Universal Display (NASDAQ:OLED) announced third-quarter 2019 results late Wednesday, handily beating expectations yet again. Only this time, the OLED technologist didn't credit orders pulled forward from Chinese customers (as was the case three months ago) due to the ongoing trade war. Rather, it touted the relative strength of its flagship product with electronics manufacturers around the world, and followed by increasing its full-year outlook.

With shares up more than 15% in after-hours trading as of this writing, here's a closer look at what Universal Display accomplished in its most recent quarter relative to the same year-ago period:

Metric Q3 2019 Q3 2018 Change (YOY)

GAAP revenue

$97.5 million

$77.6 million


GAAP net income

$37.0 million

$22.8 million


GAAP earnings per share




Data source: Universal Display. YOY= year-over-year.

Transparent OLED reading light with a book's text illuminated.

Image source: Universal Display.

Perspective is in order

Recall Universal Display adopted new (ASC 606) accounting standards in early 2018 that changed its revenue-recognition process for license fees. Under the old (ASC 605) standard, revenue this quarter would have been $97.7 million, up from $91.6 million in the same year-ago period. ASC 605 net income would have been much closer at $37.1 million, or $0.78 per share, but representing more modest bottom-line growth from $0.72 per share a year ago.

In any case, most analysts were modeling significantly lower earnings of $0.58 per share on revenue of $85.9 million.

As Universal Display disclosed in July, growth this quarter would have been even more pronounced had it not been for certain China-based customers accelerating roughly $15 million to $20 million in phosphorescent OLED emitter materials purchases to mitigate the potential impact of strained U.S.-China trade relations.

To that end, material sales this quarter arrived at $51.8 million, up 1.2% year over year, and would have climbed 12.8% (to $58.3 million) under ASC 605. Meanwhile, royalty and license fee revenue soared 84.5% to $43 million -- though the same line item would have declined slightly year over year under ASC 605 standards to $36.7 million. And finally, contract research services revenue declined slightly year over year to $2.7 million.

On new partnerships, OLED manufacturing capacity

Universal Display also moved to expand its repertoire through a new partnership with LG Chem last month, through which the companies aim to collectively develop and commercialize red, green, and yellow OLED "host" materials -- a type of OLED material that's complementary to the function of OLED emitters to enable OLED devices to function as desired.

Four jars of Universal Display OLED materials, including one host jar and three emitters.

Image source: Universal Display.

Universal Display CFO Sid Rosenblatt called it "another quarter of solid results," adding that "OLED activity continued to gain strength on a global scale."

Rosenblatt elaborated:

We believe that the proliferation of OLEDs across the consumer electronics spectrum is fueling a tremendous multi-year capex cycle. As panel makers continue to shift more of their focus to OLEDs as the future of displays, we are seeing a corresponding increase in OLED investment momentum. Based on our current forecasts and industry data, we believe market growth will continue and estimate that the installed capacity base of OLEDs at the end of 2021, as measured in square meters, will increase by approximately 50% over the installed capacity base at the end of 2019.

Upping the ante

As such, Universal Display raised its full-year guidance to call for revenue in the range of $400 million to $410 million, up from its previous outlook for a range of $370 million to $390 million (and well above consensus estimates for revenue closer to $383 million). Under the old accounting standard, this new 2019 target range would have been closer to $435 million to $440 million.

In the end, that positive revision should give bearish investors -- particularly those who were concerned by the impact of last quarter's pulled-forward orders on second-half growth -- precious little ground on which to stand. With shares of Universal Display having dropped around 25% from its 52-week high on the heels of last quarter's report, the stock is rightfully rebounding now in response.