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OLED's Q3 Earnings Miss Estimates, Revenues Decline Y/Y

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Key Takeaways

  • Universal Display's Q3 net income fell to $44M, or $0.92 per share, missing estimates.
  • Revenue declined 14% year over year to $139.6M, hurt by weaker royalty and license fees.
  • Gross margin slipped to 75% from 78%, while management focuses on operational improvements.

Universal Display Corporation (OLED - Free Report) reported soft third-quarter 2025 results, with both adjusted earnings and revenues falling short of the respective Zacks Consensus Estimate. The company reported a top-line decline year over year, owing to lower material sales, royalty and license fees.

However, growing OLED proliferation in multiple end markets, such as consumer electronics and automotive, is a major growth driver. A strong balance sheet and robust supply chain are positives. Management is undertaking several measures to improve operational and strategic infrastructure to bolster its leadership position in the industry.

Net Income of OLED

Net income in the third quarter was $44 million or 92 cents per share compared with $66.9 million or $1.40 in the year-ago quarter. Top-line decline hindered the net income growth. The bottom line missed the Zacks Consensus Estimate by 27 cents.

Revenues of OLED

The company generated $139.6 million in revenues, down from $161.6 million in the year-ago quarter. Lower royalty and license fees impeded the top line. The top line missed the consensus estimate of $163 million.

Material sales contributed $82.6 million to revenues compared with $83.4 million in the prior-year quarter. The net sales beat our estimate of $82 million. Revenues from green emitter sales marginally rose to $65 million from $63 million in the year-ago quarter, whereas those from red emitter sales were $17 million compared to $20 million in the year-ago quarter.

Revenues from royalties and license fees were $53.3 million, down from $74.6 million in the year-ago quarter. The net sales missed our estimate of $73.9 million.

Revenues from Contract research services were $3.66 million compared with $3.6 million in the prior-year quarter. The segment’s revenues missed our estimate of $6 million.

Other Details of OLED

Quarterly gross profit was $104.1 million compared to $125.8 million in the prior-year quarter. The gross margin was 75%, down from 78% a year ago. Operating income was $43.1 million and the margin was 40% compared with the year-ago quarter’s $67 million and 41%, respectively.

OLED’s Cash Flow & Liquidity

In the first nine months of fiscal 2025, Universal Display generated $179.7 million in cash from operating activities compared with $219.1 million in the year-ago period. As of Sept. 30, 2025, the company had $121.6 million in cash and cash equivalents and $55.7 million in retirement plan benefit liability.

OLED’s Guidance

For 2025, the company currently expects revenues in the range of $650-700 million, up from $640-700 million previously forecasted. The gross margin is predicted at 76-77%.

Despite some uncertainties in the near term, associated with geopolitical volatilities and imposition of tariffs, management remains optimistic about the company’s long-term growth potential. Growing OLED usage in IT applications encompassing tablets, laptops, monitors, automotive and various other consumer electronics applications, such as smartphones and TVs, will likely drive growth in the upcoming quarters.

Zacks Rank & Other Stocks to Consider

Universal Display currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Keysight Technologies, Inc. (KEYS - Free Report) is scheduled to release fourth-quarter fiscal 2025 earnings on Nov. 24. The Zacks Consensus Estimate for earnings is pegged at $1.83 per share, suggesting a growth of 10.9% from the year-ago reported figure.

Keysight has a long-term earnings growth expectation of 11.5%. Keysight delivered an average earnings surprise of 4.7% in the last four reported quarters.

Workday, Inc. (WDAY - Free Report) is set to release third-quarter 2025 earnings on Nov. 25. The Zacks Consensus Estimate for earnings is pegged at $2.12 per share, implying growth of 12.17% from the year-ago reported figure.

Workday has a long-term earnings growth expectation of 21.25%. The company delivered an average earnings surprise of 9.35% in the last four reported quarters.

AST SpaceMobile, Inc. (ASTS - Free Report) is set to release third-quarter 2025 earnings on Nov. 10. The Zacks Consensus Estimate for earnings is pegged at a loss of 18 cents per share, implying a growth of 25% from the year-ago reported figure.

AST SpaceMobile has a long-term earnings growth expectation of 28.3%. The Zacks Consensus Estimate for revenues is pegged at $20.74 million, implying a growth of 1,785.4% from the year-ago reported figure.

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