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    OLED
    Earnings call· Jun 2026(Q2 FY26)

    UNIVERSAL DISPLAY CORP \PA\ Q2 FY26 earnings call OLED

    Jul 30, 2026 Source

    Executive summary

    Universal Display Corporation Q2 FY26 — Near-term Headwinds Offset by Long-term OLED Growth Drivers

    Universal Display reported a challenging Q2 FY26 with revenue and EPS declines driven by near-term consumer electronics supply chain headwinds, particularly in smartphones. Despite this, the company maintains confidence in the long-term OLED growth trajectory, citing ongoing investments in new manufacturing capacity and expanding adoption across new applications like IT and automotive. Strategic R&D in phosphorescent blue and AI-driven materials discovery continues, supported by a strong balance sheet and commitment to shareholder returns.

    Highlights

    5

    • Royalty and license fees increased to $81 million in Q2 FY26, up from $76 million in Q2 FY25.

    • Total gross margin remained strong at 76% in Q2 FY26.

    • Ended the quarter with a robust cash, cash equivalents, and investments balance of $855 million.

    • Returned over $238 million to shareholders through dividends and share repurchases over the last 12 months.

    • Declared a Q3 cash dividend of $0.50 per share.

    Concerns

    5

    • Revenue for Q2 FY26 decreased to $152 million, down from $172 million in Q2 FY25.

    • Material sales declined to $66 million in Q2 FY26, compared to $89 million in Q2 FY25.

    • Operating income fell to $54 million in Q2 FY26, from $69 million in Q2 FY25, resulting in a 35% operating margin (down from 40%).

    • Diluted EPS decreased to $1.06 in Q2 FY26, from $1.41 in Q2 FY25.

    • Full-year revenue guidance narrowed to the lower end of the $630 million to $670 million range due to lower volume expectations.

    Guidance & targets

    6
    CategoryTargetConfidence
    Full-year Revenue
    Lower end of $630 million to $670 million
    high materiality
    High
    Second Half Revenue
    Expected to exceed first half revenue
    medium materiality
    High
    Full-year Material Sales to Royalty and License Revenue Ratio
    Approximately 1.2:1
    medium materiality
    High
    Full-year Operating Expenses
    Increase by a low single-digit percentage compared to 2025
    medium materiality
    High
    Materials Gross Margins
    Return more towards historical levels of approximately 60%
    medium materiality
    High
    Total Gross Margins
    74% to 76%
    medium materiality
    High

    Operational metrics

    25
    Revenue
    $152Mdown from $172M Q2 FY25
    Q2 FY26

    Reflects near-term headwinds in the consumer electronics supply chain.

    Material Sales
    $66Mdown from $89M Q2 FY25
    Q2 FY26

    Decrease primarily driven by lower material volumes, customer mix, and changes in cumulative catch-up adjustments.

    Green Emitter Sales
    $51Mdown from $64M Q2 FY25
    Q2 FY26

    Includes yellow green emitters.

    Red Emitter Sales
    $15Mdown from $24M Q2 FY25
    Q2 FY26
    Royalty and License Fees
    $81Mup from $76M Q2 FY25
    Q2 FY26

    Increase primarily driven by cumulative catch-up adjustments.

    Adesis Revenue
    $4.8Mdown from $7.5M Q2 FY25
    Q2 FY26
    Cost of Sales
    $37M
    Q2 FY26
    Total Gross Margin
    76%down from 77% Q2 FY25
    Q2 FY26
    Operating Expenses
    $62Mdown from $64M Q2 FY25
    Q2 FY26

    Excluding cost of sales.

    Operating Income
    $54Mdown from $69M Q2 FY25
    Q2 FY26
    Operating Margin
    35%down from 40% Q2 FY25
    Q2 FY26
    Effective Tax Rate
    19%
    Q2 FY26
    Net Income
    $49Mdown from $67M Q2 FY25
    Q2 FY26
    Diluted EPS
    $1.06down from $1.41 Q2 FY25
    Q2 FY26
    Cash and investments balance
    $855M
    Q2 FY26

    As of quarter-end, includes cash, cash equivalents and investments.

    Share Repurchases
    $48M
    Q2 FY26
    Total Capital Returned to Shareholders
    $238M
    LTM
    Q3 Cash Dividend
    $0.50
    Q3 FY26

    Declared by Board of Directors.

    Material Sales to Royalty and License Revenue Ratio
    0.8:1
    Q2 FY26
    Material Sales to Royalty and License Revenue Ratio
    1.1:1
    H1 FY26
    Cumulative Catch-up Adjustments
    $10Mnet favorable impact of $9M vs Q2 FY25
    Q2 FY26 and H1 FY26

    Across both royalty and license revenue and material sales.

    OLED Market Penetration
    65%
    current

    OLED is well established in smartphones.

    OLED Market Penetration
    low single digits
    current

    OLED adoption remains in early stages for these markets.

    OLED Area Growth
    relatively flat
    FY26

    Industry forecasts for the current year.

    OLED Area Growth
    positive growth expected
    FY27

    Industry forecasts for the next year.

    Industry KPIs

    1
    MetricValueDetails
    Node platform ramp scheduleGen 8.6 OLED manufacturing

    Deals & partnerships

    1
    Cusp AIFounding member of AI materials foundry

    Strategic collaboration to accelerate materials discovery and development using AI.

    Risks & headwinds

    3
    Rising memory costs and supply constraintsNear-term

    Not quantified, but stated to weigh on demand expectations.

    Mitigation: Focus on long-term industry growth drivers and innovation.

    Higher component costs in smartphone marketNear-term

    Putting pressure on unit volumes.

    Mitigation: Focus on long-term industry growth drivers and innovation.

    Cautious customer demand forecastsNear-term

    Reflected in updated full-year revenue outlook (lower end of range).

    Mitigation: Leveraging product cycles and customer forecasts for stronger second half.

    What to watch in Q3 FY26

    4

    Full-year Revenue Performance

    Next quarter (Q3 FY26 results)
    CurrentLower end of $630M-$670M range expected
    TargetConfirmation of H2 strength and full-year achievement

    Why it matters

    This will indicate if the anticipated second-half recovery materializes and if the company can meet its revised full-year revenue target amidst ongoing market headwinds🌐.

    Given these dynamics, we now expect full year revenue to track toward the lower end of our previously communicated range of $630 million to $670 million, with second half revenue still expected to exceed first half revenue.

    Q&A highlights

    5

    Will materials gross margins return to normalized levels in the second half after the Q2 anomaly?

    Yes, materials gross margins are expected to return to historical levels of approximately 60% in the second half, following a $7 million reduction in Q2 due to changes in materials and product mix.

    “We do expect in the remainder of the year, our materials gross margins to return more towards their historical levels, which have been approximately 60%.”

    asked by James Ricchiuti · answered by Brian Millard

    2 min read5 chapters

    Detailed Narrative

    01

    OLED Industry Expansion and Investment

    The OLED industry continues to see significant investment and expansion, with display manufacturers committing billions to new capacity. Samsung Display and BOE have commenced mass production at Gen 8.6 facilities, while Visionox and TCL China Star are advancing greenfield projects. LG Display and Samsung Display are also making further Gen 6 investments, primarily targeting IT, automotive, and TV markets where OLED adoption is still in early stages (low single digits).

    02

    Near-term Headwinds and Long-term Growth Drivers

    Despite long-term optimism, the consumer electronics supply chain faces near-term challenges, including rising memory costs and supply constraints, which are impacting smartphone unit volumes. This has led to more cautious customer demand forecasts and a revised full-year revenue outlook. However, the company emphasizes that fundamental growth drivers remain intact, with industry forecasts projecting positive OLED area growth to resume in 2027.

    03

    Advancements in Phosphorescent Blue Technology

    Universal Display continues to make significant progress in phosphorescent blue technology, a key opportunity for energy efficiency. The company presented technical results at SID Display Week demonstrating advances in efficiency, color performance, operational lifetime, and manufacturability. While commercialization timing depends on customer roadmaps, LG Display showcased a tablet prototype incorporating phosphorescent blue, indicating ongoing customer development.

    04

    Innovation in Next-Generation OLED Technologies

    Beyond phosphorescent blue, UDC is advancing and broadening its portfolio of next-generation OLED technologies, including phosphorescent sensitized fluorescence (PSF) architectures and innovations for light extraction, power efficiency, and visual appearance. The company is leveraging internal advanced computational tools, AI, machine learning, and agentic AI, as well as strategic collaborations like Cusp AI's materials foundry, to accelerate materials discovery and development.

    05

    Global Infrastructure Expansion

    To support the growing OLED industry, Universal Display is expanding its global infrastructure. The company recently celebrated the grand opening of its new OLED technology and innovation center in Chengdu, China. This facility is UDC's third innovation tech center in Asia, alongside existing centers in Korea and Hong Kong, reinforcing its commitment to local customer support and collaboration.

    AI-generated summary of the company’s earnings call. Not investment advice.