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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30,
2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ___________
Commission File Number
1-12031
UNIVERSAL DISPLAY CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania
23-2372688
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
250 Phillips Boulevard
,
Ewing
,
New Jersey
08618
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (
609
)
671-0980
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value
OLED
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☒
No
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
☒
No
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Emerging growth company
☐
Non-accelerated filer
☐
Smaller reporting company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial account standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
☐
No
☒
As of October 31, 2025, the registrant had outstanding
47,542,245
shares of common stock.
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $
181,880
and $
169,877
209,802
195,239
ACQUIRED TECHNOLOGY, net of accumulated amortization of $
216,199
and $
203,621
60,976
73,554
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $
12,910
and $
11,842
4,378
5,446
GOODWILL
15,535
15,535
INVESTMENTS
422,929
457,593
DEFERRED INCOME TAXES
77,339
78,320
OTHER ASSETS
119,179
106,815
TOTAL ASSETS
$
1,947,451
$
1,832,333
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
$
34,728
$
36,590
Accrued expenses
42,834
46,026
Deferred revenue
23,264
33,074
Other current liabilities
7,814
9,720
Total current liabilities
108,640
125,410
DEFERRED REVENUE
1,584
537
RETIREMENT PLAN BENEFIT LIABILITY
55,703
54,450
OTHER LIABILITIES
36,718
35,411
Total liabilities
202,645
215,808
COMMITMENTS AND CONTINGENCIES (Note 18)
SHAREHOLDERS’ EQUITY:
Preferred Stock, par value $
0.01
per share,
5,000,000
shares authorized,
200,000
shares of Series A Nonconvertible Preferred Stock issued and outstanding
(liquidation value of $
7.50
per share or $
1,500
)
2
2
Common Stock, par value $
0.01
per share,
200,000,000
shares authorized,
48,907,893
and
48,834,541
shares issued, and
47,542,245
and
47,468,893
shares outstanding, at
September 30, 2025 and December 31, 2024, respectively
489
488
Additional paid-in capital
739,052
723,719
Retained earnings
1,045,628
934,655
Accumulated other comprehensive income (loss)
919
(
1,055
)
Treasury stock, at cost (
1,365,648
shares at September 30, 2025 and December 31, 2024)
(
41,284
)
(
41,284
)
Total shareholders’ equity
1,744,806
1,616,525
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
1,947,451
$
1,832,333
The accompanying notes are an integral part of these Consolidated Financial Statements.
1
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEM
ENTS OF INCOME
(UNAUDITED)
(in thousands, except share and per share data)
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
REVENUE:
Material sales
$
82,634
$
83,428
$
257,439
$
272,154
Royalty and license fees
53,317
74,590
202,553
202,409
Contract research services
3,662
3,609
17,692
10,828
Total revenue
139,613
161,627
477,684
485,391
COST OF SALES
35,491
35,812
112,828
111,109
Gross margin
104,122
125,815
364,856
374,282
OPERATING EXPENSES:
Research and development
36,336
36,089
107,594
110,900
Selling, general and administrative
18,039
15,664
55,493
54,757
Amortization of acquired technology and other intangible assets
4,553
4,551
13,646
13,648
Patent costs
1,886
2,352
6,380
6,735
Royalty and license expense
170
154
401
1,928
Total operating expenses
60,984
58,810
183,514
187,968
OPERATING INCOME
43,138
67,005
181,342
186,314
Interest income, net
10,046
10,592
29,883
30,073
Other income, net
952
3,819
6,905
416
Interest and other income, net
10,998
14,411
36,788
30,489
INCOME BEFORE INCOME TAXES
54,136
81,416
218,130
216,803
INCOME TAX EXPENSE
(
10,111
)
(
14,546
)
(
42,397
)
(
40,743
)
NET INCOME
$
44,025
$
66,870
$
175,733
$
176,060
NET INCOME PER COMMON SHARE:
BASIC
$
0.93
$
1.40
$
3.69
$
3.69
DILUTED
$
0.92
$
1.40
$
3.68
$
3.69
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET
INCOME PER COMMON SHARE:
BASIC
47,554,970
47,542,114
47,571,930
47,549,976
DILUTED
47,676,500
47,669,439
47,681,477
47,644,026
CASH DIVIDENDS DECLARED PER COMMON SHARE
$
0.45
$
0.40
$
1.35
$
1.20
The accompanying notes are an integral part of these Consolidated Financial Statements.
2
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF C
OMPREHENSIVE INCOME
(UNAUDITED)
(in thousands)
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
NET INCOME
$
44,025
$
66,870
$
175,733
$
176,060
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Unrealized gain on available-for-sale debt securities,
net of tax of
none
for both three and nine month periods
788
7,093
1,789
4,117
Actuarial loss on retirement plan, net of tax of
none
,
none
,
none
and $
232
, respectively
—
—
—
(
761
)
Amortization of prior service cost, actuarial loss and
curtailment charge for retirement plan included in net
periodic pension costs, net of tax of ($
1
), ($
3
), ($
4
)
and ($
79
), respectively
4
4
13
260
Change in cumulative foreign currency translation
adjustment
(
26
)
141
172
48
TOTAL OTHER COMPREHENSIVE INCOME
766
7,238
1,974
3,664
COMPREHENSIVE INCOME
$
44,791
$
74,108
$
177,707
$
179,724
The accompanying notes are an integral part of these Consolidated Financial Statements.
3
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS
OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
(in thousands, except for share data)
Three Months Ended September 30, 2025
Series A
Nonconvertible
Additional
Accumulated
Other
Total
Preferred Stock
Common Stock
Paid-in
Retained
Comprehensive
Treasury Stock
Shareholders’
Shares
Amount
Shares
Amount
Capital
Earnings
Income (Loss)
Shares
Amount
Equity
BALANCE,
JUNE 30, 2025
200,000
$
2
48,899,719
$
489
$
732,068
$
1,023,184
$
153
1,365,648
$
(
41,284
)
$
1,714,612
Net income
—
—
—
—
—
44,025
—
—
—
44,025
Other comprehensive income
—
—
—
—
—
—
766
—
—
766
Cash dividends declared
—
—
—
—
—
(
21,581
)
—
—
—
(
21,581
)
Stock-based compensation and ESPP activity, net of taxes withheld
—
—
8,174
—
6,984
—
—
—
—
6,984
BALANCE,
SEPTEMBER 30, 2025
200,000
$
2
48,907,893
$
489
$
739,052
$
1,045,628
$
919
1,365,648
$
(
41,284
)
$
1,744,806
Nine Months Ended September 30, 2025
Series A
Nonconvertible
Additional
Accumulated
Other
Total
Preferred Stock
Common Stock
Paid-in
Retained
Comprehensive
Treasury Stock
Shareholders’
Shares
Amount
Shares
Amount
Capital
Earnings
Income (Loss)
Shares
Amount
Equity
BALANCE,
DECEMBER 31, 2024
200,000
$
2
48,834,541
$
488
$
723,719
$
934,655
$
(
1,055
)
1,365,648
$
(
41,284
)
$
1,616,525
Net income
—
—
—
—
—
175,733
—
—
—
175,733
Other comprehensive income
—
—
—
—
—
—
1,974
—
—
1,974
Cash dividends declared
—
—
—
—
—
(
64,760
)
—
—
—
(
64,760
)
Stock-based compensation and ESPP activity, net of taxes withheld
—
—
73,352
1
15,333
—
—
—
—
15,334
BALANCE,
SEPTEMBER 30, 2025
200,000
$
2
48,907,893
$
489
$
739,052
$
1,045,628
$
919
1,365,648
$
(
41,284
)
$
1,744,806
The accompanying notes are an integral part of these Consolidated Financial Statements.
4
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
(in thousands, except for share data)
Three Months Ended September 30, 2024
Series A
Nonconvertible
Additional
Accumulated
Other
Total
Preferred Stock
Common Stock
Paid-in
Retained
Comprehensive
Treasury Stock
Shareholders’
Shares
Amount
Shares
Amount
Capital
Earnings
Income (Loss)
Shares
Amount
Equity
BALANCE,
JUNE 30, 2024
200,000
$
2
48,814,273
$
488
$
712,234
$
860,058
$
(
4,660
)
1,365,648
$
(
41,284
)
$
1,526,838
Net income
—
—
—
—
—
66,870
—
—
—
66,870
Other comprehensive income
—
—
—
—
—
—
7,238
—
—
7,238
Cash dividends declared
—
—
—
—
—
(
19,152
)
—
—
—
(
19,152
)
Stock-based compensation and ESPP activity, net of taxes withheld
—
—
12,649
—
4,956
—
—
—
—
4,956
BALANCE,
SEPTEMBER 30, 2024
200,000
$
2
48,826,922
$
488
$
717,190
$
907,776
$
2,578
1,365,648
$
(
41,284
)
$
1,586,750
Nine Months Ended September 30, 2024
Series A
Nonconvertible
Additional
Accumulated
Other
Total
Preferred Stock
Common Stock
Paid-in
Retained
Comprehensive
Treasury Stock
Shareholders’
Shares
Amount
Shares
Amount
Capital
Earnings
Income (Loss)
Shares
Amount
Equity
BALANCE,
DECEMBER 31, 2023
200,000
$
2
48,731,026
$
487
$
699,554
$
789,553
$
(
1,086
)
1,365,648
$
(
41,284
)
$
1,447,226
Net income
—
—
—
—
—
176,060
—
—
—
176,060
Other comprehensive income
—
—
—
—
—
—
3,664
—
—
3,664
Cash dividends declared
—
—
—
—
—
(
57,837
)
—
—
—
(
57,837
)
Stock-based compensation and ESPP activity, net of taxes withheld
—
—
95,896
1
17,636
—
—
—
—
17,637
BALANCE,
SEPTEMBER 30, 2024
200,000
$
2
48,826,922
$
488
$
717,190
$
907,776
$
2,578
1,365,648
$
(
41,284
)
$
1,586,750
The accompanying notes are an integral part of these Consolidated Financial Statements.
5
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEM
ENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Nine Months Ended September 30,
2025
2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
175,733
$
176,060
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
20,932
19,488
Amortization of intangibles
13,646
13,648
Investment gains, net
(
6,630
)
(
5,930
)
Stock-based compensation
22,888
23,812
Deferred income tax expense (benefit)
977
(
12,878
)
Retirement plan expense, net of benefit payments
1,271
1,385
Decrease (increase) in assets:
Accounts receivable
39,434
52,157
Inventory
(
29,683
)
(
163
)
Other current assets
(
36,928
)
(
39,278
)
Other assets
(
12,364
)
(
4,397
)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses
304
9,405
Other current liabilities
(
2,406
)
(
1,977
)
Deferred revenue
(
8,763
)
(
9,950
)
Other liabilities
1,270
(
2,355
)
Net cash provided by operating activities
179,681
219,027
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
(
40,383
)
(
29,960
)
Purchases of investments
(
319,593
)
(
337,949
)
Proceeds from sale and maturity of investments
275,000
200,768
Net cash used in investing activities
(
84,976
)
(
167,141
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock
1,617
1,776
Payment of withholding taxes related to stock-based compensation to employees
(
9,470
)
(
8,251
)
Cash dividends paid
(
64,223
)
(
57,837
)
Net cash used in financing activities
(
72,076
)
(
64,312
)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
22,629
(
12,426
)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
98,980
91,985
CASH AND CASH EQUIVALENTS, END OF PERIOD
$
121,609
$
79,559
SUPPLEMENTAL DISCLOSURES:
Unrealized gain on available-for-sale securities
$
1,789
$
4,117
Common stock issued to Board of Directors and Scientific Advisory Board that was
earned and accrued for in a previous period
300
300
Net change in accounts payable and accrued expenses related to purchases of property
and equipment
4,888
(
5,573
)
Cash paid for income taxes, net of refunds
53,995
60,772
The accompanying notes are an integral part of these Consolidated Financial Statements.
6
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
1. BUSINESS:
Universal Display Corporation and its subsidiaries (the Company) is a leader in the research, development and commercialization of organic light emitting diode (OLED) technologies and materials for use in display and solid-state lighting applications. OLEDs are thin, lightweight and power-efficient solid-state devices that emit light and can be manufactured on both flexible and rigid substrates, making them highly suitable for use in full-color displays and as lighting products. OLED displays are capturing a growing share of the display market, especially in the mobile phone, television, monitor, wearable, tablet, notebook and personal computer, augmented reality (AR), virtual reality (VR) and automotive markets. The Company believes this is because OLEDs offer potential advantages over competing display technologies with respect to power efficiency, contrast ratio, viewing angle, video response time, form factor and manufacturing cost. The Company also believes that OLED lighting products have the potential to replace many existing light sources in the future because of their high-power efficiency, excellent color rendering index, low operating temperature and novel form factor. The Company’s technology leadership, intellectual property position, and more than 20 years of experience working closely with leading OLED display manufacturers are some of the competitive advantages that should enable the Company to continue to share in the revenues from OLED displays and lighting products as they continue to gain wider adoption.
The Company’s primary business strategy is to (1) develop new OLED materials and sell existing and new materials to product manufacturers of products for display applications, such as mobile phones, televisions, monitors, wearables, tablets, portable media devices, notebook computers, personal computers, automotive applications, and specialty lighting products; and (2) further develop and either license or otherwise commercialize the Company’s proprietary OLED material, device design and manufacturing technologies to those manufacturers. The Company has established a significant portfolio of proprietary OLED technologies and materials, primarily through internal research and development efforts and acquisitions of patents and patent applications, as well as maintaining long-standing, and establishing new relationships with world-class universities, research institutions and strategic manufacturing partnerships. The Company currently owns, exclusively licenses or has the sole right to sublicense more than
6,500
patents issued and pending worldwide.
The Company manufactures and sells its proprietary OLED materials to customers for evaluation and use in commercial OLED products. The Company also enters into agreements with manufacturers of OLED display and lighting products under which it grants them licenses to practice under the Company’s patents and to use the Company's proprietary know-how. At the same time, the Company works with these and other companies that are evaluating the Company's OLED material, device design and manufacturing technologies for possible use in commercial OLED display and lighting products.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Interim Financial Information
In the opinion of management, the accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the requirements of the Securities and Exchange Commission for interim financial reporting and contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position as of September 30, 2025 and results of operations for the three and nine months ended September 30, 2025 and 2024, and cash flows for the nine months ended September 30, 2025 and 2024. While management believes that the disclosures presented are adequate to make the information not misleading, these unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto in the Company’s latest year-end Consolidated Financial Statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024
. The results of the Company’s operations for any interim period are not necessarily indicative of the results of operations for any other interim period or for the full year.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of Universal Display Corporation and its wholly owned subsidiaries, UDC, Inc., UDC Ireland Limited (UDC Ireland), Universal Display Corporation Hong Kong, Limited, Universal Display Corporation Korea, Y.H. (UDC Korea), Universal Display Corporation Japan GK, Universal Display Corporation China, Ltd., Adesis, Inc. (Adesis), UDC Ventures LLC, OVJP Corporation (OVJP Corp), OLED Material Manufacturing Limited (OMM), Universal Vapor Jet Corporation Pte. Ltd. (UVJC) and UDC Chengdu OLED Technology, Ltd. (UDC Chengdu). All intercompany transactions and accounts have been eliminated.
7
Segment Information
The Company has
one
reportable business segment, namely OLED technologies and materials. The Company also performs contract development and manufacturing support services through its subsidiary, Adesis. However, the Company’s Chief Operating Decision Maker (CODM) reviews financial operating results for the Company on a combined basis only, with the exception of revenue, for the purposes of resource allocation decisions. Combined entity-level results are deemed sufficient for the assessment of the Company’s operating performance. As a result, Adesis is not considered a reportable business segment and its operations are contained in the OLED technologies and materials segment. Factors that went into this determination included examining the nature and significance of the various business activities the Company engages in, and the availability of discrete data for those business activities.
The Company’s CODM is its President and Chief Executive Officer. The President and Chief Executive Officer is the highest level of management responsible for the allocation of the Company’s resources and acts as the “assessor of the financial performance” of the Company. In a review of the financial decision making process, it was determined that the CODM primarily utilizes information consistent with that already incorporated in the existing consolidated financial statements. These measures include revenue, operating expenses, net income and assets. As such, the Consolidated Financial Statements presentation is consistent with how the Company's CODM evaluates the results of operations and formulates strategic decisions about the business.
Management’s Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The estimates made are principally in the areas of revenue recognition including estimates of material unit sales and royalties, the useful life of acquired intangibles, lease liabilities, right-of-use assets, the use and recoverability of inventories, intangibles, investments and income taxes including realization of deferred tax assets, stock-based compensation and retirement benefit plan liabilities. Actual results could differ from those estimates.
Inventories
Inventories consist of raw materials, work-in-process and finished goods, and are stated at the lower of cost, determined on a first-in, first-out basis, or net realizable value. Inventory valuation and firm committed purchase order assessments are performed on a quarterly basis and those items that are identified to be obsolete or in excess of forecasted usage are written down to their estimated realizable value. Estimates of realizable value are based upon management’s analyses and assumptions, including, but not limited to, forecasted sales levels by product, expected product lifecycle, product development plans and future demand requirements. A 12-month rolling forecast based on factors, including, but not limited to, production cycles, anticipated product orders, marketing forecasts, backlog, and shipment activities is used in the inventory analysis. If market conditions are less favorable than forecasts or actual demand from customers is lower than estimates, additional inventory write-downs may be required. If demand is higher than expected, inventories that had previously been written down may be sold.
Fair Value of Financial Instruments
The carrying values of accounts receivable, other current assets, accounts payable and other current liabilities approximate fair value in the accompanying Consolidated Financial Statements due to the short-term nature of those instruments. The Company’s other financial instruments, which include cash equivalents and investments (excluding minority equity investments) are carried at fair value.
8
Minority Equity Investments
The Company accounts for minority equity investments in companies that are not accounted for under the equity method as equity securities without readily determinable fair values. The value of these securities is based on original cost less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment in the same issuer. Under this method, the share of income or loss of such companies is not included in the Consolidated Statements of Income. The carrying value of these investments is included in investments on the Consolidated Balance Sheets.
The Company’s policy is to recognize an impairment in the value of its minority equity investments when evidence of an impairment exists. Factors considered in the assessment include a significant adverse change in the regulatory, economic, or technological environment, the completion of new equity financing that may indicate a decrease in value, the failure to complete new equity financing arrangements after seeking to raise additional funds, or the commencement of proceedings under which the assets of the business may be placed in receivership or liquidated to satisfy the claims of debt and equity stakeholders. The impairment in the value of minority equity investments is included in the other income, net line item on the Consolidated Statements of Income.
Leases
The Company is a lessee in operating leases primarily incurred to facilitate manufacturing, research and development, and selling, general and administrative activities. At contract inception, the Company determines if an arrangement is or contains a lease, and if so recognizes a right-of-use asset and lease liability at the lease commencement date. For operating leases, the lease liability is measured at the present value of the unpaid lease payments at the lease commencement date, whereas for finance leases, the lease liability is initially measured at the present value of the unpaid lease payments and subsequently measured at amortized cost using the interest method. Operating lease right-of-use assets are included in other assets on the Consolidated Balance Sheets. The short-term portion of operating lease liabilities is included in other current liabilities on the Consolidated Balance Sheets and the long-term portion is included in other liabilities on the Consolidated Balance Sheets. As of September 30, 2025, the Company had no leases that qualified as financing arrangements.
Key estimates and judgments include how the Company determines the discount rate used to discount the unpaid lease payments to present value and the lease term. The Company monitors for events or changes in circumstances that could potentially require recognizing an impairment loss.
Revenue Recognition and Deferred Revenue
Material sales relate to the Company’s sale of its OLED materials for incorporation into its customers’ commercial OLED products or for their OLED development and evaluation activities. Revenue associated with material sales is generally recognized at the time title passes, which is typically at the time of shipment or at the time of delivery, depending upon the contractual agreement between the parties. Revenue may be recognized after control of the material passes in the event the transaction price includes variable consideration. For example, a customer may be provided an extended opportunity to stock materials prior to use in mass production and given a general right of return not conditioned on breaches of warranties associated with the specific product. In such circumstances, revenue will be recognized at the earlier of the expiration of the customer’s general right of return or once it becomes unlikely that the customer will exercise its right of return.
The vast majority of revenue attributed to material sales is determined through technology license agreements and material supply agreements the terms of which are jointly agreed upon with the Company’s customers. The remaining revenue recognized is in the form of contract research services revenue earned by the Company’s subsidiary, Adesis, Inc., and the Company’s occasional material sales to smaller customers. None of the revenue recognized during the three and nine months ended September 30, 2025 and 2024 resulted solely from royalty or license fee arrangements as to which there were not associated material sales.
The rights and benefits to the Company’s OLED technologies are conveyed to the customer through technology license agreements and material supply agreements. The Company believes that the licenses and materials sold under these combined agreements are not distinct from each other for financial reporting purposes and as such, they are accounted for as a single performance obligation. Accordingly, total contract consideration is estimated and recognized over the contract term based on material units sold at the estimated per unit fee over the life of the contract. Total contract consideration is allocated to material sales and royalty and licensing fees on the Consolidated Statements of Income based on contract pricing.
Various estimates are relied upon to recognize revenue. The Company estimates total material units to be purchased by its customers over the contract term based on historical trends, industry estimates and its forecast process. Management uses the expected value method to estimate the material per unit fee. Additionally, management estimates the sales-based portion of royalty revenue based on the estimated net sales revenue of its customers over the contract term.
9
During the three months ended September 30, 2025, the Company identified an error and recorded an out of period adjustment to correct an overstatement of revenue and other current assets in prior periods. The out of period adjustment reduced royalty and license fees by $
9.5
million and $
7.1
million for the three and nine months ended September 30, 2025, respectively. The error originated during the third quarter of 2023. The Company has evaluated the impacts of this error, both quantitatively and qualitatively, and has concluded that the error was not material to the Consolidated Financial Statements for any interim or annual period prior to the three months ended September 30, 2025, and is not expected to be material to the full year ending December 31, 2025.
Contract research services revenue is revenue earned by Adesis by providing chemical materials synthesis research, development and commercialization for non-OLED applications on a contractual basis. These services range from intermediates for structure-activity relationship studies, reference agents and building blocks for combinatorial synthesis, re-synthesis of key intermediates, specialty organic chemistry needs, and selective toll manufacturing. These services are provided to third-party pharmaceutical and life sciences firms and other technology firms at fixed costs or predetermined rates on a contract basis. Revenue is recognized as services are performed with billing schedules and payment terms negotiated on a contract-by-contract basis. Payments received in excess of revenue recognized are recorded as deferred revenue. In other cases, services may be provided and revenue is recognized before the customer is invoiced. In these cases, revenue recognized will exceed amounts billed and the difference, representing amounts which are currently unbillable to the customer pursuant to contractual terms, is recorded as an unbilled receivable.
Technology development and support revenue is revenue earned from development and technology evaluation agreements and commercialization assistance fees. Technology development and support revenue is included in contract research services on the Consolidated Statements of Income.
On December 2, 2022, the Company entered into a commercial patent license agreement with Samsung Display Co., Ltd. (SDC), replacing a previous license agreement that had been in place since 2018. This agreement, which covers the manufacture and sale of specified OLED display materials, was effective as of January 1, 2023 and lasts through the end of 2027 with an additional two-year extension option for SDC. Under this agreement, the Company is being paid a license fee, which includes quarterly and annual payments over the agreement term. The agreement conveys to SDC the non-exclusive right to use certain of the Company's intellectual property assets for a limited period of time that is less than the estimated life of the assets.
At the same time the Company entered into the current commercial license agreement with SDC, the Company also entered into a new supplemental material purchase agreement with SDC, which lasts for the same term as the license agreement and is subject to the same extension option. This new material purchase agreement replaced a previous purchase agreement that had been in place since 2018. Under the supplemental material purchase agreement, SDC agrees to purchase red and green phosphorescent emitter materials from the Company for use in the manufacture of licensed products. This amount purchased is subject to SDC’s requirements for phosphorescent emitter materials and the Company’s ability to meet these requirements over the term of the supplemental agreement.
In 2015, the Company entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display Co., Ltd. (LG Display). The terms of these agreements have been extended through the end of 2025. The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under the Company's patent portfolio. The OLED commercial supply agreement provides for the sale of materials for use by LG Display, which may include phosphorescent emitters and host materials. The agreements provide for certain other minimum obligations relating to the volume of material sales anticipated over the lives of the agreements as well as minimum royalty revenue.
In 2023, the Company entered into new long-term, multi-year agreements with BOE Technology Group Co., Ltd. (BOE). Under these agreements, the Company has granted BOE non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The Company supplies phosphorescent OLED materials to BOE for use in its licensed products.
In 2019, the Company entered into an evaluation and commercial supply relationship with Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. (CSOT). In 2020, the Company entered into long-term, multi-year agreements with CSOT. Under these agreements, the Company has granted CSOT non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The Company also supplies phosphorescent OLED materials to CSOT for use in its licensed products.
In 2024, the Company entered into new long-term, multi-year agreements with Visionox Technology, Inc. (Visionox). Under these agreements, the Company has granted Visionox non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. Additionally, the Company supplies phosphorescent OLED materials to Visionox for use in its licensed products.
10
In 2016, the Company entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma Micro-electronics Co., Ltd. (Tianma). Under the license agreement, the Company has granted Tianma non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. Additionally, the Company supplies phosphorescent OLED materials to Tianma for use in its licensed products. In 2021, the parties extended the terms of both the patent license and material purchase agreements for an additional multi-year-term.
All material sales transactions that are not variable consideration transactions are generally billed and due within 90 days and substantially all are transacted in U.S. dollars.
Cost of Sales
Cost of sales consists of labor and material costs associated with the production of materials processed at the facilities of the Company's manufacturing partner, PPG Industries, Inc. (PPG) and at the Company's internal facilities. The Company’s portion of cost of sales also includes depreciation of manufacturing equipment, as well as manufacturing overhead costs and inventory adjustments for excess and obsolete inventory.
Research and Development
Expenditures for research and development are charged to expense as incurred.
Restructuring
The Company has participated in restructuring initiatives in the past and it is possible that the Company may engage in future restructuring activities. Identifying and calculating the cost to exit operations requires certain assumptions to be made, the most significant of which are anticipated future liabilities, including leases and other contractual obligations, and the adjustment of property and equipment to net realizable value. Significant judgment is required, and estimates and assumptions may change as additional information becomes available and facts or circumstances change.
In June 2020, the Company formed a wholly-owned subsidiary, OVJP Corp, operating in California, in order to advance the commercialization of the Company's proprietary OVJP technology. In December 2024, the Company announced that the OVJP Corp facility in California would be closing and OVJP operations would be relocated to the Company's newly formed Singapore subsidiary, UVJC, as well as continued operations in the Company's Tech and Innovation Center in New Jers
ey. As a result of the closure of OVJP Corp's location in California, the Company recorded $
602,000
of restructuring costs during the
nine months ended September 30, 2025. The Company recorded no restructuring costs during the three months ended September 30, 2025
. The OVJP Corp restructuring costs are included in the research and development expense line item on the Consolidated Statements of Income.
Patent Costs
Costs associated with patent applications, patent prosecution, patent defense and the maintenance of patents are charged to expense as incurred. Costs to successfully defend a challenge to a patent are capitalized to the extent of an evident increase in the value of the patent. Costs that relate to an unsuccessful outcome are charged to expense.
Amortization of Acquired Technology
Amortization costs primarily relate to technology acquired from Merck KGaA, Darmstadt, Germany (Merck KGaA) and BASF SE (BASF). The Merck KGaA acquisition was completed on April 28, 2023 and the BASF acquisition was completed during the year ended December 31, 2016. Acquisition costs are being amortized over a period of
10
years for the Merck KGaA and BASF patents.
Amortization of Other Intangible Assets
Other intangible assets from the Adesis acquisition are being amortized over a period of
10
to
15
years. See Note 7 for further discussion.
Translation of Foreign Currency Financial Statements and Foreign Currency Transactions
The
Company’s reporting currency is the U.S. dollar. The functional currency for the UDC Ireland, UDC Korea and UDC Chengdu subsidiaries are also the U.S. dollar and the functional currency for the OMM subsidiary and each of the Company's other Asia-Pacific foreign subsidiaries is its respective local currency. The Company translates the amounts included in the Consolidated Statements of
11
Income
from OMM and its other Asia-Pacific foreign subsidiaries into U.S. dollars at weighted-average exchange rates, which the Company believes are representative of the actual exchange rates on the dates of the transactions. The Company's OMM subsidiary and each of the Company's other Asia-Pacific foreign subsidiaries' assets and liabilities are translated into U.S. dollars from the local currency at the actual exchange rates as of the end of each reporting date, and the Company records the resulting foreign exchange translation adjustments in the Consolidated Balance Sheets as a component of accumulated other comprehensive income (loss). With the exception of the Korean withholding tax receivable denominated in Korean Won (see Note 20), the overall effect of the translation of foreign currency and foreign currency transactions to date has been insignificant.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.
Recognized income tax positions are measured at the largest amount of which the likelihood of realization is greater than 50%.
Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties, if any, related to unrecognized tax benefits as a component of tax expense.
On July 4, 2025, the U.S. enacted H.R. 1 "A bill to provide for reconciliation pursuant to Title II of H. Con. Res. 14." The bill includes several changes to federal tax law that generally allow for more favorable treatment of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic research and development expenditures. H.R.1 also includes certain changes to the international tax framework and permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act. During the three and nine months ended September 30, 2025, the Company evaluated H.R 1 and estimated its impact on the Consolidated Financial Statements
to be immaterial. The Company will continue to evaluate the full impact of the legislative changes as additional guidance becomes available.
Share-Based Payment Awards
The Company recognizes in the Consolidated Statements of Income the grant-date fair value of equity-based awards such as shares issued under employee stock purchase plans, restricted stock awards, restricted stock units and performance unit awards issued to employees and directors.
The grant-date fair value of stock awards is based on the closing price of the stock on the date of grant. The fair value of share-based awards is recognized as compensation expense on a straight-line basis over the requisite service period, net of forfeitures. The Company issues new shares upon the respective grant, exercise or vesting of the share-based payment awards, as applicable.
Performance unit awards are subject to either a performance-based or market-based vesting requirement. For performance-based vesting, the grant-date fair value of the award, based on fair value of the Company's common stock, is recognized over the service period based on an assessment of the likelihood that the applicable performance goals will be achieved, and compensation expense is periodically adjusted based on actual and expected performance. Compensation expense for performance unit awards with market-based vesting is calculated based on the estimated fair value as of the grant date utilizing a Monte Carlo simulation model and is recognized over the service period on a straight-line basis.
Recent Accounting Pronouncements
Adoption of New Accounting Standard
In March 2024, the FASB issued ASU No. 2024-01,
Compensation - Stock Compensation (Topic 718)
. The standard provides guidance to reduce complexity and diversity in practice in determining whether a profits interest award is accounted for as a share-based payment. Early adoption is permitted. This guidance can be applied either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest or similar awards granted or modified on or after the effective date for our application of this guidance. The adoption of ASU 2024-01, beginning on January 1, 2025, did not have an impact on the Consolidated Financial Statements and related disclosures.
Accounting Standards Issued But Not Yet Adopted
In December 2023, the FASB issued ASU No. 2023-09,
Improvements to Income Tax Disclosures (Topic 740)
. The standard enhances the annual income tax disclosures to address investor requests for more information about the tax risks and opportunities
12
present in an entity's worldwide operations. ASU 2023-09 becomes effective for annual reporting periods beginning after December 15, 2024, and the Company is evaluating the potential impact of this standard on its income tax disclosures.
In July 2025, the FASB issued ASU No. 2025-05,
Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.
This standard reduces the cost and complexity of applying Topic 326 (credit losses) to current accounts receivable and current contract assets arising from transactions accounted for under Topic 606 (revenue from contracts with customers). ASU 2025-05 becomes effective for interim and annual periods beginning after December 15, 2025, and the Company is evaluating the potential impact of this standard on the Consolidated Financial Statements and related disclosures.
In November 2024, the FASB issued ASU No. 2024-03,
Disaggregation of
Income Statement Expenses (DISE)
. The standard requires new financial statement disclosures disaggregating information about prescribed categories underlying any relevant income statement expense caption. ASU 2024-03 becomes effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is evaluating the potential impact of this standard on the Consolidated Financial Statements and related disclosures.
3. CASH, CASH EQUIVALENTS AND INVESTMENTS:
The Company’s portfolio of marketable fixed income securities consists of U.S. Government bonds. The Company considers all highly liquid debt instruments purchased with an original maturity (maturity at the purchase date) of three months or less to be cash equivalents. The Company classifies its remaining debt security investments as available-for-sale. These debt securities are carried at fair market value, with unrealized gains and losses reported in shareholders’ equity. Gains or losses on securities sold are based on the specific identification method.
Cash and Cash Equivalents
The following table provides details regarding the Company’s portfolio of cash and cash equivalents (in thousands):
Cost or
Unrealized
Aggregate
Fair
Cash and Cash Equivalents Classification
Amortized Cost
Gains
(Losses)
Market Value
September 30, 2025
Cash accounts in banking institutions
$
116,713
$
—
$
—
$
116,713
Money market accounts
4,896
—
—
4,896
$
121,609
$
—
$
—
$
121,609
December 31, 2024
Cash accounts in banking institutions
$
96,318
$
—
$
—
$
96,318
Money market accounts
2,662
—
—
2,662
$
98,980
$
—
$
—
$
98,980
Short-term Investments
The following table provides details regarding the Company’s portfolio of short-term investments (in thousands):
Cost or
Unrealized
Aggregate
Fair
Short-term Investments Classification
Amortized Cost
Gains
(Losses)
Market Value
September 30, 2025
U.S. Government bonds
$
472,554
$
1,204
$
(
40
)
$
473,718
Marketable equity securities
(1)
4,606
3,056
(
14
)
7,648
$
477,160
$
4,260
$
(
54
)
$
481,366
December 31, 2024
U.S. Government bonds
$
392,778
$
758
$
—
$
393,536
Marketable equity securities
(1)
142
12
—
154
$
392,920
$
770
$
—
$
393,690
(1)
Changes in aggregate fair market value recorded in other income, net on the Consolidated Statements of Income.
13
Long-term U.S. Government Bond Investments
The following table provides details regarding the Company’s portfolio of long-term investments (in thousands):
Cost or
Unrealized
Aggregate
Fair
Long-term Investments Classification
Amortized Cost
Gains
(Losses)
Market Value
September 30, 2025
U.S. Government bonds
$
395,293
$
2,102
$
(
12
)
$
397,383
$
395,293
$
2,102
$
(
12
)
$
397,383
December 31, 2024
U.S. Government bonds
$
434,766
$
1,302
$
(
595
)
$
435,473
$
434,766
$
1,302
$
(
595
)
$
435,473
Minority Equity Investments
The Company’s portfolio of minority equity investments consists of investments in privately held early-stage companies primarily motivated for the Company to gain early access to new technology and are passive in nature in that the Company typically does not seek to obtain representation on the boards of directors of the companies in which it invests. Minority equity investments are included in investments on the Consolidated Balance Sheets. As of September 30, 2025 and December 31, 2024
, the Company had minority equity investments in six entities for both periods, with a total carrying value of $
22.0
million and $
18.6
million, respectively, accounted for as equity securities without readily determinable fair values. As of
September 30, 2025 and December 31, 2024
, the Company had
two
convertible note investments, with a total fair value of $
3.5
million, accounted for as available-for-sale debt securities without readily determinable fair values.
4. FAIR VALUE MEASUREMENTS:
The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of
September 30, 2025 (in thousands):
Fair Value Measurements, Using
Total Carrying Value
as of September 30,
2025
Quoted Prices in
Active Markets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant Unobservable
Inputs
(Level 3)
Short-term U.S. Government bonds
$
473,718
$
473,718
$
—
$
—
Long-term U.S. Government bonds
397,383
397,383
—
—
Cash equivalents
4,896
4,896
—
—
Short-term marketable equity securities
7,648
7,648
—
—
Convertible notes
3,500
—
—
3,500
The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2024 (in thousands):
Fair Value Measurements, Using
Total Carrying Value
as of December 31,
2024
Quoted Prices in
Active Markets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant Unobservable
Inputs
(Level 3)
Long-term U.S. Government bonds
$
435,473
$
435,473
$
—
$
—
Short-term U.S. Government bonds
393,536
393,536
—
—
Cash equivalents
2,662
2,662
—
—
Short-term marketable equity securities
154
154
—
—
Convertible notes
3,500
—
—
3,500
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on management’s own assumptions used to measure assets and liabilities at fair value. A financial asset’s or liability’s classification is determined based on the lowest level input that is significant to the fair value measurement.
14
Changes in fair value of the debt investments are recorded as unrealized gains and losses in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets and any credit losses on debt investments are recorded as an allowance for credit losses with an offset recognized in other income, net on the Consolidated Statements of Income. There were
no
credit losses on debt investments as of
September 30, 2025 or December 31, 2024
.
5. INVENTORY:
Inventory consisted of the following (in thousands):
September 30, 2025
December 31, 2024
Raw materials
$
127,190
$
106,795
Work-in-process
23,291
16,374
Finished goods
62,140
59,769
Inventory
$
212,621
$
182,938
The increase in inventory during the nine months ended September 30, 2025
was primarily due to purchases of certain strategic raw materials. The Company recorded an increase in its inventory reserves of $
124,000
and $
2.3
million for the
three months ended September 30, 2025 and 2024
, respectively, and $
124,000
and $
2.6
million for the
nine months ended September 30, 2025 and 2024
, respectively.
6. PROPERTY AND EQUIPMENT:
Property and equipment, net consist of the following (in thousands):
September 30, 2025
December 31, 2024
Land
$
12,230
$
12,230
Building and improvements
164,327
131,288
Office and lab equipment
175,829
159,448
Furniture, fixtures and computer related assets
16,640
16,858
Construction-in-progress
22,656
45,292
391,682
365,116
Less: Accumulated depreciation
(
181,880
)
(
169,877
)
Property and equipment, net
$
209,802
$
195,239
Depreciation expense was $
7.5
million and $
6.4
million for the
three months ended September 30, 2025 and 2024
, respectively, and $
20.9
million and $
19.5
million for the
nine months ended September 30, 2025 and 2024, respectively. During the nine months ended September 30, 2025
, the Company disposed of $
7.0
million of property and equipment, which was impaired on December 31, 2024 in connection with the closure of the OVJP Corp facility in California.
7. GOODWILL AND INTANGIBLE ASSETS:
The Company monitors the recoverability of goodwill annually or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Purchased intangible assets subject to amortization consist of acquired technology and other intangible assets that include trade names, customer relationships and developed intellectual property (IP) processes.
15
Acquired Technology
Acquired technology primarily consists of acquired license rights for patents and know-how obtained from Merck KGaA, BASF and Fujifilm. These intangible assets consist of the following (in thousands):
September 30, 2025
December 31, 2024
Merck KGaA
$
66,012
$
66,012
BASF
95,989
95,989
Fujifilm
109,462
109,462
Other
5,712
5,712
277,175
277,175
Less: Accumulated amortization
(
216,199
)
(
203,621
)
Acquired technology, net
$
60,976
$
73,554
Amortization expense related to acquired technology was $
4.2
million for both
three months ended September 30, 2025 and 2024
and $
12.6
million for both
nine months ended September 30, 2025 and 2024
. Amortization expense is included in the amortization of acquired technology and other intangible assets expense line item on the Consolidated Statements of Income and is expected to be $
4.2
million for the three months ending December 31, 2025, $
12.0
million in the year ending December 31, 2026, $
7.2
million in each of the years ending December 31, 2027 and 2028, $
7.1
million in the year ending December 31, 2029, and $
23.3
million thereafter.
Merck KGaA Patent Acquisition
In April 2023, UDC Ireland entered into a Patent Sale and License Agreement with Merck KGaA. Under this agreement, Merck KGaA sold to UDC Ireland all of its rights, title and interest to over
550
of its owned and licensed OLED-related patents and patent applications in exchange for a cash payment of $
66.0
million. The Patent Sale and License Agreement contains customary representations, warranties and covenants of the parties. UDC Ireland recorded the payment of $
66.0
million as acquired technology, which is being amortized over a period of
10
years.
BASF Patent Acquisition
On June 28, 2016, UDC Ireland entered into and consummated an IP Transfer Agreement with BASF. Under the IP Transfer Agreement, BASF sold to UDC Ireland all of its rights, title and interest to certain of its owned and co-owned intellectual property rights relating to the composition, development, manufacture and use of OLED materials, including OLED lighting and display stack technology, as well as certain tangible assets. The intellectual property includes knowhow and more than
500
issued and pending patents in the area of phosphorescent materials and technologies. These assets were acquired in exchange for a cash payment of €
86.8
million ($
95.8
million). In addition, UDC Ireland also took on certain rights and obligations under three joint research and development agreements to which BASF was a party. The IP Transfer Agreement also contains customary representations, warranties and covenants of the parties. UDC Ireland recorded the payment of €
86.8
million ($
95.8
million) and acquisition costs incurred of $
217,000
as acquired technology, which is being amortized over a period of
10
years.
Other Intangible Assets
As a result of the Adesis acquisition in June 2016, the Company recorded $
16.8
million of other intangible assets, including $
10.5
million assigned to customer relationships with a weighted average life of
11.5
years, $
4.8
million to internally developed IP, processes and recipes with a weighted average life of
15
years, and $
1.5
million to trade name and trademarks with a weighted average life of
10
years.
At
September 30, 2025, these other intangible assets consist of the following (in thousands):
September 30, 2025
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Customer relationships
$
10,520
$
(
8,401
)
$
2,119
Developed IP, processes and recipes
4,820
(
2,948
)
1,872
Trade name/Trademarks
1,500
(
1,381
)
119
Other
448
(
180
)
268
Total identifiable other intangible assets
$
17,288
$
(
12,910
)
$
4,378
16
Amortization expense related to other intangible assets was $
360,000
and $
359,000
for the
three months ended September 30, 2025 and 2024
, respectively, and $
1.1
million for both
nine months ended September 30, 2025 and 2024. Am
ortization expense is included in the amortization of acquired technology and other intangible assets expense line item on the Consolidated Statements of Income and is expected to be $
360,000
for the three months ending December 31, 2025, $
1.4
million for the year ending December 31, 2026, $
1.3
million for the year ending December 31, 2027, $
422,000
for the year ending December 31, 2028, $
362,000
for the year ending December 31, 2029 and $
500,000
in total thereafter.
8. OTHER ASSETS:
Other assets consist of the following (in thousands):
September 30, 2025
December 31, 2024
Long-term taxes receivable
$
55,471
$
52,899
Long-term unbilled receivables
34,437
24,943
Right-of-use assets
22,460
19,867
Long-term contract assets
4,356
6,528
Other long-term assets
2,455
2,578
Other assets
$
119,179
$
106,815
See Notes 9, 20 and 21 for further explanation on right-of-use assets, long-term taxes receivable and long-term unbilled receivables, respectively.
9. LEASES:
The Company has entered into operating leases to facilitate the expansion of its manufacturing, research and development, and selling, general and administrative activities. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when those events are reasonably certain to occur. The interest rate implicit in lease contracts is typically not readily determinable and as such the Company uses the appropriate incremental borrowing rate based on information available at the lease commencement date in determining the present value of the lease payments. Current lease agreements do not contain any residual value guarantees or material restrictive covenants.
As of
September 30, 2025, the Company did not have any finance leases and had no additional operating lease that had not yet commenced.
The following table presents the Company’s operating lease cost and supplemental cash flow information related to the Company’s operating leases (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Operating lease cost
$
1,024
$
1,115
$
2,883
$
3,307
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations
$
4,270
$
—
$
4,979
$
—
The following table presents the Company’s operating lease right-of-use assets and liabilities (in thousands):
September 30, 2025
December 31, 2024
Right-of-use assets
$
22,460
$
19,867
Short-term lease liabilities
4,693
3,848
Long-term lease liabilities
20,356
19,135
The following table presents weighted average assumptions used to compute the Company’s right-of-use assets and lease liabilities:
September 30, 2025
Weighted average remaining lease term (in years)
5.3
Weighted average discount rate
3.8
%
17
As of September 30, 2025
, current operating leases had remaining terms between
one
and
six years
with options to extend the lease terms.
Undiscounted future minimum lease payments as of
September 30, 2025, by year and in the aggregate, having non-cancelable lease terms in excess of one year were as follows (in thousands):
Maturities of
Operating Lease Liabilities
2025
(1)
$
1,290
2026
5,331
2027
5,298
2028
5,006
2029
3,623
Thereafter
6,706
Total lease payments
27,254
Less: Imputed interest
(
2,205
)
Present value of lease payments
$
25,049
(1)
Scheduled maturities of lease liabilities represent the period from October 1, 2025 to December 31, 2025
.
10. ACCRUED EXPENSES:
Accrued expenses consist of the following (in thousands):
September 30, 2025
December 31, 2024
Compensation
$
23,961
$
28,744
PPG Industries, Inc. agreement
10,144
7,759
Consulting
1,336
1,718
Professional fees
1,139
1,292
Research and development agreements
747
852
Royalties
401
1,048
Other
5,106
4,613
Accrued expenses
$
42,834
$
46,026
11. RESEARCH AND LICENSE AGREEMENTS WITH ACADEMIC PARTNERS:
The Company has long-standing relationships with a number of academic institutions that undertake funded research projects, including Princeton University (Princeton) and the University of Southern California (USC).
Under the current license agreement among the Company, Princeton and USC, the universities have granted the Company worldwide, exclusive license rights, with rights to sublicense, to make, have made, use, lease and/or sell products and to practice processes based on patent applications and issued patents arising out of research performed by the universities for the Company. The Company recorded royalty expense in connection with this agreement of $
155,000
and $
145,000
for the
three months ended September 30, 2025 and 2024
, respectively, and $
359,000
and $
1.9
million for the
nine months ended September 30, 2025 and 2024, respectively.
The Company also makes payments under the current research agreement with USC on a quarterly basis as actual expenses are incurred. As of September 30, 2025
, the Company was obligated to pay USC up to $
6.8
million for work to be performed during the remaining term. The Company recorded research and development expense in connection with work performed under the agreement of $
261,000
and $
490,000
for the
three months ended September 30, 2025 and 2024
, respectively, and $
1.1
million and $
1.2
million for the
nine months ended September 30, 2025 and 2024
, respectively.
18
12. OTHER LIABILITIES:
Other liabilities consist of the following (in thousands):
September 30, 2025
December 31, 2024
Long-term lease liabilities
$
20,356
$
19,135
Long-term taxes payable
15,749
15,749
Other long-term liabilities
613
527
Other liabilities
$
36,718
$
35,411
See Notes 9 and 20 for further explanation on long-term lease liabilities and long-term taxes payable, respectively.
13. EQUITY AND CASH COMPENSATION UNDER THE PPG AGREEMENT:
On September 22, 2011, the Company entered into an Amended and Restated OLED Materials Supply and Service Agreement with PPG (the New OLED Materials Agreement), which, effective as of October 1, 2011, replaced the original OLED Materials Agreement with PPG. The term of the New OLED Materials Agreement, by amendment in February 2021, runs through December 31, 2025, and thereafter is automatically renewed for additional one-year terms, unless terminated by the Company by providing prior notice of one year or terminated by PPG by providing prior notice of two years. The New OLED Materials Agreement contains provisions that are substantially similar to those of the original OLED Materials Agreement. Under the New OLED Materials Agreement, PPG continues to assist the Company in developing its proprietary OLED materials and supplying the Company with those materials for evaluation purposes and for resale to its customers.
Under the New OLED Materials Agreement, the Company compensates PPG on a cost-plus basis for the services provided during each calendar quarter. The Company is required to pay for some of these services in all cash. Up to
50
% of the remaining services are payable, at the Company’s sole discretion, in cash or shares of the Company’s common stock, with the balance payable in cash. The actual number of shares of common stock issuable to PPG is determined based on the average closing price for the Company’s common stock during a specified number of days prior to the end of each calendar half-year period ending on March 31 and September 30. If, however, this average closing price is less than $
20.00
, the Company is required to compensate PPG in cash.
No
shares have been issued for services rendered by PPG since the inception of the contract.
The Company is also required to reimburse PPG for raw materials used for research and development. The Company records the purchases of these raw materials as a current asset until such materials are used for research and development efforts.
In February 2021, the Company entered into an amendment to the New OLED Materials Agreement extending the term of the agreement and specifying operation and maintenance services to be provided by PPG affiliate, PPG SCM Ireland Limited (PPG SCM), to UDC Ireland, at the Company’s manufacturing site in Shannon, Ireland that UDC Ireland’s wholly-owned subsidiary, OLED Material Manufacturing Limited (OMM), began leasing at such time for the production of OLED materials. OMM purchased the site in September 2023 and the Company amended and restated the February 2021 amendment to reflect OMM’s ownership and PPG SCM’s updated operation and maintenance services after such purchase. Facility improvements have been completed and operations commenced in June 2022. As with the initial New OLED Materials Agreement, the Company compensates PPG on a cost-plus basis for the services provided at the Shannon manufacturing facility.
The Company recorded research and development expense of $
3.9
million and $
4.6
million for the
three months ended September 30, 2025 and 2024
, respectively, and $
12.7
million and $
12.5
million for the
nine months ended September 30, 2025 and 2024
, respectively, in relation to the cash portion of the reimbursement of expenses and work performed by PPG, excluding amounts paid for commercial chemicals.
14. SHAREHOLDERS’ EQUITY:
Preferred Stock
The Company’s Amended and Restated Articles of Incorporation authorize it to issue up to
5,000,000
shares of $
0.01
par value preferred stock with designations, rights and preferences determined from time-to-time by the Company’s Board of Directors. Accordingly, the Company’s Board of Directors is empowered, without shareholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights superior to those of shareholders of the Company’s common stock.
19
In 1995, the Company issued
200,000
shares of Series A Nonconvertible Preferred Stock (Series A) to American Biomimetics Corporation (ABC) pursuant to a certain Technology Transfer Agreement between the Company and ABC. The Series A shares have a liquidation value of $
7.50
per share. Series A shareholders, as a single class, have the right to elect
two
members of the Company’s Board of Directors. This right has never been exercised.
Holders of the Series A shares are entitled to one vote per share on matters which shareholders are generally entitled to vote. The Series A shareholders are not entitled to any dividends.
As of September 30, 2025
, the Company had issued
200,000
shares of preferred stock (consisting of the
200,000
shares of Series A), all of which were outstanding.
Common Stock
The Company’s Amended and Restated Articles of Incorporation authorize it to issue up to
200,000,000
shares of $
0.01
par value common stock. Each share of the Company’s common stock entitles the holder to one vote on all matters to be voted upon by the shareholders. As of
September 30, 2025
, the Company had issued
48,907,893
shares of common stock, of which
47,542,245
were outstanding.
On April 29, 2025, the Company’s Board of Directors approved a share repurchase program, authorizing the Company to purchase up to $
100.0
million of its common stock. The repurchase authorization was effective immediately and permits shares of the Company’s common stock to be repurchased from time to time at management's discretion, through a variety of methods, including a 10b5-1 trading plan, open market purchases, privately negotiated transactions, or transactions otherwise in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The repurchase program has no time limit, does not obligate the Company to acquire a specified number of shares and may be modified, suspended or discontinued at any time at the Company’s discretion.
During the three and nine months ended September 30, 2025 and 2024
, the Company repurchased
no
shares of common stock.
Dividends
During the three months ended September 30, 2025
, the Company declared cash dividends of $
0.45
per common share, or $
21.6
million, and during the
nine months ended September 30, 2025
, the Company declared cash dividends of $
1.35
per common share, or $
64.8
million, on the Company's outstanding common stock. The Company paid out $
21.4
million and $
64.2
million of cash dividends during the
three and nine months ended September 30, 2025, respectively.
On November 4, 2025, the Company’s Board of Directors declared a fourth quarter dividend of $
0.45
per share to be paid on
December 31, 2025
to all shareholders of record of the Company’s common stock as of the close of business on
December 17, 2025
. All future dividends will be subject to the approval of the Company’s Board of Directors.
15. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
Amounts related to the changes in accumulated other comprehensive income (loss) were as follows (in thousands):
Unrealized Gain (Loss) on
Available-for-Sale
Securities
Net Unrealized (Loss) Gain on
Retirement Plan
(2)
Change in Cumulative
Foreign Currency
Translation Adjustment
Total
Affected Line Items in the
Consolidated Statements of
Income
Balance December 31, 2024, net of tax
$
1,269
$
(
2,106
)
$
(
218
)
$
(
1,055
)
Other comprehensive income
before reclassification
1,789
—
172
1,961
Reclassification to net income
(1)
—
13
—
13
Selling, general and administrative,
research and development and
cost of sales
Change during period
1,789
13
172
1,974
Balance September 30, 2025, net of tax
$
3,058
$
(
2,093
)
$
(
46
)
$
919
20
Unrealized Gain (Loss) on
Available-for-Sale
Securities
Net Unrealized (Loss) Gain on
Retirement Plan
(2)
Change in Cumulative
Foreign Currency
Translation Adjustment
Total
Affected Line Items in the
Consolidated Statements of
Income
Balance December 31, 2023, net of tax
$
858
$
(
1,808
)
$
(
136
)
$
(
1,086
)
Other comprehensive income (loss)
before reclassification
4,117
(
761
)
48
3,404
Reclassification to net income
(1)
—
260
—
260
Selling, general and administrative,
research and development and
cost of sales
Change during period
4,117
(
501
)
48
3,664
Balance September 30, 2024, net of tax
$
4,975
$
(
2,309
)
$
(
88
)
$
2,578
(1)
The Company reclassified amortization of prior service cost, actuarial loss and curtailment charge for its retirement plan from accumulated other comprehensive income (loss) to net income of $
13,000
and $
260,000
for the
nine months ended September 30, 2025 and 2024
, respectively.
(2)
Refer to Note 17: Retirement Plan Benefit Liability.
16. STOCK-BASED COMPENSATION:
Equity Compensation Plan
On June 15, 2023, the shareholders of the Company voted to approve the Universal Display Corporation 2023 Equity Compensation Plan (the “Equity Compensation Plan”), which replaced the Universal Display Corporation 2014 Equity Compensation Plan. The Equity Compensation Plan provides for the granting of incentive and nonqualified stock options, shares of common stock, stock appreciation rights and performance units to employees, directors and consultants of the Company. Stock options are exercisable over periods determined by the Company’s Human Capital Committee, but for no longer than
10
years from the grant date. The total number of shares that may be subject to awards under the Equity Compensation Plan is equal to the shares that were available for issuance and not subject to an award under the 2014 Equity Compensation Plan at the time it was replaced by the Equity Compensation Plan, subject to adjustment with respect to shares underlying any outstanding award granted under the Equity Compensation Plan or the 2014 Equity Compensation Plan that may expire, or be terminated, surrendered or forfeited for any reason, without issuance of such shares. As of
September 30, 2025
,
1,113,853
shares remained available to be granted under the Equity Compensation Plan. The Equity Compensation Plan will terminate on June 15, 2033.
Restricted Stock Awards and Units
The Company has issued restricted stock awards and units to employees and non-employees with vesting terms of one to five years. The fair value is equal to the market price of the Company’s common stock on the date of grant for awards granted to employees. Consistent with the accounting for equity-classified awards issued to employees, our equity-classified nonemployee share-based awards are measured at the grant date fair value. Expense for restricted stock awards and units is amortized ratably over the vesting period for the awards issued to employees and using a graded vesting method for the awards issued to non-employees.
During the nine months ended September 30, 2025
, the Company granted
102,313
shares of restricted stock awards and restricted stock units to employees and non-employees, which had a total fair value of $
11.1
million on the respective dates of grant, and will vest over
three
to
five years
from the date of grant, provided that the grantee is still an employee of the Company or is still providing services to the Company on the applicable vesting date.
For the three months ended September 30, 2025 and 2024
, the Company recorded, as compensation charges related to all restricted stock awards and units granted to employees and non-employees, selling, general and administrative expense of $
1.9
million and $
1.8
million, respectively, research and development expense of $
1.2
million and $
1.3
million, respectively, and cost of sales of $
429,000
and $
411,000
, respectively. For the
nine months ended September 30, 2025 and 2024
, the Company recorded, as compensation charges related to all restricted stock awards and units granted to employees and non-employees, selling, general and administrative expense of $
5.5
million and $
6.1
million, respectively, research and development expense of $
3.6
million and $
4.1
million, respectively, and cost of sales of $
1.3
million for both nine month periods.
In connection with the vesting of restricted stock awards and units during the three months ended September 30, 2025 and 2024
,
192
and
4,505
shares, respectively, with aggregate fair values of $
28,000
and $
927,000
, respectively, were withheld in satisfaction of tax withholding obligations and are reflected as a financing activity within the Consolidated Statements of Cash Flows. In connection with the vesting of restricted stock awards and units during the
nine months ended September 30, 2025 and 2024
,
33,236
and
37,927
21
shares,
respectively, with aggregate fair values of $
5.0
million and $
6.8
million, respectively, were withheld in satisfaction of tax withholding obligations and are reflected as a financing activity within the Consolidated Statements of Cash Flows.
The Company has granted restricted stock units to non-employee members of the Board of Directors with quarterly vesting over a period of approximately
one year
. The fair value is equal to the market price of the Company's common stock on the date of grant. The restricted stock units are issued and expense is recognized ratably over the vesting period. For the
three months ended September 30, 2025 and 2024
, the Company recorded compensation charges for services performed, related to all restricted stock units granted to non-employee members of the Board of Directors, selling, general and administrative expense of $
527,000
and $
471,000
, respectively. Such compensation charges to selling, general and administrative expense were $
1.6
million and $
1.3
million, respectively, for the
nine months ended September 30, 2025 and 2024
. In connection with the vesting of the restricted stock, the Company issued to non-employee members of the Board of Directors
10,250
and
8,044
shares, respectively, during the
nine months ended September 30, 2025 and 2024.
Performance Unit Awards
Each performance unit award is subject to both a performance-vesting requirement (either performance-based or market-based) and a service-vesting requirement. The performance-based vesting requirement is tied to EBITDA and cash flow achievement, as measured over a specific performance period. The market-based vesting requirement is tied to the Company's total shareholder return (TSR) relative to the TSR of companies comprising the Nasdaq Electronics Components Index, as measured over a three-year performance period. The maximum number of performance units that may vest based on performance is three times the shares granted. Further, if the Company's performance falls below certain thresholds, the performance units will not vest at all.
During the nine months ended September 30, 2025
, the Company granted
83,073
performance units, of which
41,535
units are subject to performance-based vesting requirements based on three-year cumulative adjusted EBITDA,
20,769
units are subject to performance-based vesting requirements based on three-year cumulative gross margin and
20,769
units are subject to market-based, TSR vesting requirements. The grant date fair value of the performance unit awards granted was $
9.0
million for the
nine months ended September 30, 2025, as determined by the Company’s common stock on date of grant for the units with performance-based vesting and a Monte Carlo simulation model used for the units with market-based vesting.
For the three months ended September 30, 2025 and 2024
, the Company recorded selling, general and administrative expense of $
1.3
million and $
605,000
, respectively, research and development expense of $
511,000
and $
269,000
, respectively, and cost of sales expense of $
316,000
and $
167,000
, respectively, related to the performance units. For the
nine months ended September 30, 2025 and 2024
, the Company recorded selling, general and administrative expense of $
6.3
million and $
6.1
million, respectively, research and development expense of $
2.4
million and $
2.6
million, respectively, and cost of sales expense of $
1.5
million and $
1.6
million, respectively, related to the performance units.
In connection with the vesting of performance units during the nine months ended September 30, 2025 and 2024
,
30,875
and
8,160
shares, respectively, with an aggregate fair value of $
4.5
million and $
1.4
million, respectively, were withheld in satisfaction of tax withholding obligations and are reflected as a financing activity within the Consolidated Statements of Cash Flows.
Employee Stock Purchase Plan
On April 7, 2009, the Board of Directors of the Company adopted an Employee Stock Purchase Plan (ESPP). The ESPP was approved by the Company’s shareholders and became effective on June 25, 2009. The Company has reserved
1,000,000
shares of common stock for issuance under the ESPP. Unless terminated by the Board of Directors, the ESPP will expire when all reserved shares have been issued.
Eligible employees may elect to contribute to the ESPP through payroll deductions during consecutive
three-month
purchase periods, the first of which began on July 1, 2009. Each employee who elects to participate will be deemed to have been granted an option to purchase shares of the Company’s common stock on the first day of the purchase period. Unless the employee opts out during the purchase period, the option will automatically be exercised on the last day of the period, which is the purchase date, based on the employee’s accumulated contributions to the ESPP. The purchase price will equal
85
% of the lesser of the closing price per share of common stock on the first day of the period or the last business day of the period.
Employees may allocate up to
10
% of their base compensation to purchase shares of common stock under the ESPP; however, each employee may purchase no more than
12,500
shares on a given purchase date, and no employee may purchase more than $
25,000
of common stock under the ESPP during a given calendar year.
During the nine months ended September 30, 2025 and 2024
, the Company issued
13,518
and
11,654
shares, respectively, of its common stock under the ESPP, resulting in proceeds of $
1.6
million and $
1.8
million, respectively.
22
For the three months ended September 30, 2025 and 2024
, the Company recorded charges of $
44,000
and $
29,000
, respectively, to selling, general and administrative expense, $
60,000
and $
69,000
, respectively, to research and development expense, and $
82,000
and $
54,000
, respectively, to cost of sales related to the ESPP equal to the amount of the discount and the value of the look-back feature. For the
nine months ended September 30, 2025 and 2024
, the Company recorded charges of $
114,000
and $
101,000
, respectively, to selling, general and administrative expense, $
161,000
and $
206,000
, respectively, to research and development expense, and $
200,000
and $
151,000
, respectively, to cost of sales related to the ESPP equal to the amount of the discount and the value of the look-back feature.
Scientific Advisory Board Awards
During the nine months ended September 30, 2025 and 2024
, the Company granted a total of
2,070
and
1,616
shares, respectively, of fully vested common stock to non-employee members of the Scientific Advisory Board for services performed in
2024 and 2023
, respectively. The fair value of shares issued to members of the Scientific Advisory Board was $
300,000
for both nine month periods.
For the three months ended September 30, 2025 and 2024
, the Company recorded as compensation charges related to all restricted stock units granted to non-employee members of the Scientific Advisory Board, whose unvested shares are marked to market each reporting period, research and development expense of $
60,000
for both three-month periods. Such compensation charges to research and development expense were $
179,000
and $
182,000
, respectively, for the
nine months ended September 30, 2025 and 2024
.
17. RETIREMENT PLAN BENEFIT LIABILITY:
On March 18, 2010, the Human Capital Committee and the Board of Directors of the Company approved and adopted the Universal Display Corporation Supplemental Executive Retirement Plan (SERP). The SERP is currently unfunded and includes salary and bonus as part of the plan. The purpose of the SERP is to provide certain of the Company’s key employees with supplemental pension benefits following a cessation of their employment and to encourage their continued employment with the Company. As of September 30, 2025
, there were
seven
participants in the SERP. In December 2022, one of the participants retired and monthly SERP benefit payments commenced in January 2023. The total SERP benefit payments for the
nine months ended September 30, 2025
were $
1.5
million.
The Company records amounts relating to the SERP based on calculations that incorporate various actuarial and other assumptions, including discount rates, rate of compensation increases, retirement dates and life expectancies. The net periodic costs are recognized as employees render the services necessary to earn the SERP benefits.
The components of net periodic pension cost were as follows (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Service cost
$
226
$
211
$
676
$
626
Interest cost
696
710
2,089
1,931
Curtailment charge
—
—
—
312
Amortization of prior service cost
6
6
17
27
Total net periodic benefit cost
$
928
$
927
$
2,782
$
2,896
18. COMMITMENTS AND CONTINGENCIES:
Commitments
Under the current research agreement with USC, the Company is obligated to make certain payments to USC based on work performed by it under that agreement, and by the University of Michigan (Michigan) under a subcontractor agreement that Michigan has with USC.
Under the terms of the current license agreement among the Company, Princeton and USC, the Company makes royalty payments to Princeton. See Note 11 for further explanation.
The Company has agreements with
five
executive officers and
nine
senior level employees which provide for certain cash and other benefits upon termination of employment of the officer or employee in connection with a change in control of the Company. If a covered person’s employment is terminated in connection with the change in control, the person is entitled to a lump-sum cash payment equal to
two
times (in the case of the executive officers) or either
one
or
two
times
(in the case of the senior level employees) the sum
23
of
the average annual base salary and bonus of the person and immediate vesting of all stock options and other equity awards that may be outstanding at the date of the change in control, among other items.
In order to manage manufacturing lead times and help ensure adequate material supply, the Company entered into the New OLED Materials Agreement (see Note 13) that allows PPG to procure and produce inventory based upon criteria as defined by the Company. These purchase commitments consist of firm, noncancelable and unconditional commitments. In certain instances, this agreement allows the Company the option to reschedule and adjust the Company’s requirements based on its business needs prior to firm orders being placed. As of September 30, 2025 and December 31, 2024
, the Company had purchase commitments for inventory of $
44.2
million and $
46.5
million, respectively.
Patent Related Challenges and Oppositions
Each major jurisdiction in the world that issues patents provides both third parties and applicants an opportunity to seek a further review of an issued patent. The process for requesting and considering such reviews is specific to the jurisdiction that issued the patent in question, and generally does not provide for claims of monetary damages or a review of specific claims of infringement. The conclusions made by the reviewing administrative bodies tend to be appealable and generally are limited in scope and applicability to the specific claims and jurisdiction in question.
The Company believes that opposition proceedings are frequently commenced in the ordinary course of business by third parties who may believe that one or more claims in a patent do not comply with the technical or legal requirements of the specific jurisdiction in which the patent was issued. The Company views these proceedings as reflective of its goal of obtaining the broadest legally permissible patent coverage permitted in each jurisdiction. Once a proceeding is initiated, as a general matter, the issued patent continues to be presumed valid until the jurisdiction’s applicable administrative body issues a final non-appealable decision. Depending on the jurisdiction, the outcome of these proceedings could include affirmation, denial or modification of some or all of the originally issued claims. The Company believes that as OLED technology becomes more established and its patent portfolio increases in size, so will the number of these proceedings.
19. CONCENTRATION OF RISK:
Revenues and accounts receivable from the Company's largest customers were as follows (in thousands):
% of Total Revenue for the
Three Months Ended September 30,
% of Total Revenue for the
Nine Months Ended September 30,
Accounts Receivable as of
Customer
2025
2024
2025
2024
September 30, 2025
A
54
%
41
%
42
%
43
%
$
15,429
B
25
%
24
%
21
%
24
%
$
29,015
C
8
%
17
%
17
%
16
%
$
1,922
Revenues from outside of North America represented approximately
97
% and
98
% of
consolidated revenue for the three months ended September 30, 2025 and 2024
, respectively, and
96
% and
98
% for the
nine months ended September 30, 2025 and 2024, respectively. Revenues by geographic area are as follows (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
Country
2025
2024
2025
2024
South Korea
$
103,069
$
95,105
$
276,924
$
305,697
China
32,161
61,366
179,173
164,072
Japan
383
503
2,497
3,013
Other non-U.S. locations
223
975
1,211
2,913
Total non-U.S. locations
135,836
157,949
459,805
475,695
United States
3,777
3,678
17,879
9,696
Total revenue
$
139,613
$
161,627
$
477,684
$
485,391
The Company attributes revenue to different geographic areas on the basis of the location of the customer.
24
Property and equipment, net by geographic area are as follows (in thousands):
September 30, 2025
December 31, 2024
United States
$
121,279
$
117,496
Ireland
73,159
63,346
Other
15,364
14,397
Total property and equipment, net
$
209,802
$
195,239
Substantially all chemical materials were purchased from
one
supplier. See Note 13.
20. INCOME TAXES:
The Company is subject to income taxes in both the United States and foreign jurisdictions. The effective income tax rate was
18.7
% and
17.9
% for the
three months ended September 30, 2025 and 2024
, respectively, and
19.4
% and
18.8
% for the
nine months ended September 30, 2025 and 2024
, respectively. The Company recorded income tax expense of $
10.1
million and $
14.5
million for the
three months ended September 30, 2025 and 2024
, respectively, and $
42.4
million and $
40.7
million for the
nine months ended September 30, 2025 and 2024, respectively. The discrepancy between the statutory tax rate and the effective tax rate was primarily due to the benefit of income taxed in foreign jurisdictions and the use of research and development credits. As of September 30, 2025
, the Company had $
49.6
million of taxes receivable included in other current assets on the Consolidated Balance Sheets.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent on the Company's ability to generate future taxable income to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credits. As part of its assessment, management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. At this time there is not sufficient evidence to release the valuation allowance that has been recorded for the New Jersey research and development credits. There are no indicators against the realizability of the remaining net deferred tax asset.
On December 27, 2018, the Korean Supreme Court, citing prior cases, held that only royalties paid with respect to Korean registered patents are considered Korean source income and subject to Korean withholding tax under the applicable law and interpretation of the Korea-U.S. Tax Treaty. The Company has incurred Korean withholding tax of $
14.9
million for each of the years ended December 31, 2018, through December 31, 2022. Based on the Korean Supreme Court decision, a tax refund request on behalf of the Company was filed with the Korean National Tax Service (KNTS) for the period from January 1, 2018, to December 31, 2022. The Company received a formal rejection from the KNTS; and in May 2022 filed an appeal with the Korean Tax Tribunal. On December 18, 2023, the Company received a formal rejection from the Tax Tribunal. Anticipating the rejection of the appeal, in September 2023 the Company filed a petition to the District Court.
On September 18, 2025, the Korean Supreme Court issued a decision, changing its long-standing position on the taxation of royalties for patents not registered in Korea. The court held that royalties paid for licensing of a patent constitute Korean source income if the patented technology is actually used in the territory of the Republic of Korea. Based on discussions with a prominent Korean law firm, the Company has been advised that there is still a more likely-than-not chance of success, as the manufacturing and sales process occurs within and without the Republic of Korea. Due to these recent developments, the next court hearing was moved to November 2025.
As a result, the C
ompany has recorded a long-term receivable of $
55.5
million and $
52.9
million as of
September 30, 2025, and December 31, 2024
, respectively, for the receipt of the Korean withholding tax. The Company also recorded foreign exchange loss of $
1.9
million and a foreign exchange gain of $
3.2
million for the
three months ended September 30, 2025 and 2024
, respectively, and a foreign exchange gain of $
2.6
million and a foreign exchange loss of $
545,000
for the
nine months ended September 30, 2025 and 2024, respectively,
due to the fluctuation of the Korean Won to the U.S. Dollar and resulting remeasurement of this Won-denominated receivable. The Company will amend U.S. federal tax returns for the 2018 to 2022 years when the anticipated refund from KNTS is received to offset the additional tax liability. The Company has recorded a long-term payable of $
15.7
million as of
September 30, 2025 and December 31, 2024, for the estimated amounts due to the U.S. federal government based on the amendment of the Company's U.S. tax returns, indicating that lower withholding amounts were required.
The Company is not subject to examinations by the federal tax authority for the years prior to 2021. The Company's state and foreign tax returns are open for a period of generally three to four years. The Company is under audits by the IRS for tax year 2023, and the state of California for tax years 2021 and 2022. Both audits are in the information-collecting stage.
25
The above estimates may change in the future and upon settlement.
21. REVENUE RECOGNITION:
The Company recognizes revenue in accordance with ASC Topic 606,
Revenue from Contracts with Customers (Topic 606)
. The standard establishes the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows from a contract with a customer.
For the three months ended September 30, 2025 and 2024
, the Company recorded
97
% and
98
%, respectively, of its revenue from OLED related sales and
3
% and
2
%, respectively, from the providing of services through Adesis. For the
nine months ended September 30, 2025 and 2024
, the Company recorded
96
% and
98
%, respectively, of its revenue from OLED related sales and
4
% and
2
%, respectively, from the providing of services through Adesis.
Contract Balances
The following table provides information about assets and liabilities associated with our contracts from customers (in thousands):
As of September 30, 2025
Accounts receivable
$
74,214
Short-term unbilled receivables
43,371
Long-term unbilled receivables
34,437
Short-term contract assets
3,193
Long-term contract assets
4,356
Short-term deferred revenue
23,264
Long-term deferred revenue
1,584
Short-term and long-term unbilled receivables and contract assets are classified as other current assets and other assets, respectively, on the Consolidated Balance Sheets. Contract assets represent consideration related to the renewal of customer contracts which is recognized over the contract term based on material units sold. The deferred revenue balance as of September 30, 2025 will be recognized as materials are shipped to customers over the remaining contract periods. As of September 30, 2025
, the Company had $
32.1
million of backlog associated with committed purchase orders from its customers for phosphorescent emitter material. These orders are anticipated to be fulfilled within the next 90 days.
Significant changes in unbilled receivables, contract assets and deferred revenue balances associated with the Company's contracts from customers for the
nine months ended September 30, 2025 and 2024 are as follows (in thousands):
Nine Months Ended September 30, 2025
Assets
Liabilities
Balance at December 31, 2024
$
64,876
$
(
33,611
)
Revenue recognized that was previously included in deferred revenue, net
—
68,024
Increases due to cash received
—
(
63,183
)
Cumulative catch-up adjustment arising from changes in estimates of
transaction price, net
—
3,922
Unbilled receivables recorded, net
134,588
—
Contract assets recorded, net
(
1,911
)
—
Transferred to receivables from unbilled receivables
(
112,196
)
—
Net change
20,481
8,763
Balance at September 30, 2025
$
85,357
$
(
24,848
)
26
Nine Months Ended September 30, 2024
Assets
Liabilities
Balance at December 31, 2023
$
42,134
$
(
59,719
)
Revenue recognized that was previously included in deferred revenue, net
—
86,825
Increases due to cash received
—
(
82,928
)
Cumulative catch-up adjustment arising from changes in estimates of
transaction price, net
—
6,053
Unbilled receivables recorded, net
109,246
—
Contract assets recorded, net
(
1,893
)
—
Transferred to receivables from unbilled receivables
(
70,026
)
—
Net change
37,327
9,950
Balance at September 30, 2024
$
79,461
$
(
49,769
)
The cumulative catch-up adjustment recorded to revenue arising from changes in estimates of transaction price, net was an increase of $
3.9
million for the
nine months ended September 30, 2025
as compared to an increase of $
6.1
million for the
nine months ended September 30, 2024. For the nine months ended September 30, 2025 and 2024
, the adjustment resulted from an increase in the average price per gram that was primarily due to the decrease in anticipated demand by several of the Company's customers over the remaining lives of their contracts.
22. NET INCOME PER COMMON SHARE:
The Company computes earnings per share in accordance with ASC Topic 260, Earnings per Share, which requires earnings per share (EPS) for each class of stock to be calculated using the two-class method. The two-class method is an allocation of income between the holders of common stock and the Company's participating security holders. Under the two-class method, income for the reporting period is allocated between common shareholders and other security holders based on their respective participation rights in undistributed income. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and, therefore, are included in computing earnings per share pursuant to the two-class method.
Basic net income per common share is computed by dividing net income allocated to common shareholders by the weighted-average number of shares of common stock outstanding for the period excluding unvested restricted stock units and performance units. Net income allocated to the holders of the Company's unvested restricted stock awards is calculated based on the shareholders proportionate share of weighted average shares of common stock outstanding on an if-converted basis.
For purposes of determining diluted net income per common share, basic net income per share is further adjusted to include the effect of potential dilutive common shares outstanding, including restricted stock units, performance units and the impact of shares to be issued under the Company's Employee Stock Purchase Plan.
27
The following table is a reconciliation of net income and the shares used in calculating basic and diluted net income per common share for the
three and nine months ended September 30, 2025 and 2024 (in thousands, except share and per share data):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Numerator:
Net income
$
44,025
$
66,870
$
175,733
$
176,060
Adjustment for Basic EPS:
Earnings allocated to unvested shareholders
(
19
)
(
126
)
(
123
)
(
452
)
Adjusted net income
$
44,006
$
66,744
$
175,610
$
175,608
Denominator:
Weighted average common shares outstanding – Basic
47,554,970
47,542,114
47,571,930
47,549,976
Effect of dilutive shares:
Common stock equivalents arising from ESPP
416
276
1,375
1,179
Restricted stock awards and units and performance units
121,114
127,049
108,172
92,871
Weighted average common shares outstanding – Diluted
47,676,500
47,669,439
47,681,477
47,644,026
Net income per common share:
Basic
$
0.93
$
1.40
$
3.69
$
3.69
Diluted
$
0.92
$
1.40
$
3.68
$
3.69
For the three months ended September 30, 2025 and 2024,
the combined effects of unvested restricted stock awards, restricted stock units and performance unit awards of
25,047
and
17,538
, respectively, were excluded from the calculation of diluted EPS as their impact would have been antidilutive.
For the nine months ended September 30, 2025 and 2024,
the combined effects of unvested restricted stock awards, restricted stock units and performance unit awards of
90,669
and
13,530
, respectively, were excluded from the calculation of diluted EPS as their impact would have been antidilutive.
23. SUBSEQUENT EVENTS:
On October 31, 2025, UDC Ireland entered into a Patent Sale Agreement with Merck Electronics KGaA, Darmstadt, Germany (Merck KGaA). Under this agreement, Merck KGaA will sell to UDC Ireland all of its rights, title and interest to certain of its OLED-related patents and patent applications in exchange for a cash payment of $
50.0
million. The Patent Sale Agreement contains customary representations, warranties and covenants of the parties. The transaction is expected to close in January 2026, subject to customary closing conditions.
28
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited Consolidated Financial Statements and related notes above.
CAUTIONARY STATEMENT
CONCERNING FORWARD-LOOKING STATEMENTS
This discussion and analysis contains some “forward-looking statements.” Forward-looking statements concern possible or assumed future results of operations, including descriptions of our business strategies and customer relationships. These statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “seek,” “will,” “may” or similar expressions. These statements are based on assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors that we believe are appropriate in these circumstances.
As you read and consider this discussion and analysis, you should not place undue reliance on any forward-looking statements. You should understand that these statements involve substantial risk and uncertainty and are not guarantees of future performance or results. They depend on many factors that are discussed further in the sections entitled (Risk Factors) in our Annual Report on Form 10-K for the year ended December 31, 2024, as supplemented by disclosures in Item 1A of Part II below. Changes or developments in any of these areas could affect our financial results or results of operations and could cause actual results to differ materially from those contemplated in the forward-looking statements.
All forward-looking statements speak only as of the date of this report or the documents incorporated by reference, as the case may be. We do not undertake any duty to update any of these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.
OVERVIEW
We are a leader in the research, development and commercialization of organic light emitting diode (OLED) technologies and materials for use in display applications, such as mobile phones, televisions, monitors, wearables, tablets, portable media devices, notebook computers, personal computers and automotive applications, as well as specialty and general lighting products. Since 1994, we have been engaged and expect to continue to be primarily engaged, in funding and performing research and development activities relating to OLED technologies and materials, and commercializing these technologies and materials. We derive our revenue primarily from the following:
•
sales of OLED materials for evaluation, development and commercial manufacturing;
•
intellectual property and technology licensing;
•
technology development and support, including third-party collaboration efforts and providing support to third parties for commercialization of their OLED products; and
•
contract research services in the areas of chemical materials synthesis research, development and commercialization for non-OLED applications.
Material sales relate to our sale of OLED materials for incorporation into our customers’ commercial OLED products or for their OLED development and evaluation activities. Material sales are generally recognized at the time title passes, which is typically at the time of shipment or at the time of delivery, depending upon the contractual agreement between the parties.
We receive license and royalty payments under certain commercial, development and technology evaluation agreements, some of which are non-refundable advances. These payments may include royalty and license fees made pursuant to license agreements and also license fees included as part of certain commercial supply agreements. These payments are included in the estimate of total contract consideration by customer and recognized as revenue over the contract term based on material units sold at the estimated per unit fee over the life of the contract.
On December 2, 2022, we entered into a commercial patent license agreement with Samsung Display Co., Ltd. (SDC), replacing a previous license agreement that had been in place since 2018. This agreement, which covers the manufacture and sale of specified OLED display materials, was effective as of January 1, 2023 and lasts through the end of 2027 with an additional two-year extension option for SDC. Under this agreement, we are being paid a license fee, which includes quarterly and annual payments over the agreement
29
term. The agreement conveys to SDC the non-exclusive right to use certain of our intellectual property assets for a limited period of time that is less than the estimated life of the assets.
At the same time that we entered into the current commercial license agreement with SDC, we also entered into a material purchase agreement with SDC, which lasts for the same term as the license agreement and is subject to the same extension option. This new material purchase agreement replaced a previous purchase agreement that had been in place since 2018. Under the material purchase agreement, SDC agrees to purchase from us a minimum amount of red and green phosphorescent emitter materials for use in the manufacture of licensed products. This minimum commitment is subject to SDC’s requirements for phosphorescent emitter materials and our ability to meet these requirements over the term of the supplemental agreement.
In 2015, we entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display Co., Ltd. (LG Display). The terms of these agreements have been extended through the end of 2025. The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under our patent portfolio. The OLED commercial supply agreement provides for the sales of materials for use by LG Display, which may include phosphorescent emitters and host materials. The agreements provide for certain other minimum obligations relating to the volume of material sales anticipated over the life of the agreements as well as minimum royalty revenue.
In 2023, we entered into new long-term, multi-year agreements with BOE Technology Group Co., Ltd. (BOE). Under these agreements, we have granted BOE non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. We also supply phosphorescent OLED materials to BOE for use in its licensed products.
In 2019, we entered into an evaluation and commercial supply relationship with Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. (CSOT). In 2020, we entered into long-term, multi-year agreements with CSOT. Under these agreements, we have granted CSOT non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. We also supply phosphorescent OLED materials to CSOT for use in its licensed products.
In 2024, we entered into new long-term, multi-year agreements with Visionox Technology, Inc. (Visionox). Under these agreements, we have granted Visionox non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. Additionally, we supply phosphorescent OLED materials to Visionox for use in its licensed products.
In 2016, we entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma Micro-electronics Co., Ltd. (Tianma). Under the license agreement, we have granted Tianma non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. Additionally, we supply phosphorescent OLED materials to Tianma for use in its licensed products. In 2021, we mutually agreed to extend the terms of both the patent license and material purchase agreements for an additional multi-year term.
In 2016, we acquired Adesis, Inc. (Adesis) which has operations in New Castle and Wilmington, Delaware. Adesis is a contract development and manufacturing organization (CDMO) that provides support services on a contractual basis to third-party customers in the OLED, pharma, biotech, catalysis and other industries. As of September 30, 2025, Adesis employed a team of 137 research scientists, chemists, engineers and laboratory technicians. Prior to our acquisition of Adesis, we utilized more than 50% of Adesis’ technology service and production output. We continue to utilize a significant portion of its technology research capacity for the benefit of our OLED technology development, and Adesis uses the remaining capacity to operate as a CDMO by providing contract research services for non-OLED applications to third-party customers in the above-mentioned industries. Contract research services revenue is earned by providing chemical materials synthesis research, development and commercialization for non-OLED applications on a contractual basis for those third-party customers.
In June 2020, we formed a wholly-owned subsidiary, OVJP Corporation (OVJP Corp), operating in California, in order to advance the commercialization of our proprietary Organic Vapor Jet Printing (OVJP) technology. In December 2024, we announced that the OVJP Corp facility in California would be closing and OVJP operations would be relocated to our newly formed Singapore subsidiary, Universal Vapor Jet Corporation Pte. Ltd. (UVJC), as well as continued operations in our Tech and Innovation Center in New Jersey. While we continue to focus on the long-term opportunity in the large-area display market for OVJP, the industry’s current focus is on the growing demand for IT capacity. Our UVJC subsidiary plans to assess additional market opportunities where this technology may be transformative. As a result of the closure of the OVJP Corp location in California, we recorded $602,000 of restructuring costs for the nine months ended September 30, 2025. We recorded no restructuring costs during the three months ended September 30, 2025.
In February 2021, we announced the establishment of a new manufacturing site in Shannon, Ireland and an agreement between UDC Ireland Limited and PPG for the production of our OLED materials. We purchased the site during September 2023. When fully operational, the new facility is expected to double our production capacity and allow for the diversification of our manufacturing base for phosphorescent emitters. The first phase of facility improvements has been completed and operations commenced in June 2022.
30
We also generate technology development and support revenue earned from development and technology evaluation agreements and commercialization assistance fees.
We anticipate fluctuations in our annual and quarterly results of operations due to uncertainty regarding, among other factors:
•
the timing, cost and volume of sales of our OLED materials;
•
the timing of our receipt of license fees and royalties, as well as fees for future technology development and evaluation;
•
the timing and magnitude of expenditures we may incur in connection with our ongoing research and development and patent-related activities; and
•
the timing and financial consequences of our formation of new business relationships and alliances.
RESULTS OF OPERATIONS
Comparison of the Three Months Ended September 30, 2025 and 2024
Three Months Ended September 30,
2025
2024
Increase (Decrease)
REVENUE:
Material sales
$
82,634
$
83,428
$
(794
)
Royalty and license fees
53,317
74,590
(21,273
)
Contract research services
3,662
3,609
53
Total revenue
139,613
161,627
(22,014
)
COST OF SALES
35,491
35,812
(321
)
Gross margin
104,122
125,815
(21,693
)
OPERATING EXPENSES:
Research and development
36,336
36,089
247
Selling, general and administrative
18,039
15,664
2,375
Amortization of acquired technology and other intangible assets
4,553
4,551
2
Patent costs
1,886
2,352
(466
)
Royalty and license expense
170
154
16
Total operating expenses
60,984
58,810
2,174
OPERATING INCOME
43,138
67,005
(23,867
)
Interest income, net
10,046
10,592
(546
)
Other income, net
952
3,819
(2,867
)
Interest and other income, net
10,998
14,411
(3,413
)
INCOME BEFORE INCOME TAXES
54,136
81,416
(27,280
)
INCOME TAX EXPENSE
(10,111
)
(14,546
)
4,435
NET INCOME
$
44,025
$
66,870
$
(22,845
)
Revenue
Our total material sales were $82.6 million for the three months ended September 30, 2025, as compared to $83.4 million for the three months ended September 30, 2024, a decrease of 1% with a commensurate decrease in unit material volume of less than 1%.
•
Green emitter sales for the three months ended September 30, 2025, which include our yellow-green emitters, were $64.6 million as compared to $62.6 million for the three months ended September 30, 2024, with unit material volumes increasing by 4%.
•
Red emitter sales for the three months ended September 30, 2025 were $16.8 million as compared to $20.1 million for the three months ended September 30, 2024, with unit material volumes decreasing by 12%.
Revenue from royalty and license fees was $53.3 million for the three months ended September 30, 2025 as compared to $74.6 million for the three months ended September 30, 2024, a decrease of 29%. The decrease in royalty and license fees for the three months ended September 30, 2025 was primarily the result of changes in customer mix and a $9.5 million reduction in revenue due to an out of period adjustment. The out of period adjustment was due to a correction of an error that originated during the third quarter of 2023. We have evaluated the impacts of this error, both quantitatively and qualitatively, and have concluded that the error was not material to the
31
Consolidated Financial Statements for any interim or annual period prior to the three months ended September 30, 2025, and is not expected to be material to the full year ending December 31, 2025.
The cumulative catch-up adjustment recorded to revenue arising from changes in estimates of transaction price, net was an increase of $1.3 million for the three months ended September 30, 2025 as compared to a net increase of $5.3 million for the three months ended September 30, 2024. For the three months ended September 30, 2025 and 2024, the adjustment resulted from an increase in the average price per gram that was primarily due to the decrease in anticipated demand by several of our customers over the remaining lives of their contracts.
Revenue from contract research services consists of revenue earned by Adesis, which provides support services on a contractual basis to third-party customers in the pharma, biotech, catalysis and other industries. Contract research services revenue was $3.7 million for the three months ended September 30, 2025 as compared to $3.6 million for the three months ended September 30, 2024, an increase of 1%.
Cost of sales
Cost of sales for the three months ended September 30, 2025 decreased by $321,000 as compared to the three months ended September 30, 2024. As a result of the decrease in revenue from royalty and licenses fees, gross margin for the three months ended September 30, 2025 decreased by $21.7 million as compared to the three months ended September 30, 2024, with gross margin as a percentage of revenue decreasing to 75% from 78%.
Research and development
Research and development expenses increased to $36.3 million for the three months ended September 30, 2025, as compared to $36.1 million for the three months ended September 30, 2024. The increase in research and development expenses was primarily due increased contract research costs, partially offset by the closure of the OVJP Corp facility in California during December 2024.
Selling, general and administrative
Selling, general and administrative expenses increased to $18.0 million for the three months ended September 30, 2025, as compared to $15.7 million for the three months ended September 30, 2024. The increase in selling, general and administrative expenses was primarily due to an increase in salaries and stock-based compensation expenses.
Amortization of acquired technology and other intangible assets
Amortization of acquired technology and other intangible assets was $4.6 million for both three months ended September 30, 2025 and 2024.
Patent costs
Patent costs decreased to $1.9 million for the three months ended September 30, 2025, as compared to $2.4 million for the three months ended September 30, 2024.
Royalty and license expense
Royalty and license expense increased to $170,000 for the three months ended September 30, 2025, as compared to $154,000 for the three months ended September 30, 2024.
Interest and other income, net
Interest income, net was $10.0 million for the three months ended September 30, 2025, as compared to $10.6 million for the three months ended September 30, 2024. Other income, net primarily consisted of net exchange gains and losses on foreign currency transactions, net investment gains and losses, and rental income. We recorded other income, net of $952,000 for the three months ended September 30, 2025 as compared to $3.8 million for the three months ended September 30, 2024. The decrease in other income, net was primarily due to a $3.0 million investment gain on our marketable equity securities portfolio, partially offset by a $1.9 million foreign exchange loss during the three months ended September 30, 2025 as compared to a $3.2 million foreign exchange gain during the three months ended September 30, 2024. Net exchange gains and losses on foreign currency are primarily caused by the fluctuation in the Korean Won to the U.S. Dollar exchange rate and resulting remeasurement of a Korean Won-denominated withholding tax receivable.
32
Income tax expense
We are subject to income taxes in the United States and foreign jurisdictions. The effective income tax rate was 18.7% and 17.9% for the three months ended September 30, 2025 and 2024, respectively, and we recorded income tax expense of $10.1 million and $14.5 million, respectively, for those periods.
Comparison of the Nine Months Ended September 30, 2025 and 2024
Nine Months Ended September 30,
2025
2024
Increase (Decrease)
REVENUE:
Material sales
$
257,439
$
272,154
$
(14,715
)
Royalty and license fees
202,553
202,409
144
Contract research services
17,692
10,828
6,864
Total revenue
477,684
485,391
(7,707
)
COST OF SALES
112,828
111,109
1,719
Gross margin
364,856
374,282
(9,426
)
OPERATING EXPENSES:
Research and development
107,594
110,900
(3,306
)
Selling, general and administrative
55,493
54,757
736
Amortization of acquired technology and other intangible assets
13,646
13,648
(2
)
Patent costs
6,380
6,735
(355
)
Royalty and license expense
401
1,928
(1,527
)
Total operating expenses
183,514
187,968
(4,454
)
OPERATING INCOME
181,342
186,314
(4,972
)
Interest income, net
29,883
30,073
(190
)
Other income, net
6,905
416
6,489
Interest and other income, net
36,788
30,489
6,299
INCOME BEFORE INCOME TAXES
218,130
216,803
1,327
INCOME TAX EXPENSE
(42,397
)
(40,743
)
(1,654
)
NET INCOME
$
175,733
$
176,060
$
(327
)
Revenue
Our total material sales were $257.4 million for the nine months ended September 30, 2025, as compared to $272.2 million for the nine months ended September 30, 2024, a decrease of 5% with a commensurate decrease in unit material volume of 4%. The decrease in material sales was primarily due to lower unit material volume and changes in customer mix.
•
Green emitter sales for the nine months ended September 30, 2025, which include our yellow-green emitters, were $191.7 million as compared to $205.0 million for the nine months ended September 30, 2024, with unit material volumes decreasing by 4%.
•
Red emitter sales for the nine months ended September 30, 2025 were $62.2 million as compared to $63.3 million for the nine months ended September 30, 2024, with unit material volumes decreasing by 2%.
Revenue from royalty and license fees was $202.6 million for the nine months ended September 30, 2025 as compared to $202.4 million for the nine months ended September 30, 2024, an increase of less than 1%. The increase in royalty and license fees for the nine months ended September 30, 2025 was primarily the result of changes in customer mix, partially offset by a $7.1 million reduction in revenue due to an out of period adjustment. The out of period adjustment was due to a correction of an error that originated during the third quarter of 2023. We have evaluated the impacts of this error, both quantitatively and qualitatively, and have concluded that the error was not material to the Consolidated Financial Statements for any interim or annual period prior to the three months ended September 30, 2025, and is not expected to be material to the full year ending December 31, 2025.
The cumulative catch-up adjustment recorded to revenue arising from changes in estimates of transaction price, net was an increase of $3.9 million for the nine months ended September 30, 2025 as compared to a net increase of $6.1 million for the nine months ended September 30, 2024. For the nine months ended September 30, 2025 and 2024, the adjustment resulted from an increase in the average price per gram that was primarily due to the decrease in anticipated demand by several of our customers over the remaining lives of their contracts.
33
Revenue from contract research services consists of revenue earned by Adesis, which provides support services on a contractual basis to third-party customers in the pharma, biotech, catalysis and other industries. Contract research services revenue was $17.7 million for the nine months ended September 30, 2025 as compared to $10.8 million for the nine months ended September 30, 2024, an increase of 63%. The increase in contract research services revenue was primarily due to increased specialty manufacturing customer demand at our subsidiary, Adesis, during the nine months ended September 30, 2025.
Cost of sales
Cost of sales for the nine months ended September 30, 2025 increased by $1.7 million as compared to the nine months ended September 30, 2024, primarily due to product mix and Adesis' cost of sales, partially offset by lower sales volume. As a result of the decrease in revenue from material sales, partially offset by the increase in revenue from contract research services, gross margin for the nine months ended September 30, 2025 decreased by $9.4 million as compared to the nine months ended September 30, 2024, with gross margin as a percentage of revenue decreasing to 76% from 77%.
Research and development
Research and development expenses decreased to $107.6 million for the nine months ended September 30, 2025, as compared to $110.9 million for the nine months ended September 30, 2024. The decrease in research and development expenses was primarily due to the closure of the OVJP Corp facility in California during December 2024, partially offset by increased contract research costs.
Selling, general and administrative
Selling, general and administrative expenses increased to $55.5 million for the nine months ended September 30, 2025, as compared to $54.8 million for the nine months ended September 30, 2024. The increase in selling, general and administrative expenses was primarily due to an increase in salaries expenses.
Amortization of acquired technology and other intangible assets
Amortization of acquired technology and other intangible assets was $13.6 million for both nine months ended September 30, 2025 and 2024.
Patent costs
Patent costs decreased to $6.4 million for the nine months ended September 30, 2025, as compared to $6.7 million for the nine months ended September 30, 2024.
Royalty and license expense
Royalty and license expense decreased to $401,000 for the nine months ended September 30, 2025, as compared to $1.9 million for the nine months ended September 30, 2024. The decrease was due to a one-time expense of $1.5 million during the nine months ended September 30, 2024 in connection with an amendment to our existing amended license agreement, effective as of October 9, 1997, with Princeton University and the University of Southern California.
Interest and other income, net
Interest income, net was $29.9 million for the nine months ended September 30, 2025, as compared to $30.1 million for the nine months ended September 30, 2024. Other income, net primarily consisted of net exchange gains and losses on foreign currency transactions, net investment gains and losses, and rental income. We recorded other income, net of $6.9 million for the nine months ended September 30, 2025 as compared to $416,000 for the nine months ended September 30, 2024. The increase in other income, net was primarily due to a $3.0 million investment gain on our marketable equity securities portfolio and $2.6 million foreign exchange gain during the nine months ended September 30, 2025 as compared to a $545,000 foreign exchange loss during the nine months ended September 30, 2024. Net exchange gains and losses on foreign currency are primarily caused by the fluctuation in the Korean Won to the U.S. Dollar exchange rate and resulting remeasurement of a Korean Won-denominated withholding tax receivable.
34
Income tax expense
We are subject to income taxes in the United States and foreign jurisdictions. The effective income tax rate was 19.4% and 18.8% for the nine months ended September 30, 2025 and 2024, respectively, and we recorded income tax expense of $42.4 million and $40.7 million, respectively, for those periods.
Liquidity and Capital Resources
Our principal sources of liquidity are our cash and cash equivalents and short-term investments. As of September 30, 2025, we had cash and cash equivalents of $121.6 million, short-term investments of $481.4 million, and long-term U.S. Government bonds investments of $397.4 million for a total of $1.0 billion. This compares to cash and cash equivalents of $99.0 million, short-term investments of $393.7 million, and long-term U.S. Government bond investments of $435.5 million for a total of $928.2 million as of December 31, 2024.
Cash provided by operating activities for the nine months ended September 30, 2025 was $179.7 million resulting from $175.7 million of net income and $53.1 million from non-cash items including stock-based compensation, depreciation and amortization of intangibles, partially offset by a $49.1 million reduction due to changes in our operating assets and liabilities. Changes in our operating assets and liabilities related to an increase in other assets of $49.3 million, an increase in inventory of $29.7 million, a decrease in deferred revenue of $8.7 million and a decrease in other liabilities of $1.1 million, partially offset by a decrease in accounts receivable of $39.4 million and an increase in accounts payable of $304,000. The increase in other assets during the nine months ended September 30, 2025 was primarily due to an increase in unbilled receivables from certain customers. The decrease in accounts receivable during the nine months ended September 30, 2025 was primarily due to the timing of material shipments as well as license fee payments from certain customers. The increase in inventory during the nine months ended September 30, 2025 was primarily due to purchases of certain strategic raw materials.
Cash provided by operating activities for the nine months ended September 30, 2024 was $219.0 million resulting from $176.1 million of net income, $39.5 million from non-cash items including stock-based compensation, depreciation and amortization of intangibles, and $3.4 million due to changes in our operating assets and liabilities. Changes in our operating assets and liabilities related to a decrease in accounts receivable of $52.2 million and an increase in accounts payable and accrued expenses of $9.4 million, partially offset by an increase in other assets of $43.7 million, a decrease in deferred revenue of $10.0 million, a decrease in other liabilities of $4.3 million and an increase in inventory of $163,000.
Cash used in investing activities was $85.0 million for the nine months ended September 30, 2025, as compared to $167.1 million for the nine months ended September 30, 2024. The decrease in cash used in investing activities was due to timing of maturities and purchases of investments resulting in net purchases of $44.6 million for the nine months ended September 30, 2025, as compared to $137.1 million for the nine months ended September 30, 2024, partially offset by an increase in purchases of property, plant and equipment of $10.4 million. The increase in property, plant and equipment purchases during the nine months ended September 30, 2025 was primarily due to the continued expansion of the manufacturing facility in Shannon, Ireland and improvements to our research and development facility in Ewing, New Jersey.
Cash used in financing activities was $72.1 million for the nine months ended September 30, 2025, as compared to $64.3 million for the nine months ended September 30, 2024. The increase was due to an increase in the cash payment of dividends in the current year of $6.4 million, an increase in the payment of withholding taxes related to stock-based compensation to employees of $1.2 million and a decrease in the proceeds from issuance of common stock of $159,000.
Working capital was $928.7 million as of September 30, 2025, as compared to $774.4 million as of December 31, 2024. The increase was primarily due to increases in short-term investments, other current assets, inventory, and cash and cash equivalents, partially offset by a decrease in accounts receivable.
We anticipate, based on our internal forecasts and assumptions relating to our operations (including, among others, assumptions regarding our working capital requirements, the progress of our research and development efforts, the availability of sources of funding for our research and development work, and the timing and costs associated with the preparation, filing, prosecution, maintenance, defense and enforcement of our patents and patent applications), that we have sufficient cash, cash equivalents and short-term investments to meet our obligations for at least the next twelve months.
We believe that potential additional financing sources for us include long-term and short-term borrowings and public and private sales of our equity and debt securities. It should be noted, however, that additional funding may be required in the future for research, development and commercialization of our OLED technologies and materials, to obtain, maintain and enforce patents respecting these technologies and materials, and for working capital and other purposes, the timing and amount of which are difficult to ascertain. There
35
can be no assurance that additional funds will be available to us when needed, on commercially reasonable terms or at all, particularly in the current economic environment.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations is based on our Consolidated Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these Consolidated Financial Statements requires us to make estimates and judgments that affect our reported assets and liabilities, revenues and expenses, and other financial information. Actual results may differ significantly from our estimates under other assumptions and conditions.
We believe that our accounting policies related to revenue recognition and deferred revenue, inventories, and income taxes are our “critical accounting policies” as contemplated by the SEC.
Refer to our Annual Report on Form 10-K for the year ended December 31, 2024, for additional discussion of our critical accounting policies.
Contractual Obligations
Refer to our Annual Report on Form 10-K for the year ended December 31, 2024 for a discussion of our contractual obligations.
Off-Balance Sheet Arrangements
As of September 30, 2025, we had no off-balance sheet arrangements in the nature of guarantee contracts, retained or contingent interests in assets transferred to unconsolidated entities (or similar arrangements serving as credit, liquidity or market risk support to unconsolidated entities for any such assets), or obligations (including contingent obligations) arising out of variable interests in unconsolidated entities providing financing, liquidity, market risk or credit risk support to us, or that engage in leasing, hedging or research and development services with us.
ITEM 3.
QUANTITATIVE AND QUALITAT
IVE DISCLOSURES ABOUT MARKET RISK
We do not utilize financial instruments for trading purposes and hold no derivative financial instruments, other financial instruments or derivative commodity instruments that could expose us to significant market risk other than our investments disclosed in “Fair Value Measurements” in Note 4 to the Consolidated Financial Statements. We generally invest in investment grade financial instruments to reduce our exposure related to investments. Our primary market risk exposure with regard to such financial instruments is to changes in interest rates, which would impact interest income earned on investments. However, based upon the conservative nature of our investment portfolio and current experience, we do not believe a decrease in investment yields would have a material negative effect on our interest income.
Substantially all our revenue is derived from outside of North America and primarily denominated in U.S. dollars and therefore we bear no significant foreign exchange risk from routine customer sales transactions. However, due to a withholding tax receivable denominated in Korean Won, we do bear foreign exchange risk from fluctuations in the Korean Won to U.S. dollar exchange rate and resulting remeasurement.
ITEM 4.
CONTROLS
AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2025. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this report, are effective to provide reasonable assurance that the information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. However, a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
36
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHE
R INFORMATION
ITEM 1.
LEGAL
PROCEEDINGS
Patent Related Challenges and Oppositions
Each major jurisdiction in the world that issues patents provides both third parties and applicants an opportunity to seek a further review of an issued patent. The process for requesting and considering such reviews is specific to the jurisdiction that issued the patent in question, and generally does not provide for claims of monetary damages or a review of specific claims of infringement. The conclusions made by the reviewing administrative bodies tend to be appealable and generally are limited in scope and applicability to the specific claims and jurisdiction in question.
We believe that opposition proceedings are frequently commenced in the ordinary course of business by third parties who may believe that one or more claims in a patent do not comply with the technical or legal requirements of the specific jurisdiction in which the patent was issued. We view these proceedings as reflective of its goal of obtaining the broadest legally permissible patent coverage permitted in each jurisdiction. Once a proceeding is initiated, as a general matter, the issued patent continues to be presumed valid until the jurisdiction’s applicable administrative body issues a final non-appealable decision. Depending on the jurisdiction, the outcome of these proceedings could include affirmation, denial or modification of some or all of the originally issued claims. We believe that as OLED technology becomes more established and its patent portfolio increases in size, so will the number of these proceedings.
ITEM 1A.
RI
SK FACTORS
There have been no material changes to the risk factors previously discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 2.
UNREGISTERED SALES OF EQUI
TY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3.
DEFAULTS UPO
N SENIOR SECURITIES
None.
ITEM 4.
MINE SAF
ETY DISCLOSURES
Not applicable.
ITEM 5.
OTHER
INFORMATION
Trading Arrangements
During the quarter ended September 30, 2025
, none of our directors or executive officers
adopted
or
terminated
a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
37
ITEM 6.
EXHIBITS
The following is a list of the exhibits filed as part of this report. Where so indicated by footnote, exhibits that were previously filed are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated parenthetically, together with a reference to the filing indicated by footnote.
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents.
104
The cover page of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 formatted in Inline XBRL (included in Item 101.INS)
Explanation of footnotes to listing of exhibits:
*
Filed herewith.
**
Furnished herewith.
38
SIGNA
TURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
UNIVERSAL DISPLAY CORPORATION
Date: November 6, 2025
By: /s/ Brian Millard
Brian Millard
Vice President, Chief Financial Officer and Treasurer
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