Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What's happening: Shares of Universal Display Corp. (NASDAQ:OLED) were up more than 12% as of 11:15 a.m. Friday after the OLED technologist reported light first-quarter revenue, but followed with better than expected earnings and reiterated its full-year guidance.

Quarterly revenue fell 24% year over year to $31.2 million, which translated to net income of $1.3 million, or $0.03 per diluted share. Analysts, on average, were expecting net income of just $0.01 per share on slightly higher sales of $32.2 million.

In addition, Universal Display reiterated 2015 guidance for a "base" revenue forecast of $200 million, with a downside range of roughly 5% ($190 million) and upside of 15% ($230 million). Analysts were modeling 2015 revenue of $211.9 million.

Why it's happening: Driving Universal Display's top line was a 24% decrease in material sales to $26.8 million, partially offset by a 146% increase in royalty and license fees to roughly $4.4 million. That might sound bad, but to blame for the former was an expected fall in sales of host materials. Remember, while Universal Display has an effective IP lock on the phosphorescent OLED emitter materials market, its customers aren't required to purchase host materials under their patent and license agreements with the company. And Samsung, for its part, acquired OLED host materials producer Cheil Industries for that very reason around this time last year.

Sure enough, red emitter sales rose 34% from last quarter to $6.3 million on strong demand for products like Samsung's Galaxy S6 and S6 Edge smartphones. And while green emitters were up in volume, revenue there was down 5% sequentially to $14.4 million on volume discounts. For that, investors can partly thank Universal Display's new long-term license agreement with LG Display(NYSE:LPL). As LG continues to ramp production and shipments of its OLED TVs -- with 600,000 units expected this year and 1.5 million in 2016 -- it's evident this volume price-induced weakness won't last long. 

With this in mind, Universal Display also has not begun recognizing earned royalties from LG under that agreement. According to CFO Sid Rosentblatt, those royalties "will be recognized one quarter in arrears when the royalty amounts become known to us, which will begin in the second quarter."

All things considered, given Universal Display's understandable explanations for its narrow top-line miss, better-than-expected earnings, and reiterated guidance, I can't blame the market for bidding up the stock today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.