SAN FRANCISCO, May 1, 2025 /PRNewswire/ -- Dolby Laboratories, Inc. (NYSE:DLB) today announced the company's financial results for the second quarter of fiscal 2025.Dolby logo (PRNewsfoto/Dolby Laboratories, Inc.)

"We had a strong second quarter with continued momentum across our end markets, especially in Auto and Mobile," said Kevin Yeaman, President and CEO, Dolby Laboratories. "While there is economic uncertainty, we are well positioned to operate across a range of scenarios. We are in a strong financial position, we continue to see strong engagement from our ecosystem, and we remain focused on driving long-term growth."

Second Quarter Fiscal 2025 Financial Highlights

Total revenue was $370 million, compared to $365 million for the second quarter of fiscal 2024. GAAP net income was $92 million or $0.94 per diluted share, compared to GAAP net income of $98 million or $1.01 per diluted share for the second quarter of fiscal 2024. On a non-GAAP basis, second quarter net income was $131 million or $1.34 per diluted share, compared to $123 million or $1.27 per diluted share for the second quarter of fiscal 2024. Dolby repurchased approximately 429,000 shares of its common stock for approximately $35 million, and ended the quarter with approximately $352 million of stock repurchase authorization available going forward.

A complete listing of Dolby's non-GAAP measures are described and reconciled to the corresponding GAAP measures at the end of this release.

Recent Business Highlights

The Super Bowl and March Madness were available in Dolby Atmos and Dolby Vision. In the UK, Sky released the Sky Glass Gen 2 TV that supports Dolby Vision and a Dolby Atmos soundbar built into the TV. LG announced the evo C5 and G5 TVs with Dolby Atmos and Dolby Vision. Waipu.tv, a market leader in IPTV/OTT in Germany, announced support for Dolby Atmos and Dolby Vision. TOD, a leading streaming platform for sports and entertainment in the Middle East and Northern Africa, launched a 4K set-top box supporting Dolby Atmos and Dolby Vision. OPPO launched the Find X8 Ultra, Find X8s, and Find X8s+, all supporting Dolby Vision capture and playback. Sonos, Vizio, and Teufel released soundbars that support Dolby Atmos. Porsche announced that Dolby Atmos will be supported in the Taycan, the Panamera, the Cayenne, and the 911 in the 2026 models. Cadillac announced that its entire EV lineup in 2026 will support Dolby Atmos. Volvo, Xiaomi, and Hyundai recently announced new vehicle models that support our technologies. Dolby Laboratories and AMC Entertainment announced an expansion of their partnership that will add 40 Dolby Cinema screens at select locations nationwide by 2027.

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Dividend

Today, Dolby announced a cash dividend of $0.33 per share of Class A and Class B common stock, payable on May 21, 2025, to stockholders of record as of the close of business on May 13, 2025.

Financial Outlook

Dolby's financial outlook relies, in part, on estimates of royalty-based revenue that take into consideration various factors that are subject to uncertainty, including consumer demand for electronic products. In addition, actual results could differ materially from the estimates Dolby is providing below due in part to uncertainty resulting from the macroeconomic effect of certain conditions, including developments concerning trade restrictions and changes in trade or diplomatic relationships, supply chain constraints, international conflicts, geopolitical instability, and fluctuations in inflation and interest rates. The uncertainty resulting from these factors has greatly reduced visibility into Dolby's future outlook. To the extent possible, the estimates Dolby is providing for future periods reflect certain assumptions about the potential impact of certain of these items, based upon a consideration of currently available external and internal data and information. These assumptions are subject to risks and uncertainties. For more information, see "Forward-Looking Statements" in this press release for a description of certain risks that Dolby faces, and the section captioned "Risk Factors" in its Quarterly Report on Form 10-Q for the second quarter of fiscal 2025, to be filed on or around the date hereof.

Dolby is providing the following estimates for its third quarter of fiscal 2025:

Total revenue is estimated to range from $290 million to $320 million. Licensing revenue is estimated to range from $265 million to $295 million. Gross margins are anticipated to be approximately 86% on a GAAP basis and approximately 88% on a non-GAAP basis. Operating expenses are anticipated to range from $225 million to $235 million on a GAAP basis and from $190 million to $200 million on a non-GAAP basis. Effective tax rate is anticipated to be around 23% on a GAAP basis and around 20.5% on a non-GAAP basis. Diluted earnings per share is anticipated to range from $0.26 to $0.41 on a GAAP basis and from $0.62 to $0.77 on a non-GAAP basis.

Dolby is providing the following estimates for the full year of fiscal 2025:

Total revenue is expected to range from $1.31 billion to $1.38 billion. Licensing revenue is estimated to range from $1.21 billion to $1.28 billion. Gross margins are anticipated to be approximately 87% on a GAAP basis and approximately 90% on a non-GAAP basis. Operating expenses are anticipated to range from $905 million to $920 million on a GAAP basis and from $760 million to $775 million on a non-GAAP basis. Dolby expects operating margins to be roughly 20% on a GAAP basis and to be roughly 33% on a non-GAAP basis. Effective tax rate is anticipated to be around 22.5% on a GAAP basis and around 20.0% on a non-GAAP basis. Diluted earnings per share is anticipated to range from $2.31 to $2.46 on a GAAP basis and from $3.88 to $4.03 on a non-GAAP basis.

Conference Call Information

Members of Dolby management will lead a conference call open to all interested parties to discuss second quarter fiscal 2025 financial results for Dolby Laboratories at 2:00 p.m. PT (5:00 p.m. ET) on Thursday, May 1, 2025. Access to the teleconference will be available at http://investor.dolby.com or by dialing 1-888-210-2212 (+1-646-960-0390 for international callers) and entering confirmation code 5587811.

A replay of the call will be available from 5:00 p.m. PT (8:00 p.m. ET) on Thursday, May 1, 2025, until 8:59 p.m. PT (11:59 p.m. ET) on Thursday, May 8, 2025 by dialing 1-800-770-2030 (+1-647-362-9199 for international callers) and entering the confirmation code 5587811. An archived version of the teleconference will also be available on the Dolby website, http://investor.dolby.com.

Non-GAAP Financial Information

To supplement Dolby's financial statements presented on a GAAP basis, Dolby management uses, and Dolby provides to investors, certain non-GAAP financial measures as an additional tool to evaluate Dolby's operating results in a manner that focuses on what Dolby's management believes to be its ongoing business operations and performance. We believe these non-GAAP financial measures are also helpful to investors in enabling comparability of operating performance between periods and among peer companies. Additionally, Dolby's management regularly uses our supplemental non-GAAP financial measures to make operating decisions, for planning and forecasting purposes and determining bonus payouts. Specifically, Dolby excludes the following as adjustments from one or more of its non-GAAP financial measures:

Stock-based compensation expense: Stock-based compensation, unlike cash-based compensation, utilizes subjective assumptions in the methodologies used to value the various stock-based award types that Dolby grants. These assumptions may differ from those used by other companies. To facilitate more meaningful comparisons between its underlying operating results and those of other companies, Dolby excludes stock-based compensation expense.

Amortization of acquisition-related intangibles: Dolby amortizes intangible assets acquired in connection with business combinations. These intangible assets consist of patents and technology, customer relationships, and other intangibles. Dolby records amortization charges relating to these intangible assets in its GAAP financial statements, and Dolby views these charges as items arising from pre-acquisition activities that are determined by the timing and valuation of its acquisitions. As these amortization charges do not directly correlate to its operations during any particular period, Dolby excludes these charges to facilitate an evaluation of its current operating performance and comparisons to its past operating results. In addition, while amortization expense of acquisition-related intangible assets is excluded from Non-GAAP Net Income, the revenue generated from those assets is not excluded.

Restructuring charges or credits: Restructuring charges are costs associated with restructuring plans and primarily relate to costs associated with exit or disposal activities, employee severance benefits, and asset impairments. Dolby excludes restructuring costs, including any adjustments to charges recorded in prior periods (which may be credits), as Dolby believes that these costs are not representative of its normal operating activities and therefore, excluding these amounts enables a more effective comparison of its past operating performance and to that of other companies.

Income tax adjustments: The income tax effects of the aforementioned non-GAAP adjustments do not directly correlate to its operating performance so Dolby believes that excluding such income tax effects provides a more meaningful view of its underlying operating results to management and investors.

Using the aforementioned adjustments, Dolby provides various non-GAAP financial measures including, but not limited to: non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating margin, and non-GAAP effective tax rate. Dolby's management believes it is useful for itself and investors to review both GAAP and non-GAAP measures to assess the performance of Dolby's business, including as a means to evaluate period-to-period comparisons. Dolby's management does not itself, nor does it suggest that investors should, consider non-GAAP financial measures in isolation from, superior to, or as a substitute for, financial information prepared in accordance with GAAP. Whenever Dolby uses non-GAAP financial measures, it provides a reconciliation of the non-GAAP financial measures to the most closely applicable GAAP financial measures. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures as detailed above and below. Investors are also encouraged to review Dolby's GAAP financial statements as reported in its US Securities and Exchange Commission (SEC) filings. A reconciliation between GAAP and non-GAAP financial measures is provided at the end of this press release and on the Dolby investor relations website, http://investor.dolby.com.

Forward-Looking Statements

Certain statements in this press release and in our earnings calls, including, but not limited to, expected financial results for the third quarter of fiscal 2025 and full year fiscal 2025, Dolby's ability to expand existing business, navigate challenging periods, pursue its long-term growth opportunities, and advance its other long-term objectives are "forward-looking statements" that inherently involve substantial risks and uncertainties. These forward-looking statements are based on management's current expectations, and as a result of certain risks and uncertainties, actual results may differ materially from those provided. The following important factors, without limitation, could cause actual results to differ materially from those in the forward-looking statements: the potential impacts of economic conditions on Dolby's business operations, financial results, and financial position (including the impact to Dolby partners and disruption of the supply chain and delays in shipments of consumer products; the level at which Dolby technologies are incorporated into products and the consumer demand for such products; delays in the development and release of new products or services that contain Dolby technologies; delays in royalty reporting or delinquent payment by partners or licensees; lengthening sales cycles; the impact to the overall cinema market including adverse impact to Dolby's revenue recognized on box-office sales and demand for cinema products and services; and macroeconomic conditions that affect discretionary spending and access to products that contain Dolby technologies); risks associated with geopolitical issues and international conflicts; risks associated with trends in the markets in which Dolby operates, including the broadcast, mobile, consumer electronics, PC, and other markets; the loss of, or reduction in sales by, a key customer, partner, or licensee; pricing pressures; risks relating to changing trends in the way that content is distributed and consumed; risks relating to conducting business internationally, including trade restrictions and changes in diplomatic or trade relationships; risks relating to maintaining patent coverage; the timing of Dolby's receipt of royalty reports and payments from its licensees, including recoveries; changes in tax regulations; timing of revenue recognition under licensing agreements and other contractual arrangements; Dolby's ability to develop, maintain, and strengthen relationships with industry participants; Dolby's ability to develop and deliver innovative products and technologies in response to new and growing markets; competitive risks; risks associated with conducting business in countries that have historically limited recognition and enforcement of intellectual property and contractual rights; risks associated with the health of the motion picture and cinema industries generally; Dolby's ability to increase its revenue streams and to expand its business generally, and to continue to expand its business beyond its current technology offerings; risks associated with acquiring and successfully integrating businesses or technologies; and other risks detailed in Dolby's SEC filings and reports, including the risks identified under the section captioned "Risk Factors" in its Quarterly Report on Form 10-Q filed on or around the date hereof. Dolby may not actually achieve the plans, intentions, or expectations disclosed in its forward-looking statements. Forward-looking statements are based upon information available to us as of the date of such statements, and while Dolby believes such information forms a reasonable basis for such statements, such information may be limited or incomplete. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Except as required by law, Dolby disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.

About Dolby Laboratories

Dolby Laboratories (NYSE: DLB) is based in San Francisco, California with offices around the globe. From movies and TV shows, to apps, music, sports and gaming, Dolby transforms the science of sight and sound into spectacular experiences for billions of people worldwide. Dolby partners with artists, storytellers, developers, and businesses to revolutionize entertainment and communications with Dolby Atmos, Dolby Vision, Dolby Cinema, and Dolby OptiView.

Dolby, Dolby Atmos, Dolby Vision, Dolby Cinema, Dolby OptiView, and the double-D symbol are among the registered and unregistered trademarks of Dolby Laboratories in the United States and/or other countries. Other trademarks remain the property of their respective owners.

DOLBY LABORATORIES, INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts; unaudited) Fiscal Quarter Ended  Fiscal Year-To-Date Ended March 28,
2025 March 29,
2024  March 28,
2025 March 29,
2024 Revenue:  Licensing $                346,006 $                338,240  $                676,485 $                632,007 Products and services 23,555 26,283  50,075 48,090 Total revenue 369,561 364,523  726,560 680,097  Cost of revenue:  Cost of licensing 19,685 15,318  40,795 31,054 Cost of products and services 16,152 23,459  35,816 39,783 Total cost of revenue 35,837 38,777  76,611 70,837  Gross profit 333,724 325,746  649,949 609,260  Operating expenses:  Research and development 61,707 62,493  128,345 129,526 Sales and marketing 89,629 90,038  184,028 169,041 General and administrative 70,415 66,742  140,507 131,908 Restructuring charges/(credits) 4,210 (2,495)  9,426 3,596 Total operating expenses 225,961 216,778  462,306 434,071  Operating income 107,763 108,968  187,643 175,189  Other income/(expense):  Interest income/(expense), net 3,559 8,597  6,205 17,784 Other income, net 8,928 4,183  12,453 9,608 Total other income 12,487 12,780  18,658 27,392  Income before income taxes 120,250 121,748  206,301 202,581 Provision for income taxes (28,024) (23,534)  (46,005) (36,786) Net income including noncontrolling interest 92,226 98,214  160,296 165,795 Less: net income attributable to noncontrolling interest (433) (384)  (681) (984) Net income attributable to Dolby Laboratories, Inc. $                  91,793 $                  97,830  $                159,615 $                164,811  Net income per share:  Basic $                      0.95 $                      1.02  $                      1.66 $                      1.72 Diluted $                      0.94 $                      1.01  $                      1.64 $                      1.69 Weighted-average shares outstanding:  Basic 96,329 95,718  95,972 95,547 Diluted 97,471 96,856  97,581 97,397

DOLBY LABORATORIES, INC.

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands; unaudited)  March 28,
2025 September 27,
2024  ASSETS  Current assets:  Cash and cash equivalents $                626,551 $                482,047  Restricted cash 123,791 95,705  Accounts receivable, net 314,114 315,465  Contract assets, net 230,352 197,478  Inventories, net 34,594 33,728  Prepaid expenses and other current assets 59,878 69,994  Total current assets 1,389,280 1,194,417  Long-term investments 73,757 89,267  Property, plant, and equipment, net 472,663 479,109  Operating lease right-of-use assets 34,086 39,046  Goodwill and intangible assets, net 937,083 967,722  Deferred taxes 223,410 219,758  Other non-current assets 98,757 120,609  Total assets $             3,229,036 $             3,109,928   LIABILITIES AND STOCKHOLDERS' EQUITY  Current liabilities:  Accounts payable $                  17,288 $                  17,380  Accrued liabilities 376,498 347,529  Income taxes payable 13,309 9,045  Contract liabilities  39,615 31,644  Operating lease liabilities 10,775 12,238  Total current liabilities 457,485 417,836  Non-current contract liabilities 29,664 34,593  Non-current operating lease liabilities 29,656 34,754  Other non-current liabilities 129,212 135,852  Total liabilities 646,017 623,035   Stockholders' equity:  Class A common stock 55 53  Class B common stock 40 41  Retained earnings 2,601,552 2,496,255  Accumulated other comprehensive loss (27,978) (19,187)  Total stockholders' equity – Dolby Laboratories, Inc. 2,573,669 2,477,162  Noncontrolling interest 9,350 9,731  Total stockholders' equity 2,583,019 2,486,893  Total liabilities and stockholders' equity $             3,229,036 $             3,109,928

DOLBY LABORATORIES, INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands; unaudited)  Fiscal Year-To-Date Ended  March 28,
2025 March 29,
2024  Operating activities:  Net income including noncontrolling interest $                160,296 $                165,795  Adjustments to reconcile net income to net cash provided by operating activities:  Depreciation and amortization 43,899 35,890  Stock-based compensation 66,734 60,809  Amortization of operating lease right-of-use assets 5,725 5,847  Amortization of premium on investments — (1,757)  Provision for/(benefit from) credit losses 1,967 (1,454)  Deferred income taxes (3,741) (6,779)  Other non-cash items affecting net income (13,844) (2,500)  Changes in operating assets and liabilities:  Accounts receivable, net (420) (18,509)  Contract assets, net (32,864) (61,008)  Inventories (1,155) (7,836)  Operating lease right-of-use assets (1,608) (7,848)  Prepaid expenses and other assets 38,653 33,527  Accounts payable and accrued liabilities 27,267 3,923  Income taxes, net 5,906 5,215  Contract liabilities 3,282 2,651  Operating lease liabilities (5,682) 1,028  Other non-current liabilities (12,739) (17,176)  Net cash provided by operating activities 281,676 189,818   Investing activities:  Purchases of marketable securities — (104,135)  Proceeds from sales of marketable securities 15,911 4,451  Proceeds from maturities of marketable securities — 97,459  Proceeds from sale of assets held for sale 16,881 —  Purchases of property, plant, and equipment (13,676) (15,015)  Business combinations, net of cash and restricted cash acquired, and other related payments (1,362) —  Net cash provided by/(used in) investing activities 17,754 (17,240)   Financing activities:  Proceeds from issuance of common stock 26,124 29,345  Repurchase of common stock (49,999) (104,999)  Payment of excise tax on repurchase of common stock  (261) —  Payment of cash dividend (63,377) (57,268)  Distributions to noncontrolling interest (981) (1,047)  Shares repurchased for tax withholdings on vesting of restricted stock (33,950) (36,054)  Equity issued in connection with business combination — 722  Net cash used in financing activities (122,444) (169,301)   Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash (4,396) 3,113  Net increase in cash, cash equivalents, and restricted cash 172,590 6,390  Cash, cash equivalents, and restricted cash at beginning of period 577,752 817,966  Cash, cash equivalents, and restricted cash at end of period $                750,342 $                824,356

Licensing Revenue by Market

(unaudited)   The following table presents the composition of our licensing revenue and percentage of total licensing revenue for all periods presented (in thousands, except percentage amounts):  Fiscal Quarter Ended  Fiscal Year-To-Date Ended  Market March 28, 2025  March 29, 2024  March 28, 2025  March 29, 2024  Broadcast $     94,249 27 %  $    105,480 31 %  $    210,011 31 %  $    217,896 34 %  Mobile 100,123 29 %  88,690 26 %  161,647 24 %  123,977 20 %  CE 38,140 11 %  42,221 12 %  87,597 13 %  95,441 15 %  PC 58,402 17 %  49,938 15 %  89,658 13 %  79,617 13 %  Other 55,092 16 %  51,911 16 %  127,572 19 %  115,076 18 %  Total licensing revenue $    346,006 100 %  $    338,240 100 %  $    676,485 100 %  $    632,007 100 %

GAAP to Non-GAAP Reconciliations (unaudited)   The following tables present Dolby's GAAP financial measures reconciled to the non-GAAP financial measures included in this release for the second quarters of fiscal 2025 and fiscal 2024:  Net income:    Fiscal Quarter Ended (in thousands)    March 28,
2025 March 29,
2024 GAAP net income attributable to Dolby Laboratories, Inc.    $               91,793 $               97,830 Stock-based compensation (1)    30,664 28,915 Amortization of acquisition-related intangibles (2)    10,078 3,031 Restructuring charges/(credits)    4,210 (2,495) Income tax adjustments    (6,017) (4,091) Non-GAAP net income attributable to Dolby Laboratories, Inc.    $             130,728 $             123,190  (1) Stock-based compensation included in above line items:  Cost of products and services    $                     414 $                     356 Research and development    9,043 8,949 Sales and marketing    10,640 9,927 General and administrative    10,567 9,683  (2) Amortization of acquisition-related intangibles included in above line items:  Cost of licensing    $                  6,720 $                     (15) Cost of products and services    728 524 Sales and marketing    317 650 General and administrative    1,872 1,872 Other income, net    441 —  Diluted earnings per share:    Fiscal Quarter Ended March 28,
2025 March 29,
2024 GAAP diluted earnings per share    $                    0.94 $                    1.01 Stock-based compensation    0.32 0.30 Amortization of acquisition-related intangibles    0.10 0.03 Restructuring charges    0.04 (0.03) Income tax adjustments    (0.06) (0.04) Non-GAAP diluted earnings per share    $                    1.34 $                    1.27   Weighted-average shares outstanding - diluted (in thousands)    97,471 96,856

The following tables present a reconciliation between GAAP and non-GAAP versions of the estimated financial measures for the third quarter of fiscal 2025 and full year fiscal 2025 included in this release:  Gross margin:   Q3 2025   Fiscal 2025 GAAP gross margin   86.0 %   87.0 % Stock-based compensation   0.1 %   0.1 % Amortization of acquisition-related intangibles   1.9 %   2.9 % Non-GAAP gross margin   88.0 %   90.0 %  Operating expenses (in millions):   Q3 2025   Fiscal 2025 GAAP operating expenses (low - high end of range)   $225 - $235   $905 - $920 Stock-based compensation   (32)   (127) Amortization of acquisition-related intangibles   (3)   (9) Restructuring charges   —   (9) Non-GAAP operating expenses (low - high end of range)   $190 - $200   $760 - $775  Operating margin:     Fiscal 2025 GAAP operating margin      20% +/- Stock-based compensation      9 % Amortization of acquisition-related intangibles      3 % Restructuring charges      1 % Non-GAAP operating margin      33% +/-  Effective tax rate:   Q3 2025   Fiscal 2025 GAAP effective tax rate   23.0 %   22.5 % Stock-based compensation (low - high end of range)   (2%) - 0%   (2%) - 0% Amortization of acquisition-related intangibles (low - high end of range)   (1%) - 0%   (1%) - 0% Non-GAAP effective tax rate   20.5 %   20.0 %  Diluted earnings per share:  Q3 2025  Fiscal 2025 Low High  Low High GAAP diluted earnings per share (low - high end of range)  $                    0.26 $                0.41  $                    2.31 $                2.46 Stock-based compensation  0.33 0.33  1.34 1.34 Amortization of acquisition-related intangibles  0.11 0.11  0.42 0.42 Restructuring charges  — —  0.10 0.10 Income tax adjustments  (0.08) (0.08)  (0.29) (0.29) Non-GAAP diluted earnings per share (low - high end of range)  $                    0.62 $                0.77  $                    3.88 $                4.03  Weighted-average shares outstanding - diluted (in thousands)  96,900 96,900  97,200 97,200

Investor Contact: Peter Goldmacher
415-254-7415
[email protected]

Media Contact: [email protected]

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