What happened

Shares of Universal Display Corporation (NASDAQ:OLED) were up 13% as of 12:30 p.m. EDT Friday after the OLED technologist announced better-than-expected second-quarter 2018 results

But its performance didn't look great at first glance. Universal Display's quarterly revenue declined 45.3% year over year to $56.1 million, while net income fell nearly 80% to $10.8 million, or $0.23 per share. But most people watching the stock were only expecting earnings of $0.15 per share on revenue of $49.6 million.

Three vials with Universal Display logo containing phosphorescent OLED emitter materials

Image source: Universal Display.

So what

To be fair, Universal Display's revenue and earnings were negatively impacted by new accounting standards at the start of the year, which change the way it's required to recognized license fees. Adjusted for that impact, revenue would have been $73.6 million, and earnings would have arrived at $25.1 million, or $0.54 per share. At the same time, those figures still represented year-over-year declines, namely given a 21% drop in OLED material sales revenue (to $36.8 million), due to a combination of weak OLED panel demand from softness in the premium smartphone market and pre-ordered material inventory purchases last year.

However, Universal Display CFO Sidney Rosenblatt left investors excited for the future, noting that the company believes material shipments hit a "bottom" in the first quarter and should accelerate starting in the second half of the year. Rosenblatt also reminded investors that the broader OLED industry remains at the beginning of a "multi-year OLED [capital expenditures] growth cycle of new production lines," which will significantly increase manufacturing capacities as a slew of new OLED products hit the market.

Now what

In the meantime, Universal Display reiterated its guidance for full-year revenue of $280 million to $310 million -- a range that would be 10% to 15% higher had it not been for the adoption of those new accounting standards.

Given its impending return to growth, and with Universal Display shares trading at less than half their 52-week highs, it's evident the market couldn't be more pleased.