It has been about a month since the last earnings report for Universal Display Corp. (OLED). Shares have lost about 10.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Universal Display due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Universal Display Q3 Earnings Beat on Higher Licensing Revenues

Universal Display reported relatively modest third-quarter 2024 results, with the bottom line surpassing the Zacks Consensus Estimate but the top line missing the same. However, the company reported a year-over-year top-line expansion, backed by solid licensing revenues.

Growing OLED proliferation in the IT market is driving growth. Management is undertaking several measures to improve its operational and strategic infrastructure to bolster its leadership position in the industry.

Net Income

Net income in the third quarter was $66.9 million or $1.40 per share compared with $51.5 million or $1.08 per share in the year-ago quarter. The improvement was primarily attributed to year-over-year net sales growth. The bottom line beat the Zacks Consensus Estimate of $1.20.

Revenues

The company generated $161.6 million in revenues, up from $141.1 million in the year-ago quarter. Increasing royalty and license fees boosted the top line. However, the top line missed the consensus estimate by $6 million.

Material sales contributed $83.4 million to revenues compared with $92.5 million in the prior-year quarter. Fluctuating material purchasing patterns from consumers affected net sales. The top line missed our estimate of $98 million.

Revenues from Green emitter sales decreased to $62.6 million from $68.9 million in the year-ago quarter, whereas revenues from red emitter sales fell to $20.1 million from $22.1 million in the year-ago quarter.

Revenues from Royalty and license fees were $74.6 million, up from $45.9 million in the year-ago quarter. The top line beat our estimate of $62.3 million.

Revenues from Contract research services were $3.6 million compared with $2.7 million in the prior-year quarter. The segment’s revenues missed our estimate of $5.2 million.

Other Details

Quarterly gross profit increased to $125.8 million from $106.8 million in the prior-year quarter. The gross margin was 78% up from 76% a year ago. Operating income was $67 million and the margin was 41% compared with the year-ago quarter’s $48.4 million and 34%, respectively.