefited from elevated customer purchases ahead of anticipated tariff increases.
  • Full Year Revenue Guidance -- Management updated its 2026 forecast to the lower end of the $630 million to $670 million range, citing restricted visibility in consumer electronics and cautious customer demand.
  • Material Sales -- Sales were $66 million, down from $89 million in the prior year period due to lower volumes, changes in customer mix, and cumulative catch-up adjustments.
  • Green Emitter Sales -- Revenue reached $51 million, including yellow-green emitters, compared to $64 million in the second quarter of 2025.
  • Red Emitter Sales -- Sales totaled $15 million, representing a decrease from $24 million in the same period last year.
  • Royalty and License Fees -- Revenue was $81 million, an increase from $76 million in the prior year period, primarily driven by cumulative catch-up adjustments.
  • Cumulative Catch-up Adjustments -- Adjustments totaled approximately $10 million during the quarter, resulting in a net favorable impact of $9 million compared to the second quarter of 2025.
  • Material Sales to Royalty Ratio -- The ratio was 0.8 to 1 for the second quarter, though management expects the full year ratio to average approximately 1.2 to 1.
  • Adhesives Revenue -- Sales from Adhesivs were $4.8 million, down from $7.5 million in the prior year period.
  • Total Gross Margin -- The company reported a gross margin of 76%, consistent with its full year guidance range of 74% to 76%.
  • Materials Gross Margin -- Management reported an anomaly in the second quarter that resulted in a $7 million reduction, but expects margins to return to the historical level of approximately 60% in the second half.
  • Operating Expenses -- Expenses were $62 million, a decrease from $64 million in the second quarter of 2025.
  • Full Year Operating Expense Guidance -- Management expects operating expenses to increase by a low single digit percentage compared to 2025.
  • Operating Income -- Income was $54 million, resulting in an operating margin of 35% compared to 40% in the prior year period.
  • Net Income -- Net income was $49 million, or $1.06 per diluted share, compared to $67 million, or $1.41 per diluted share, in the second quarter of 2025.
  • Cash and Investments -- The company ended the quarter with approximately $855 million in cash, cash equivalents, and investments.
  • Share Repurchases -- The company repurchased 531,000 shares for approximately $48 million during the second quarter.
  • Shareholder Returns -- Management reported returning more than $238 million to shareholders through dividends and buybacks over the last 12 months.
  • Dividend -- The board of directors declared a third quarter cash dividend of $0.50 per share.
  • OLED Market Penetration -- OLED has reached approximately 65% penetration in the smartphone market, while IT, automotive, and TV markets remain in the low single digits.
  • Tax Rate -- The effective tax rate for the quarter was approximately 19%.
  • Second Half Outlook -- Management expects second half revenue to exceed first half revenue, driven by product launch cycles in the third quarter and early 2027.

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RISKS

  • Abramson stated, "Rising memory costs and supply constraints continue to weigh on demand expectations, particularly within the smartphone market," noting that higher component costs are pressuring unit volumes.
  • Millard noted that "customer demand forecasts have become more cautious as higher component costs continue to pressure portions of the smartphone market," leading to the revised full year revenue guidance.

SUMMARY

Management adjusted full-year revenue expectations to the lower end of the previous range, citing restricted visibility in consumer electronics and rising component costs. The company reported ongoing expansion in OLED manufacturing capacity, specifically with Gen 8.6 facilities commencing mass production at Samsung Display and BOE. Strategic focus remains on the commercialization of phosphorescent blue materials and the penetration of IT, automotive, and television markets where adoption remains in the early stages. Management anticipates a stronger second half of the year as new product cycles begin and material gross margins normalize.

  • Abramson stated that OLED area growth is expected to be "relatively flat this year with positive growth expected to resume in 2027."
  • Samsung Display and BOE have recently commenced mass production of Gen 8.6 OLED facilities, while Visionox and TCL China Star continue greenfield projects.
  • Regarding the development of phosphorescent blue, Abramson noted that "commercialization timing continues to depend on customer road maps," despite technical progress in efficiency and lifetime.
  • Millard attributed the materials gross margin dip to a "negative item hitting the materials line" in the second quarter, which he expects to return to 60% levels for the remainder of the year.
  • The company opened a new OLED technology and innovation center in Chengdu, China, marking its third such innovation tech center in Asia.
  • Abramson highlighted the expansion of foldables, noting that as more brands enter the market, they are expected to "evolve from a niche category into a more mainstream segment in the years ahead."
  • The company is utilizing agentic AI and machine learning through its role in the AI Materials Foundry to accelerate next-generation material discovery and development.

INDUSTRY GLOSSARY

  • UniversalPHOLED: The company's brand of phosphorescent OLED materials which are significantly more energy-efficient than traditional fluorescent materials.
  • Gen 8.6: A larger glass substrate size used in manufacturing that improves production efficiency for medium-sized displays like tablets and laptops.
  • Phosphorescent Blue: A high-efficiency blue light-emitting material currently under development to complete the company's phosphorescent red, green, and blue portfolio.
  • Tandem Architectures: A display design that stacks multiple layers of OLED materials to increase brightness and extend the operational lifetime of the device.
  • SID Display Week: A major annual international symposium and exhibition for the electronic display industry.
  • PSF: Phosphorescent sensitized fluorescence, a next-generation OLED technology being developed to enhance display performance.
  • Agentic AI: Advanced artificial intelligence capable of autonomous reasoning and task execution used by the company for materials discovery.

Full Conference Call Transcript

Operator: Good day, ladies and gentlemen, and welcome to Universal Display Corporation's Second Quarter 26 Earnings Conference Call. My name is Sherry, and I will be your conference moderator for today's call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference call over to Darice Liu, Senior Director of Investor Relations. Please proceed.

Darice Liu: Thank you, and good afternoon, everyone. Welcome to Universal Display's second quarter earnings conference call. Joining me on the call today are Steven V. Abramson, President and Chief Executive Officer and Brian Millard, chief financial officer and treasurer. Before Steve begins, let me remind you today's call is a property of Universal Display. Any redistribution, retransmission, or rebroadcast of any portion of this call in any form without the expressed written consent of Universal Display is strictly prohibited. Further, this call is being webcast live and will be made available for a period of time on Universal Display's website.

This call contains time sensitive information that is accurate only as of the date of the live webcast of this call July 30, 2026. During this call, we may make forward-looking statements based on current expectations These statements are subject to a number of significant risks and uncertainties and our actual results may differ materially. These risks and uncertainties are discussed in the company's periodic reports filed with the SEC and should be referenced by anyone considering making any investments in the company's securities. Universal Display disclaims any obligation to update any of these statements. Now I would like to turn the call over to Steven V. Abramson.

Steven V. Abramson: Thanks, Darice, and good afternoon, everyone. As we look across the OLED industry, we continue to see investment innovation, and expansion throughout the ecosystem. Display manufacturers are investing billions of dollars in new capacity. Brands are broadening adoption across a growing range of products and applications. And next generation technologies continue to push the boundaries of performance and capability. Those developments reflect the industry's long term growth trajectory. Even as portions of the consumer electronics supply chain face a more challenging near term environment. Rising memory costs and supply constraints continue to weigh on demand expectations, particularly within the smartphone market. Where higher component costs are putting pressure on unit volumes.

The near term headwinds are reflected in our updated outlook which Brian will discuss in more detail. We believe it is important to separate the current cycle from the longer term direction of the industry. While demand expectations have softened in the near term, we believe the industry's fundamental growth drivers remain firmly intact. Industry forecast call for OLED area growth to be relatively flat this year with positive growth expected to resume in 2027. And many of the investments that will support that next phase of growth are already underway today. After years of planning and development, Gen 8.6 OLED manufacturing is becoming a commercial reality.

Samsung Display and BOE recently commenced mass production of the Gen 8.6 facilities, while Visionox and TCL China Star continue advancing their greenfield projects. In addition, LG Display and Samsung Display have announced further Gen 6 investment. Most of these investments target end markets where adoption remains in its early stages. While OLED is already well established in smartphones, with approximately 65% market penetration. IT, automotive, and TVs remain at a much earlier stage with shares still in the low single digits. In automotive, recent introductions such as the Genesis g v 70 Volvo EX 60, and Zeekr 009 demonstrate how OLEDs are driving sophisticated digital cockpits in premium and electric vehicle interiors.

Beyond expanding into new applications, 1 of OLED's key advantages is its ability to enable entirely new form factors. Foldable, trifold, and rollable devices are demonstrating how OLED flexibility can unlock new product designs and user experiences. Last week, Samsung unveiled its Galaxy Fold 8 series featuring new flex titanium technology that significantly reduces crease visibility while improving durability. As additional brands enter the market and performance continues to improve, foldables are expected to evolve from a niche category into a more mainstream segment in the years ahead. Collectively, these industry developments highlight the significant runway that remains as OLED expands across new applications, larger display formats, emerging form factors.

As adoption broadens, customers continue to demand higher brightness lower power consumption, longer lifetime, broader color gamut, and more advanced display architectures. Meeting these needs requires continued advances in materials and device technologies, which is where our expertise and technology leadership matters most. We are continuing to play a central role in advancing the materials and technology that underpin and drive the industry. Our decades of invention, development, and manufacturing know-how, a portfolio of more than 7 thousand patents, strong customer relationships, and a global support infrastructure position us well as the industry leader entering this next phase of growth.

1 of the most important opportunities on our road map continues to be phosphorescent blue and the meaningful energy efficiency benefit it is expected to deliver. At SID display week in May, we presented additional technical results demonstrating continued progress towards a more robust phosphorescent blue system. Including advances in efficiency, color performance, operational lifetime, and manufacturability. While commercialization timing continues to depend on customer road maps, we believe phosphorescent blue is a significant opportunity for both UDC and the broader industry.

Beyond Blue, we continue advancing and broadening our portfolio of next generation OLED technologies, including phosphorescent sensitized fluorescence or PSF, tandem architectures, and innovations designed to enhance light extraction, increase power efficiency, and improve the visual appearance of the display. We look forward to sharing additional technical developments at Korea's IMID conference next month. We are also accelerating materials discovery and development through our internal advanced computational tools, artificial intelligence, machine learning, and agentic AI, as well as strategic collaborations. Including our role as a founding member of CuspAI's recently launched AI Materials Foundry. On the infrastructure front, we continue to invest alongside the OLED industry.

Last month, we celebrated the grand opening of our new OLED technology and innovation center in Chengdu, China. As our third innovation tech center in Asia, following Korea and Hong Kong, It reinforces our commitment to providing on the ground local support and fostering collaboration with customers. As we look ahead, we remain confident in the OLED industry's growth trajectory. Continued investment in manufacturing capacity expanding adoption across new applications of form factors and advances in materials and device architectures reinforce our belief that the next growth phase is taking shape. Our investments in innovation and infrastructure, we are helping to build the foundation for that future. And with that, I will turn the call over to Brian.

Brian Millard: Thanks, Steven. Revenue for the second quarter of 2026 was $152 million. Compared to $172 million in the second quarter of 2025. As a reminder, the prior year period benefited from elevated customer purchases ahead of anticipated tariff increases. Turning to the broader environment. As Steve shared, we continue to see meaningful investment across the OLED ecosystem and encouraging progress in several long term growth drivers. At the same time, visibility across portions of the consumer electronics supply chain has remained limited. Customer demand forecasts have become more cautious as higher component costs continue to pressure portions of the smartphone market.

Given these dynamics, we now expect full year revenue to track toward the lower end of our previous previously communicated range of $630 million to $670 million with second half revenue still expected to exceed first half revenue. Our total material sales in the second quarter were $66 million compared to material sales of $89 million in the second quarter of 2025. The decrease in material sales was primarily driven by lower material volumes customer mix, and changes in cumulative catch up adjustments. Green emitter sales, which include our yellow green emitters, were $51 million. Compared to $64 million in the second quarter of 2025.

Red emitter sales were $15 million compared to $24 million in the second quarter of 2025. Revenue from royalty and license fees was $81 million in the second quarter compared to $76 million in the prior year period. The increase was primarily driven by cumulative catch up adjustments. Across both royalty and license revenue and material sales, cumulative catch up adjustments totaled approximately $10 million during the second quarter and the first 6 months of 2026. And had a net favorable impact of approximately $9 million compared to the second quarter of 2025. The ratio of material sales to royalty and license revenue during the second quarter was approximately 0.8 to 1.

When you look at the first half of the year, the ratio was approximately 1.1 to 1. Based on our current outlook, we now expect the full year ratio to average approximately 1.2 to 1. Adhesus generated $4.8 million of revenue during the quarter, compared to $7.5 million in the second quarter of 2025. Cost of sales was $37 million for the quarter. Total gross margin was 76%. Compared to 77% in the second quarter of 2025. Operating expenses, excluding cost of sales, were $62 million compared to $64 million in the prior year period. We continue to operate as a lean company, investing in key R&D and growth initiatives while maintaining a disciplined approach to spending.

Based on our current outlook, we now expect full year operating expenses to increase by a low single digit percentage compared to 2025. Operating income for the quarter was $54 million representing an operating margin of 35%. This compares to the prior year period of $69 million and an operating margin of 40% The effective tax rate for the quarter was approximately 19%. Net income was $49 million or $1.06 per diluted share, compared to net income of $67 million or $1.41 per diluted share in the second quarter of 2025. Our business continues to generate strong cash flow and maintain significant financial flexibility. During the second quarter, we repurchased approximately 531 thousand shares for approximately $48 million.

Over the last 12 months, we returned more than $238 million to shareholders through dividends and share repurchases. Today, we announced that our board of directors declared a third quarter cash dividend of $0.50 per share. We ended the quarter with approximately $855 million in cash, cash equivalents and investments. Providing substantial flexibility to invest in innovation, pursue growth opportunities, and continue returning capital to shareholders. Our strong balance sheet and cash flow generation position us well to support both our near term priorities and long term growth initiatives. With that, I will turn the call back to Steven.

Steven V. Abramson: Thanks, Brian. We are excited about the opportunities ahead. OLED continues to expand into new applications new products, and new form factors. The technology road map also continues to advance, creating new opportunities across the ecosystem. As an OLED pioneer, we have helped shape the industry through scientific leadership intellectual property, and close collaboration with our customers and partners. We believe those strengths, together with our robust R&D pipeline, global infrastructure, and strong balance sheet position us well for the future. I would like to thank each of our employees for their drive desire, dedication, and heart in elevating and shaping Universal Display's accomplishments and advancements. We are committed to being a leader in the OLED ecosystem.

Achieving superior long term growth and delivering cutting edge technologies and materials for the industry, for our customers, and for our shareholders. With that, operator, let's start the Q&A session.

Operator: Thank you, Mr. Abramson. You may press 2 if you would like to remove your question from the queue. Before pressing the star keys. Our first question comes from Jim Ricchiuti with Needham and Company. Please proceed.

James Ricchiuti: Thank you. Good afternoon. I know there is probably some noise in those materials margins that were in the second quarter I am wondering, do you should we anticipate a return to more normalized material margins in the second half?

Brian Millard: Yeah. Hi, Jim. Yeah. As you noted, there was a little bit of anomaly in the second quarter. We did as we went through our reforecasting process, we did-- we do now assume that there is going to be a change in a bit of in some of the materials mix and the product mix. And so as a result of that, there was roughly a $7 million reduction recorded compared to where we were in Q2 of last year. So it was a negative item hitting the materials line in the second quarter. And we do expect in the remainder of the year, our Materials gross margins to return more toward their historical levels which have been approximately 60%.

James Ricchiuti: Got it. And are you able to say if your revenues if you expect your revenues to benefit in any meaningful way from the new capacity that you alluded to in the press release and your introductory comments. In the second half? Or is this realistically, is this more likely to be a catalyst for you next year?

Steven V. Abramson: There certainly is some benefit we are seeing in 2026 in the second half and even in the first half as those fabs are getting ready for mass production. And that is already encompassed in our guidance for this year. Next year we certainly and, you know, in 2027 and beyond, even more benefit as those fabs are fully operational and mass production scale for a full 12 months. Each year as well as, more heavily utilized in the coming years. So 2026 is really setting up, you know, the opportunity for growth in the next few years.

Operator: Our next question is from Mehdi Hosseini with SIG. Please proceed.

Mehdi Hosseini: Yes. Thanks for taking my question. I want to go back to Steven. This is obviously a recurring question every quarter. And I am just going to ask you, is there any more detail as to how you are progressing with commercialization of the blue Has the reliability and the yield and the lifetime improved to the point that we are just waiting for commercial adoption at a larger scale, or is there still some milestones that you need to meet before commercialization of the end market product?

Steven V. Abramson: Well, Mehdi, as you know, phosphorescent blue is 1 of our most important opportunities. And we have made meaningful progress in the earlier developmental materials achieved some key milestones. And work is continuing on those programs and you saw the announcement about from LG on the iPad. But you know, as the industry has evolved, we have seen multiple pathways emerging for phosphorescent commercial blue OLEDs. And so we are expanding our efforts across a broader range of next generation blue materials and architecture. So we are accelerating the development, increasing resources behind the program, including leveraging our AI machine learning to expand the design space and accelerate materials discovery and development.

We remain confident in the long term commercial opportunity for phosphorescent blue. But, again, I cannot give you any specific timelines right now because that is really dependent on our customers' commercial road maps.

Brian Millard: Yeah. And, Mehdi, you know, as you are aware, in 2025, LG at SID display week showcased a tablet sized product that had incorporated phosphorescent blue in a hybrid tandem structure. So it was a tablet you know, size product, and they did re showcase at this year's SID display week a similar prototype that they developed. So we are very encouraged by progress that we see LG making and talking about very publicly as well as progress that other customers have made as well that have not have, you know, now gotten to a point of being prototypes that they are able to, showcase with others in the industry.

Mehdi Hosseini: Got it. Thanks for detail. If I may just have a follow-up here. Could there be a scenario where increased emphasis on power consumption or reduction in power consumption make the blue a more viable solution for the next generation of the gaming laptop or even to that extent, a more sophisticated AI notebooks that would come into the market next year.

Operator: Oh, go ahead.

Steven V. Abramson: The more the emphasis is on power efficiency, the more important is our blue phosphorescence. But the next year comment, I am going to hold on to.

Mehdi Hosseini: Gotcha. Thank you.

Operator: Our next question is from Scott Searle with ROTH Capital Partners.

Scott Searle: Please Hey, good afternoon. Thanks for taking the questions. Steven and Brian, maybe to dive in, in terms of guidance for the year. Even at the lower end of the range, it still implies a meaningful step-up into the second half of this year. Think an average of $168 million ish in revenue per quarter. I am wondering where you are seeing the strength? What level of confidence is in that? Certainly, it sounds like you have got some early production that is going on with some of the new fabs.

But I am wondering if you could update us in terms of where you think channel inventories are and kind of what is driving that comfort and outlook into the second half?

Brian Millard: Yeah. Hi, Scott. So in the second half, as you are aware, there is a number of products that launch in Q3, as well as early Q1. That we, you will typically see a stronger second half in most years in our business, and we expect that trend this year as well. So on the visibility we have right now at the product cycles, and the details that we are receiving from customers in terms of their forecast, we do expect the second half to be to be stronger than the first half, which has really been our expectation all along this year.

We have, since the beginning of the year, expected that, the second half was going to be stronger, and that continues to be the case today.

Scott Searle: Gotcha. Very helpful. Thank you. And if I could just to follow-up specifically on some of the geographic mix, I think China took a nice tick up in the second quarter. Are we getting back to a more normalized level of China revenues? Or is this some more pre buying ahead of second round of tariffs or just new production coming online for BA? Any color on that front would be helpful. And just to clarify on the gross margins, Brian, I want to make sure I heard correctly. Materials gross margins recovering back to the 60% level. In the second half after some of the anomalies that we saw in the second quarter?

Brian Millard: Yes. that is right on the materials gross margins. We do expect the second half to be more normal, you know, near our historical trends, which have been around 60% in recent quarters. There were some anomalies in Q2 that drove the Materials gross margin being lower. As it relates to China, our China sales have always been very lumpy. Historically, and that continues to be the case. But we are projecting growth in Chinese customer revenues in the second half. And I would say, we are seeing customers who are more exposed to the mid and low end segments of the smartphone market. there is just a little more pressure on those customers this year.

But we are projecting growth in the second half.

Scott Searle: Thanks so much. I will get back in the queue. Thanks, Scott.

Operator: As a reminder, just *1 on your telephone keypad if you would like to ask a question. Our next question is from Nam Kim with Equity Research. Please proceed.

Nam Kim: Hello. Thank you for taking my question. I think the guidance adjustment, I guess, you know, may be due to a bit slower material growth trend. Is this driven by lower unit volume or ASP pressure or combination of both? I mean, IT OLED demand, especially gaming monitor, seems very strong. But smartphone demand is weak. So could you help me understand, overall unit impact across your, end market? And also, given the rising cost of across the industry, are you seeing any price pressure on your OLED material? Or has your material pricing remained relatively stable? Thank you.

Brian Millard: Yeah. Hi, Nam. The change in the guidance now expecting us to be toward the low end of the prior range, that is really driven by a change in volume expectation. As you are aware, we have long term, you know, typically 5 year deals with our customers. So we have very consistent ASPs over those periods, and we have not seen anything out of the ordinary on the pricing side. And so that, you know, it is really driven by a lower expectation of, of volume this year.

Nam Kim: K. Thank you.

Operator: Our next question is from Martin Yang with Oppenheimer and Company. Please proceed.

Martin Yang: Hi. Thank you for taking my question. Hi. Thank you for taking my question. A follow-up on the previous topic on growth in the second half. Do you expect growth in the second half across all of your customers? Hi, Martin.

Brian Millard: Yeah. We are projecting growth across our customers in the second half. So, there is product cycles that we expect we will benefit from in the second half as well as we are projecting across the board growth in the in the customer base based on a broad basis in the second half.

Martin Yang: Got it. Second question on gross margin. Looking to maybe a more medium term perspective, do you think we will see incremental gross margin headwind in 2027 based on raw material costs And do you have any potential offset to those potential headwinds?

Brian Millard: Yeah. So on gross margin, I think, you know, it is important to focus on total gross margins is the much more useful way in our view of a assessing our profitability. And our guidance this year for total gross margins is 74% to 76%. And on a year to date basis, we are tracking right in line with that at just north of 75%. And in terms of 2027, too early to give a guide or expectation there. We do have certain input costs, into our manufacturing process. 1 of the key ones being iridium, which is a key component of many of our products. That has fluctuated in price recently.

On the other side, you know, as we can put more volume through, the fixed components of our manufacturing plants, we are able to achieve, you know, greater operating leverage there. So we will give more color in February about what that means for next year, but we are certainly very focused on the sourcing side of things, making sure that we are sourcing our raw materials and inputs in the most efficient and cost effective way. And, you know, working with PPG as well to make sure that the manufacturing processes are optimized to the to the greatest extent.

Martin Yang: Got it. Last question. The sales of blue sample materials have stayed at a very low level in past few quarters. Can you maybe comment on what should we interpret as lower level of sample sales versus the past few quarters or the same time last year? And what we should expect for the rest of this year? Thank you.

Brian Millard: Yeah. So I think that the blue development sales have been low as you noted in the last couple of quarters, but the progress with our customers continues to move positively in the right direction. When in an R&D stage and development cycle that they are in, a little bit of material can go a long way. And we are also, as Steven noted, continuing to focus our resources on inventing new materials and providing those to customers to, you know, open even more doors for them in Blue Development.

So, the number is certain the revenue number is certainly, you know, an interesting anecdote, but it is not necessarily the best way of measuring the progress that we are making, in moving closer to commercialization of blue.

Martin Yang: Got it. Thank you, Brian. that is it for me. Thanks.

Operator: Thank you. This concludes the question-and-answer session. I would like to turn the program back over to Brian Millard for any additional or closing remarks.

Brian Millard: Thanks for joining us today. We are confident in the underlying growth drivers for UDC and the OLED industry. We appreciate your continued support and look forward to speaking with you again next quarter. Thank you.

Operator: This concludes today's conference call. You may now disconnect.