Universal Display 2026 Q2 Earnings Call

Please proceed. Thank you. 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 that 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 express written consent of Universal Display is strictly prohibited. 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 30th, 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. 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. I would like to turn the call over to Steven V.

Abramson. Thanks, Darice. 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 in new capacity, brands are broadening adoption across a growing range of products and applications. 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. Those 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 forecasts call for OLED area growth to be relatively flat this year, with positive growth expected to resume in 2027. 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 at their 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 investments. 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 GV70, Volvo EX60, and Zeekr 9X demonstrate how OLEDs are driving sophisticated digital cockpits in premium and electric vehicle interiors. Beyond expanding into new applications, one 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, and 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 7,000 patents, strong customer relationships, and a global support infrastructure position us well as the industry leader entering its next phase of growth. One of the most important opportunities on our roadmap continues to be phosphorescent blue and the meaningful energy efficiency benefits it is expected to deliver.

At SID Display Week in May, we presented additional technical results demonstrating continued progress towards a more robust phosphorus and blue system, including advances in efficiency, color performance, operational lifetime, and manufacturability. While commercialization timing continues to depend on customer roadmaps, we believe phosphorus and 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 phosphorus and 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 and form factors, and advances in materials and device architectures reinforce our belief that the next growth phase is taking shape.

Through our investments in innovation and infrastructure, we're helping to build the foundation for that future. With that, I'll turn the call over to Brian.

Thanks, Steve. 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 previously communicated range of $630 million-$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.