Universal Display Corp Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tyler Bisset - Goldman Sachs - Analyst : Hey, guys, this is Tyler Bisset on for Brian. Thanks for taking our questions. On the blue update from LG Display, it sounds like your customer has reached commercialization, which was great to see. So how should we think about what that means for a timeline for when blue could show up in a commercial device? And are there certain milestones here for reaching more firm pricing terms? And then is it fair to assume that this is for a mobile device and not TVs?

Question: Tyler Bisset - Goldman Sachs - Analyst : And then with that announcement from LG Display, how should we think about the impact on other customers developing flow? Does this sort of start an acceleration of store to a potential race towards blue?

Question: James Ricchiuti - Needham & Company Inc. - Analyst : Hi, thanks. I just want to continue on the blue theme. The LG release talks about a hybrid solution. And I'm wondering if you can give us some sense as to where you are in terms of working with the industry to still see commercial viability of a pure phosphorescent TV solutions. How far along are we there? I mean, is that months the way you described previously going back to your original commentary around blue? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. MAY 01, 2025 / 9:00PM, OLED.OQ - Q1 2025 Universal Display Corp Earnings Call

Question: James Ricchiuti - Needham & Company Inc. - Analyst : Okay. One thing that I think caught our -- it was out in the press release was when LG talked about the stability of blue fluorescence, the legacy material. And I'm wondering, can you help us better understand what that means as it relates to the stability of your materials and maybe what still needs to be achieved?

Question: James Ricchiuti - Needham & Company Inc. - Analyst : Is this -- and I'll jump back in the queue. But is your expectation that the advantages you have on the low power side -- low-power consumption side with phosphorescence that this is that potentially over the near term going to be even more commercial solution that we see a combination of blue fluorescence and phosphorescence?

Question: Mehdi Hosseini - Susquehanna Financial Group LLLP - Analyst : Yes, thanks for taking my question. A couple of follow-ups for me, Brian. I think I understand the challenges in forecasting and market adoption, but I think is also we will be helpful for shareholders of UDC to understand the market development. So if this -- the LGs announcement is kind of hyper fluorescent blue, kind of a tandem junction, would it be fair to think of this as a bridge? It will be limited to a high-end premium devices? And the when the fluorescent blue is ready for commercialization as a standalone, then it would have a wider adoption? Could we think about this of the sequencing a bridge and then the mass reduction as a fair assessment? Then I have a follow-up. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. MAY 01, 2025 / 9:00PM, OLED.OQ - Q1 2025 Universal Display Corp Earnings Call

Question: Mehdi Hosseini - Susquehanna Financial Group LLLP - Analyst : Sure. That's fair. And then regarding the material gross margin, should we think about a step-up in gross margin improvement to get the low 60% for the year? Or would this improvement be more material so that you would go back to the 60% to 65% range?

Question: Scott Searle - Roth MKM - Analyst : Hey, guys, thanks for taking the questions. I apologize I'm going to go back to blue again. I just want to clarify that the LG implementation in terms of Universal Display's materials, you have picked commercial specs. Is that correct in terms of their implementation and not using a fluorescent in effect to cover up the shortcomings of your commercial blue? And just in terms of materials then that are used in a tandem architecture here, is this in the ballpark of what you guys were expecting in terms of materials per device?

Question: Scott Searle - Roth MKM - Analyst : Okay. And just as a follow-up. Looking at the geographic mix, your revenue in China was up a little bit seasonally in the first quarter, I think about $10 million or so. It sounds like you've started to see what you are gaming, pull-ins potentially ahead of tariffs. Are you continuing to see that as we've gotten through the month of April? How should we be expecting, I guess, the sequential progression as we're going into the second quarter here with the current tariff environment? Thanks.

Question: Nam Kim - Arete Research - Analyst : Thank you for taking my question. One more follow-up on blue. For this commercial OLED panel from LG Display news, do they use your Bluehost material or only (inaudible) material? I know you guys have been preparing for Bluehost as well, so just curious on this. And then secondly, on this press release, it seems to relate on IT device. Most IT devices today they already use tandem structure. So in that sense, nothing new. However, how should I interpret your work on single-stack structure? Any color you can share with me would be great. Thank you.

Question: Eddie Araby - TD Cowen - Analyst : Hey, guys, this is Eddie for Krish. Just a clarification. I know this question was asked several times on this call. Do you think like from a technical perspective, the blue materials can now be used in smartphones, for example? I guess I just want to understand like how important the LG announcement as to the mass adoption for blue phosphorescent. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. MAY 01, 2025 / 9:00PM, OLED.OQ - Q1 2025 Universal Display Corp Earnings Call

Question: Eddie Araby - TD Cowen - Analyst : Got it. And do you guys cleared most of the milestones for that mass adoption?

Question: Eddie Araby - TD Cowen - Analyst : Got it. Just a follow-up. I think one of the major smartphone OEMs, there were like some news that they might use foldable phones. Would you remind us like what's the content difference between foldable phones and just regular smartphones? That's it for me. Thank you.

Question: Martin Yang - Oppenheimer & Co., Inc. - Analyst : Hi, thank you for taking my question. The first question is regarding things to look forward to before we see product shipping with blue. Can you point to any other milestones either by you or by your customers before we see actual product shipping?

Question: Martin Yang - Oppenheimer & Co., Inc. - Analyst : Thanks, Brian. And then can you confirm that with today's announcement and with LG's panel, there will be no other technical hurdles to clear for that LG product to be in a commercial device?

Question: Martin Yang - Oppenheimer & Co., Inc. - Analyst : Got it. Last question from me is on overall communication strategy regarding other potential announcement by your customers. So should we expect similar manner where the customers will be the one leading the press release or announcing a potential breakthroughs or innovation with your blue material?

Question: James Ricchiuti - Needham & Company Inc. - Analyst : Did you quantify the level of orders that you saw that may have been related to tariffs? I'm just trying to get a sense of how impactful that might be in terms of potentially pulling from the back half of the year into the June quarter.

Question: James Ricchiuti - Needham & Company Inc. - Analyst : And then I don't recall -- I may have missed it. Did you say what the blue development revenue was in the quarter?

Question: James Ricchiuti - Needham & Company Inc. - Analyst : And then final question for me is just on OpEx. What are you anticipating the OpEx relative to the last year for the full year?

Question: James Ricchiuti - Needham & Company Inc. - Analyst : And I guess that's where I may be just getting a little confused. I thought that initially you were anticipating OpEx to be up in '25, but you're basically had been saying flat.

Question: Scott Searle - Roth MKM - Analyst : Thank you. Just a quick question on tandem. Given the announcement from LG today, we started to see some of the design activity from an Apple standpoint in terms of their tablets. Is there more of a shift from a market perspective towards tandem architectures? Or is it still just kind of one-offs here or there? I'm just trying to get my hands around if there's any sort of a bigger trend going on here. Thanks.