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Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.09pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
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Not scored
Net-tone change vs last year's 10-K.
MD&A
+0.09pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
No section text extracted for this filing. The 10-K may use a non-standard template that the parser doesn't recognize - the original doc is still linked in the Stats tab.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
error+3
losses+2
correction+1
Positive rising
gain+3
gains+2
MD&A (Item 7)
4,582 words
ITEM 7. 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 section entitled “Selected Financial Data” in this report and our Consolidated Financial Statements and related notes to this report. This discussion and analysis contains forward-looking statements based on our current expectations, assumptions, estimates and projections. These forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those indicated in these forward-looking statements as a result of certain factors, as more fully discussed in Item 1A of this report, entitled “Risk Factors.”
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, automotive applications and specialty 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 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). In 2021, we and LG Display entered into new agreements that extended the terms of these agreements at least 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 their patent portfolio. The patent license calls for minimum annual license fees and additional incremental license fees based on LG Display’s volume of sale of licensed products. The OLED commercial supply agreement provides for the sale of dopant and host materials for use by LG Display.
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 2025, we entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma Micro-electronics Co., Ltd. (Tianma). Under the agreements, 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 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 December 31, 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, which we now refer to as Universal Vapor Jet Printing (UVJP). In December 2024, we announced that the OVJP Corp facility in California would be closing and UVJP 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 UVJP, the industry’s current focus is on the growing demand for IT capacity. Our UVJC subsidiary continues 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 $2.2 million and $8.9 million of restructuring costs for the years ended December 31, 2025 and 2024, respectively.
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. The Shannon manufacturing facility became operational in June 2022 and we purchased the site during September 2023. The Shannon manufacturing facility provides incremental manufacturing capacity to meet our expanding production needs, and allows for the geographical diversification of our manufacturing base for the world-wide distribution of our materials
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.
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 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 and income taxes, as described below, are our “critical accounting policies” as contemplated by the SEC. These policies, which have been reviewed with our Audit Committee, are discussed in greater detail below.
Revenue Recognition and Deferred Revenue
Material sales relate to the sale of our OLED materials for incorporation into our 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 our customers. The remaining revenue recognized is in the form of contract research services revenue earned by our subsidiary, Adesis, Inc., and our occasional material sales to smaller customers. None of the revenue recognized during the years ended December 31, 2025, 2024 or 2023 resulted solely from royalty or license fee arrangements as to which there were not associated material sales.
The rights and benefits to our OLED technologies are conveyed to the customer through technology license agreements and material supply agreements. We believe that the licenses and materials sold under these combined agreements are not distinct from each other for financial reporting purposes and as such, 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. We estimate total material units to be purchased by our customers over the contract term based on historical trends, industry estimates and our forecast process. Our management uses the expected value method to estimate the material per unit fee. Additionally, our management estimates the sales-based portion of royalty revenue based on the estimated net sales revenue of our customers over the contract term.
Accounting for Income Taxes
We are subject to income taxes in both the U.S. and foreign jurisdictions. Significant judgments and estimates are required in evaluating our tax positions for future realization and determining our provision for income taxes. Our income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management's best assessment of estimated future taxes to be paid.
In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of our deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent on our 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 our assessment, we consider the scheduled reversal of deferred tax assets and liabilities, projected future taxable income, and tax planning strategies.
During the year ended December 31, 2025, based on our previous earnings history, a current evaluation of expected future taxable income and other evidence, we determined to retain the valuation allowance that relates to New Jersey research and development credits. In addition, the Company has an unrealized gain on investments that if sold, could offset the capital loss carryforward within the carryforward period. As such the valuation allowance on the capital loss was reversed. There are no indicators against the realizability of the remaining net-deferred tax assets.
RESULTS OF OPERATIONS
For a discussion of our results of operations comparison for the years ended December 31, 2024 and 2023, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed on February 20, 2025.
Comparison of the Years Ended December 31, 2025 and 2024 (in thousands)
Year Ended December 31,
(Decrease) Increase
REVENUE:
Material sales
Royalty and license fees
Contract research services
Total revenue
COST OF SALES
Gross margin
OPERATING EXPENSES:
Research and development
Selling, general and administrative
Amortization of acquired technology and other intangible assets
Patent costs
Royalty and license expense
Total operating expenses
OPERATING INCOME
Interest income, net
Other income (loss), net
Interest and other income, net
INCOME BEFORE INCOME TAXES
INCOME TAX EXPENSE
NET INCOME
Revenue
Our total material sales were $353.0 million for the year ended December 31, 2025, as compared to $365.4 million for the year ended December 31, 2024, a decrease of 3% with a commensurate decrease in unit material volume of 1%. The decrease in material sales was primarily due to changes in customer mix and lower unit material volume.
Green emitter sales for the year ended December 31, 2025, which include our yellow-green emitters, were $265.8 million as compared to $272.4 million for the year ended December 31, 2024, with unit material volumes increasing by less than 1%.
Red emitter sales for the year ended December 31, 2025 were $82.9 million as compared to $88.5 million for the year ended December 31, 2024, with unit material volumes decreasing by 4%.
Revenue from royalty and license fees was $275.1 million for the year ended December 31, 2025 as compared to $266.8 million for the year ended December 31, 2024, an increase of 3%. The increase in royalty and license fees 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, nor was it material to the full year ended December 31, 2025.
The cumulative catch-up adjustment recorded to revenue arising from changes in estimates of transaction price, net was $14.1 million for the year ended December 31, 2025 as compared to $10.8 million for the year ended December 31, 2024. For each of the years ended December 31, 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.
Contract research services revenue was $22.5 million for the year ended December 31, 2025 as compared to $15.4 million for the year ended December 31, 2024, an increase of 46%. The increase in contract research services revenue was primarily due to increased specialty manufacturing customer demand at our subsidiary, Adesis, during the year ended December 31, 2025. 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.
Cost of Sales
Cost of sales for the year ended December 31, 2025 increased by $5.7 million as compared to the year ended December 31, 2024, primarily due to Adesis' cost of sales and changes in product mix. As a result of the decrease in revenue from material sales, partially offset by the increases in revenue from royalty and license fees and contract research, gross margin for the year ended December 31, 2025 decreased by $2.7 million as compared to the year ended December 31, 2024, with gross margin as a percentage of revenue decreasing to 76% from 77%.
Research and development
Research and development expenses decreased to $146.1 million for the year ended December 31, 2025, as compared to $157.2 million for the year ended December 31, 2024. The decrease in research and development expenses was primarily due to restructuring costs and closure of the OVJP Corp facility in California during December 2024.
Selling, general and administrative
Selling, general and administrative expenses was $74.3 million for each of the years ended December 31, 2025 and 2024.
Amortization of acquired technology and other intangible assets
Amortization of acquired technology and other intangible assets was $18.2 million for each of the years ended December 31, 2025 and 2024. See Note 7 in Notes to Consolidated Financial Statements for further discussion.
Patent costs
Patent costs increased to $8.8 million for the year ended December 31, 2025, as compared to $8.7 million for the year ended December 31, 2024.
Royalty and license expense
Royalty and license expense decreased to $504,000 for the year ended December 31, 2025, as compared to $2.0 million for the year ended December 31, 2024. This decrease was due to a one-time expense of $1.5 million in the year ended December 31, 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 $39.7 million for the year ended December 31, 2025, as compared to $40.7 million for the year ended December 31, 2024. Other income (loss), 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 $6.5 million for the year ended December 31, 2025 as compared to other loss, net of $7.4 million for the year ended December 31, 2024. The increase in other income (loss), net during the year ended December 31, 2025 was primarily due to a $3.9 million investment gain, net on our marketable equity securities portfolio and a $935,000 foreign exchange gain during the year ended December 31, 2025 as compared to a $7.2 million foreign exchange loss during the year ended December 31, 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.
Income tax expense
We are subject to income taxes in both the United States and foreign jurisdictions. The effective income tax rate was 17.9% and 18.4% for the years ended December 31, 2025 and 2024, respectively, and we recorded income tax expense of $52.7 million and $50.0 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 December 31, 2025, we had cash and cash equivalents of $138.4 million, short-term investments of $464.0 million, and long-term U.S. Government bond investments of $353.0 million for a total of $955.4 million. 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 year ended December 31, 2025 was $210.8 million resulting from $242.1 million of net income and an increase of $68.3 million due to non-cash items including depreciation, stock-based compensation and amortization of intangibles, partially offset by a $99.6 million reduction due to changes in our operating assets and liabilities. Changes in our operating assets and liabilities related to an increase in inventory of $58.0 million, an increase in other assets of $27.0 million, a decrease in deferred revenue of $10.7 million and an increase accounts receivable of $6.3 million, partially offset by an increase in accounts payable and accrued expenses of $2.1 million and an increase in other liabilities of $248,000. The increase in inventory during the year ended December 31, 2025 was primarily due to purchases of certain strategic raw materials.
Cash provided by operating activities for the year ended December 31, 2024 was $253.7 million resulting from $222.1 million of net income and an increase of $56.9 million due to non-cash items including stock-based compensation, depreciation, and amortization of intangibles, partially offset by a $25.3 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 $26.2 million, a decrease in deferred revenue of $26.1 million, an increase in inventory of $7.2 million and a decrease in other liabilities of $2.4 million, partially offset by a decrease in accounts receivable of $26.2 million and an increase in accounts payable and accrued expenses of $10.4 million.
Cash used in investing activities was $45.5 million for the year ended December 31, 2025, as compared to $164.4 million for the year ended December 31, 2024. The decrease was due to the timing of maturities and purchases of investments resulting in net sales and maturities of $20.9 million for the year ended December 31, 2025, as compared to net purchases of $121.8 million for the year ended December 31, 2024, partially offset by an increase in purchases of intangibles and property and equipment of $23.8 million. The increase in property, plant and equipment purchases during the year ended December 31, 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 $126.0 million for the year ended December 31, 2025, as compared to $82.3 million for the year ended December 31, 2024. The increase was due to an increase in repurchases of common stock of $32.9 million, an increase in the cash payment of dividends in the current year of $9.4 million and 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 $200,000.
Working capital was $979.0 million as of December 31, 2025, as compared to $774.4 million as of December 31, 2024. The increase was primarily due to increases in short-term investments, inventory, and cash and cash equivalents.
Several significant contractual obligations are anticipated to be incurred in future periods and include payments for retirement benefit plan obligations, lease obligations and PPG inventory commitments. Payments towards the retirement plan obligations commenced during fiscal year 2023 and are expected to total $77.2 million over the remaining life of the plan. Existing lease obligations are $5.3 million for both fiscal years 2026 and 2027, $5.0 million for fiscal year 2028 and $10.3 million thereafter. Existing PPG inventory commitments are $40.7 million and will fluctuate based on PPG production needs to fulfill our demand for commercial emitter material.
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.
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. 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. There 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.
Recently Issued Accounting Pronouncements
Recently issued accounting pronouncements are addressed in Note 2 in the Notes to the Consolidated Financial Statements included herein.
ITEM 7A. 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 included herein. 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 8. FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA
Our Consolidated Financial Statements and the related notes to those statements are attached to this report beginning on page F-1.
