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OLED provider Universal Display (NASDAQ:OLED) fell short of analysts' expectations in Q2 CY2024, with revenue up 8.1% year on year to $158.5 million. The company's full-year revenue guidance of $660 million at the midpoint also came in slightly below analysts' estimates. It made a GAAP profit of $1.10 per share, improving from its profit of $1.04 per share in the same quarter last year.
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Universal Display (OLED) Q2 CY2024 Highlights:
- Revenue: $158.5 million vs analyst estimates of $159.9 million (small miss)
- EPS: $1.10 vs analyst expectations of $1.15 (4.7% miss)
- The company slightly lifted its revenue guidance for the full year from $655 million to $660 million at the midpoint
- Gross Margin (GAAP): 75.8%, in line with the same quarter last year
- Inventory Days Outstanding: 408, up from 388 in the previous quarter
- Free Cash Flow of $57.89 million, down 10.9% from the previous quarter
- Market Capitalization: $10.56 billion
Serving major consumer electronics manufacturers, Universal Display (NASDAQ:OLED) is a provider of organic light emitting diode (OLED) technologies used in display and lighting applications.
Analog SemiconductorsDemand for analog chips is generally linked to the overall level of economic growth, as analog chips serve as the building blocks of most electronic goods and equipment. Unlike digital chip designers, analog chip makers tend to produce the majority of their own chips, as analog chip production does not require expensive leading edge nodes. Less dependent on major secular growth drivers, analog product cycles are much longer, often 5-7 years.
Sales GrowthUniversal Display's revenue growth over the last three years has been unimpressive, averaging 6.8% annually. As you can see below, this was a weaker quarter for the company, with revenue growing from $146.6 million in the same quarter last year to $158.5 million. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).
Universal Display had a slow quarter as its unremarkable 8.1% year-on-year revenue growth missed analysts' estimates by 0.9%. Despite these results, we believe Universal Display is still in the early days of an upcycle, as this was just the second consecutive quarter of growth and a typical upcycle tends to last 8-10 quarters.
Product Demand & Outstanding InventoryDays Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business' capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Universal Display's DIO came in at 408, which is 34 days above its five-year average, suggesting that the company's inventory has grown to higher levels than we've seen in the past.
Key Takeaways from Universal Display's Q2 Results Its revenue unfortunately missed analysts' expectations, although by a small amount. Its full-year revenue guidance was raised, which is always a good sign. Overall, this was a mixed quarter for Universal Display, but given the shaky results of other semiconductor names this earnings season, expectations were likely low. The stock traded up 3.9% to $220.78 immediately following the results.
![Universal Display (NASDAQ:OLED) Misses Q2 Sales Targets](https://d68-invdn-com.investing.com/content/picb5d3ea2af4d8df5ab3de2d6a5d21237b.jpeg)