Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Universal Display Corp (OLED, Financial) reported solid second-quarter results with revenue of $159 million, an 8% increase year-over-year.
- The company raised the low end of its annual revenue guidance range to $645 million to $675 million, reflecting confidence in future growth.
- OLED tablet panel shipments are expected to triple year-over-year, and OLED notebook panel shipments are expected to almost double year-over-year in 2024.
- The OLED smartphone market is growing, with OLED smartphone shipments surpassing LCD shipments for the first time in Q1 2024.
- Universal Display Corp (OLED) continues to make significant advances in its phosphorescent Blue development, nearing commercial entry specifications.
Negative Points
- The development of the commercial phosphorescent Blue emissive system will take more time than initially expected, extending beyond 2024.
- Second-quarter royalty and license fees decreased to $60 million from $64 million in the prior year's period.
- Adesis second-quarter revenue was $3.5 million, down from $5.1 million in the second quarter of 2023.
- Operating expenses increased year-over-year, primarily due to higher stock-based compensation and continued investments in infrastructure and innovation.
- The company's operating margin decreased to 36% in the second quarter, down from 40% in the prior year period.
Q & A Highlights
Q: You mentioned refining Blue phosphorus and needing more time. Is this a less optimistic tone compared to the previous quarter? Also, can you share revenues from Blue development during the quarter?
A: We believe we need more time beyond this year to hit entry commercial specs for Blue phosphorus, but it will be months, not years. We had $1.3 million in Blue emitter and host sales in Q2.
Q: Can you discuss the competitive dynamics in China and whether local competitors are emerging?
A: We don't believe there are any materials competitive with our state-of-the-art materials. Our customers want our full suite of OLED technologies and material solutions, which is why all major panel makers work with us and sign long-term agreements.
Q: What drove the updated guidance, especially raising the low end of the annual guidance?
A: With more than seven months into the year, we have greater visibility and felt the prior guidance warranted an adjustment. The increase is driven by a broad range of factors across the board.
Q: Is there a way to systematically track the progress of Blue development?
A: It's challenging to share detailed progress due to the nature of R&D and customer confidentiality. However, we are confident in our progress and believe it's a matter of when, not if, phosphorescent Blue is commercialized.
Q: Are you observing any pricing differential for IT applications?
A: There is no pricing difference based on the use of the emitter. Our pricing remains consistent across different applications.
Q: How should we think about the level of R&D as Blue gets closer to commercialization?
A: We have a robust Blue development program, and we don't expect a significant increase in R&D spend. Our expenses are driven by the complexity of next-generation materials, not just Blue.
Q: Any updates on partnerships for OVJP?
A: We continue to talk to customers and industry players about partnerships and believe strongly in the promise of OVJP, but there are no specific updates to share at this point.
Q: What contributed to the growth in PP&E in the quarter?
A: Our CapEx projects include renovation work on our New Jersey campus and ensuring operational capabilities across our manufacturing network to support future growth.
Q: Can you explain the difference in sales growth between Korean and Chinese customers?
A: The ordering patterns and revenues from our Chinese customers have been variable and lumpy quarter-to-quarter, which explains the difference in growth between the two regions.
Q: What drove the big jump in deferred revenue in the current balance?
A: The increase was due to certain billing milestones achieved on a contract in the quarter. This is a normal course of business and not out of the ordinary.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
