Universal Display (NASDAQ:OLED) reported lower second-quarter revenue and earnings as softer material volumes and customer mix weighed on results, while management said it remains confident that new OLED manufacturing capacity and broader adoption across applications will support longer-term growth.
Second-quarter revenue was $152 million, down from $172 million a year earlier. Chief Financial Officer Brian Millard noted that the prior-year period benefited from elevated customer purchases ahead of anticipated tariff increases.
Outlook shifts toward lower end of range
Management now expects full-year revenue to track toward the lower end of its previously communicated $630 million to $670 million range. Millard said customer demand forecasts have become more cautious as rising component costs pressure portions of the smartphone market.
The revised outlook reflects lower expected sales volumes rather than pricing pressure, according to Millard. He said the company generally has long-term agreements with customers and has not seen unusual changes in average selling prices.
Despite the more cautious full-year outlook, Universal Display expects second-half revenue to exceed first-half revenue. Millard said the company typically benefits from product launches in the third quarter and early first quarter, and it expects growth across its customer base during the second half.
“2026 is really setting up the opportunity for growth in the next few years,” Millard said, citing newly commissioned OLED facilities that are expected to contribute more meaningfully as they reach full-year mass-production scale and higher utilization.
Materials sales decline, while license revenue rises
Total material sales fell to $66 million in the second quarter from $89 million a year earlier. The decline reflected lower material volumes, customer mix and changes in cumulative catch-up adjustments.
- Green emitter sales were $51 million, compared with $64 million a year earlier.
- Red emitter sales were $15 million, down from $24 million.
- Royalty and license revenue rose to $81 million from $76 million, primarily due to cumulative catch-up adjustments.
- Adesis revenue was $4.8 million, compared with $7.5 million in the prior-year quarter.
Cumulative catch-up adjustments across material sales and royalty and license revenue totaled about $10 million in the quarter. During the first six months of 2026, those adjustments had a net favorable impact of about $9 million compared with the second quarter of 2025, Millard said.
Total gross margin was 76%, compared with 77% a year earlier. Millard said material gross margin was affected by an approximately $7 million negative item tied to changes in materials and product mix during the company’s reforecasting process. He expects material gross margins to return closer to their historical level of approximately 60% during the second half.
For the full year, the company continues to expect total gross margin of 74% to 76%. Operating expenses excluding cost of sales were $62 million, down from $64 million a year earlier, and Universal Display expects full-year operating expenses to increase by a low single-digit percentage from 2025.
Management cites OLED capacity expansion and new markets
President and Chief Executive Officer Steve Abramson said OLED industry demand expectations have softened near term, but he believes the longer-term growth drivers remain intact. Industry forecasts call for OLED area growth to be relatively flat this year before returning to positive growth in 2027, he said.
Samsung Display and BOE have begun mass production at Generation 8.6 OLED facilities, Abramson said, while Visionox and TCL China Star are advancing greenfield projects. LG Display and Samsung Display have also announced additional Generation 6 investments.
Management highlighted IT, automotive and television displays as markets where OLED adoption remains in the low single digits, compared with approximately 65% penetration in smartphones. Abramson also pointed to foldable, trifold and rollable devices as categories that could broaden OLED adoption and enable new product designs.
Universal Display opened an OLED Technology and Innovation Center in Chengdu, China, during the quarter. The location is the company’s third innovation technology center in Asia, following facilities in Korea and Hong Kong.
Phosphorescent blue remains a key development priority
Universal Display continues to pursue commercialization of phosphorescent blue OLED technology, which management believes could deliver meaningful energy-efficiency benefits. Abramson said the company presented additional technical results at SID Display Week in May, including progress in efficiency, color performance, operational lifetime and manufacturability.
However, he did not provide a commercialization timeline, saying adoption depends on customer product roadmaps. The company is expanding development efforts across a broader range of blue materials and architectures and is using computational tools, artificial intelligence and machine learning to accelerate materials discovery.
Millard said blue development-material sales have been low in recent quarters, but he cautioned that sample-sales revenue is not necessarily the best measure of progress because limited quantities can support research and development work. He also cited prototypes publicly displayed by LG that incorporated phosphorescent blue in a hybrid tandem structure.
Universal Display ended the quarter with approximately $855 million in cash, cash equivalents and investments. During the quarter, it repurchased about 531,000 shares for approximately $48 million. The board declared a third-quarter cash dividend of $0.50 per share.
About Universal Display (NASDAQ:OLED)
Universal Display Corporation (NASDAQ: OLED) is a technology company specializing in organic light-emitting diode (OLED) solutions. The company develops and commercializes materials, technologies and software used in the creation of OLED displays and lighting. Its offerings include proprietary phosphorescent OLED (PHOLED) materials, display driver integrated circuits and process technologies that enable higher efficiency, longer lifetimes and improved color performance for a range of display and lighting applications.
Universal Display’s core business is licensing its extensive OLED patent portfolio to display manufacturers and providing them with the key organic materials needed for device fabrication.
