Core Insights - Dolby Laboratories, Inc. (DLB) reported first-quarter fiscal 2026 non-GAAP earnings per share (EPS) of $1.06, exceeding the Zacks Consensus Estimate of 90 cents, but down from $1.14 in the prior-year quarter [1][9] - Total revenues were $346.7 million, a decrease from $357 million in the year-ago quarter, yet surpassing the Zacks Consensus Estimate by 4.2% [2][9] Financial Performance - Licensing revenues were $319.8 million, down 3.2% year over year, but within the company's guidance of $290 million to $320 million [5] - Products and Services revenues increased by 1.6% year over year to $26.9 million [5] - Gross profit for the fiscal first quarter was $303.5 million, compared to $316.2 million in the year-ago quarter, while total operating expenses rose to $241.3 million from $236.3 million [7] Market Outlook - Management expressed optimism about the company's market position and growth opportunities, citing strong momentum in Dolby Atmos and Dolby Vision, as well as an expanding addressable market [3] - For the second quarter of fiscal 2026, the company estimates revenues between $375 million and $405 million, with licensing revenues projected to be between $350 million and $380 million [12] Shareholder Returns - The company repurchased approximately 1 million shares for about $70 million during the first quarter, with roughly $207 million remaining under its stock repurchase authorization [11] - A cash dividend of 36 cents per share was declared, payable on February 18, 2026 [11] Segment Performance - Broadcast Licensing contributed 31% to total licensing revenues, while Mobile Licensing, Consumer Electronics, PC Licensing, and Licensing from Other Markets accounted for 23%, 14%, 9%, and 23% respectively [6] Future Projections - For fiscal 2026, the company expects total revenues to be in the range of $1.4 billion to $1.45 billion, an increase from the prior estimate of $1.39 billion to $1.44 billion [13] - Licensing revenues are projected to range from $1.295 billion to $1.345 billion, up from the previous estimate of $1.285 billion to $1.335 billion [13]

Earnings Per Share (EPS) of $1.06, beating the estimated $0.99 and showcasing a 17.78% earnings surprise.Revenue reported at approximately $346.7 million, exceeding the estimated $341.3 million and marking a 4.19% revenue surprise.Financial Health indicated by a low debt-to-equity ratio of 0.015 and a current ratio of approximately 3.17.Dolby Laboratories, Inc. (NYSE:DLB) is a prominent player in the audio, video, and voice technology industry. Known for its innovative technologies like Dolby Atmos and Dolb ...

Core Insights - There has been a significant sell-off in software stocks, particularly affecting software-as-a-service (SaaS) companies, which is creating potential buying opportunities in this sector [1]. Group 1: Market Trends - The software sector, especially SaaS names, has experienced a brutal sell-off over the past few months [1]. - This downturn is leading to interesting buying opportunities for both SaaS companies and other related sectors [1]. Group 2: Analyst Background - Ian Bezek, a former hedge fund analyst, has extensive experience in Latin American markets and specializes in high-quality compounders and growth stocks at reasonable prices [1].

Park added that GAAP operating expenses in the quarter included a $10 million restructuring charge as the company continues to streamline operations and align resources with business priorities.Licensing revenue totaled $320 million , while product and services revenue was $27 million . The company generated approximately $55 million in operating cash flow, repurchased $70 million of common stock, and ended the quarter with about $207 million remaining on its share repurchase authorization. Dolby also decla ...

Core Insights - Dolby Laboratories reported revenue of $346.71 million for the quarter ended December 2025, reflecting a year-over-year decline of 2.9% and an EPS of $1.06, down from $1.14 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $332.77 million by 4.19%, while the EPS surpassed the consensus estimate of $0.90 by 17.78% [1] Revenue Breakdown - Licensing revenue was $319.77 million, compared to the average estimate of $305.85 million, representing a year-over-year decline of 3.2% [4] - Products and services revenue was $26.94 million, slightly above the estimated $26.91 million, showing a year-over-year increase of 1.6% [4] - PC market licensing revenue was $28.72 million, below the estimated $33.17 million, marking an 8.1% decline year-over-year [4] - Other market licensing revenue was $70.24 million, compared to the estimated $72.21 million, reflecting a 3.1% year-over-year decline [4] - Consumer Electronics (CE) market licensing revenue was $45.6 million, exceeding the estimate of $39.35 million, indicating a year-over-year decline of 7.8% [4] - Broadcast market licensing revenue was $100.26 million, below the estimated $106.1 million, representing a 13.4% decline year-over-year [4] - Mobile market licensing revenue was $74.95 million, surpassing the estimate of $55.43 million, showing a significant year-over-year increase of 21.8% [4] Stock Performance - Shares of Dolby Laboratories have returned -4.7% over the past month, while the Zacks S&P 500 composite has changed by +0.8% [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential outperformance against the broader market in the near term [3]

Financial Data and Key Metrics Changes - Revenue for Q1 2026 was $347 million, exceeding the high end of guidance, driven by earlier-than-expected deal closures and a $7 million favorable true-up for Q4 shipments [14][17] - Non-GAAP earnings per share was $1.06, also above guidance, attributed to higher revenue and lower operating expenses [14][17] - Operating cash flow generated was approximately $55 million, with $70 million of common stock repurchased [15][16] Business Line Data and Key Metrics Changes - Licensing revenue was $320 million, while product and services revenue was $27 million [14] - Mobile revenue grew over 20% year-over-year, while broadcast revenue declined in the mid-teens year-over-year [16] Market Data and Key Metrics Changes - The automotive sector is a major focus, with partnerships increasing from 20 OEMs last year to over 35 this year [7][12] - Dolby Vision 2 received positive feedback at CES, with support from content providers like Peacock and TP Vision [9][54] Company Strategy and Development Direction - The company is focused on expanding its presence in automotive entertainment and enhancing the in-car experience with Dolby Atmos and Dolby Vision [5][6] - Dolby Vision 2 aims to meet evolving viewer expectations and unlock the potential of modern televisions [8][9] - The company is confident in growing Dolby Atmos, Dolby Vision, and Imaging Patents at 15%-20% per year over the next few years [13] Management's Comments on Operating Environment and Future Outlook - Management noted that while some deals came in earlier than expected, it does not indicate a broader change in the macro environment [21] - The company raised its full-year revenue guidance to $1.4 billion-$1.45 billion, reflecting strong Q1 performance and true-up adjustments [17][19] - Management remains optimistic about growth opportunities despite potential impacts from memory pricing and macroeconomic factors [60][61] Other Important Information - A dividend of $0.36 was declared, representing a 9% increase from the previous year [16] - The company ended the quarter with cash and investments of approximately $730 million [16] Q&A Session Summary Question: Impact of deal timing on revenue - Management indicated that earlier deal closures de-risk the outlook for the year but do not suggest a general change in the macro environment [21] Question: Details on the $7 million true-up - The true-up was primarily in gaming and broadcast sectors [23] Question: Growth in mobile revenue - Mobile growth is influenced by the timing of new deals and renewals, with expectations for slight growth for the full year [24] Question: Update on patent monetization strategy - The company aims for 10% of revenue from content service providers within three years, with Roku as a significant new licensee [32] Question: Guidance for Q1 performance - The guidance was positively influenced by the $7 million true-up and earlier-than-expected deals [35][44] Question: Feedback from CES - The event showcased strong interest in automotive experiences and Dolby Vision 2, with positive responses from partners and customers [50][52]

Financial Data and Key Metrics Changes - Revenue for Q1 2026 was $347 million, exceeding the high end of guidance, driven by earlier-than-expected deal closures and a $7 million favorable true-up for Q4 shipments [14][17] - Non-GAAP earnings per share was $1.06, also above guidance, attributed to higher revenue and lower operating expenses [14][17] - Operating cash flow generated was approximately $55 million, with $70 million of common stock repurchased [15][16] Business Line Data and Key Metrics Changes - Licensing revenue reached $320 million, while product and services revenue was $27 million [14] - Mobile revenue grew over 20% year-over-year, while broadcast revenue declined in the mid-teens year-over-year [16] Market Data and Key Metrics Changes - The automotive sector is a major focus, with partnerships increasing from 20 OEMs to over 35 OEMs year-over-year [7] - Dolby Vision 2 received positive feedback at CES, with support from content providers like Peacock and TP Vision [9][53] Company Strategy and Development Direction - The company is raising its full-year fiscal 2026 revenue guidance to $1.4 billion-$1.45 billion, reflecting strong Q1 performance and earlier deal closures [17] - Dolby aims to grow Dolby Atmos, Dolby Vision, and imaging patents at 15%-20% per year, which now comprise nearly half of licensing revenue [13][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in growth opportunities despite macroeconomic uncertainties, noting that the timing of deals has improved [21][58] - The company is optimistic about the adoption of Dolby Vision 2 and the expansion of its addressable market through new partnerships and technologies [26][32] Other Important Information - A dividend of $0.36 was declared, representing a 9% increase from the previous year [16] - The company ended the quarter with cash and investments of approximately $730 million [16] Q&A Session Summary Question: Impact of deal timing on the environment - Management noted that while some deals came in earlier than expected, it should not be generalized to indicate a broader change in the macro environment [21] Question: Details on the large true-up - The $7 million true-up was primarily in gaming and broadcast sectors [23] Question: Growth in mobile revenue - Mobile growth was attributed to a combination of new deals and renewals, with expectations for slight full-year growth [24] Question: Update on patent monetization strategy - The company aims for 10% of revenue from content service providers within three years, with Roku as a significant new licensee [32] Question: Guidance for the quarter - The guidance was influenced by a combination of favorable true-up and strong deal timing, with overall performance aligning closely with expectations [44][46] Question: Feedback from CES - Positive feedback was received regarding the automotive experience and Dolby Vision 2, with significant interest from partners and customers [50][51]

Financial Data and Key Metrics Changes - Revenue for Q1 2026 was $347 million, exceeding the high end of guidance, driven by earlier-than-expected deal closures and a $7 million favorable true-up for Q4 shipments [11][12] - Non-GAAP earnings per share was $1.06, also above guidance, attributed to higher revenue and lower operating expenses [11] - Licensing revenue reached $320 million, while product and services revenue was $27 million [11] - Operating cash flow generated was approximately $55 million, with $70 million of common stock repurchased [11][12] Business Line Data and Key Metrics Changes - Mobile revenue grew over 20% year-over-year, while broadcast revenue declined in the mid-teens year-over-year, primarily due to timing of deals [12] - The automotive sector is a major focus, with partnerships increasing from 20 OEMs last year to over 35 this year [6][10] - Dolby Vision 2 was well-received at CES, with support from partners like Peacock and TP Vision, enhancing revenue opportunities from TVs [7][8] Market Data and Key Metrics Changes - The mobile market is expected to see mid-single-digit growth for the full year, despite quarterly fluctuations [12] - The automotive market remains the highest growth area, with diversification geographically, including partnerships with major manufacturers like Mercedes and Audi [60][62] Company Strategy and Development Direction - The company is focused on expanding its addressable market through new growth initiatives, including Dolby OptiView and video distribution programs [10][29] - Dolby Vision 2 aims to enhance viewer experience across various content types, with plans to launch new TVs by the end of the fiscal year [7][10] - The company is optimistic about growth in Dolby Atmos, Dolby Vision, and imaging patents, projecting a growth rate of 15%-20% per year [10][15] Management's Comments on Operating Environment and Future Outlook - Management noted that the early closure of deals does not indicate a broader change in the macro environment but provides confidence in the outlook for the year [18] - The company remains cautious about potential impacts from memory pricing and geopolitical factors but has not seen significant adjustments in guidance [58][59] - The automotive sector continues to thrive, with no immediate impacts from U.S. policy changes observed [62] Other Important Information - A dividend of $0.36 was declared, representing a 9% increase from the previous year [12] - The company ended the quarter with cash and investments of approximately $730 million [12] Q&A Session Summary Question: Impact of deal timing on revenue - Management indicated that earlier deal closures do not suggest a macro trend but help de-risk the outlook for the year [18] Question: Details on the $7 million true-up - The true-up was primarily in gaming and broadcast sectors [19] Question: Growth in mobile revenue - Growth was attributed to new deals and renewals, with expectations for slight increases over the full year [21] Question: Potential market share gains from Sony's spin-off - Management expressed optimism about strong relationships with both TCL and Sony, focusing on increasing TV attach rates [22][23] Question: Cash flow generation comparison - Cash flow can fluctuate based on deal timing, but it typically tracks closely with non-GAAP net income [24] Question: Update on patent monetization strategy - The company aims for 10% of revenue from content service providers within three years, with progress in the video distribution program [29][30] Question: OEM responses to macro issues - Management noted that while there are adjustments, they are not material, and the mobile market is most affected [58][59] Question: Adoption of in-car offerings amid policy changes - No significant impact observed; the automotive sector remains a high-growth area [62]

Revenue Performance - Total revenue for the fiscal quarter ended December 26, 2025, was $346.7 million, a decrease of 2% from $357.0 million for the same period in 2024[161]. - Licensing revenue accounted for 92% of total revenue at $319.8 million, while products and services contributed 8% at $26.9 million[161]. - Dolby generated 92% of its revenue in Q1 fiscal 2026 through licensing technology, brand, and patents, primarily to device manufacturers[201]. - Licensing revenue for Q1 2026 was $319,771, a decrease of 3% from $330,479 in Q1 2025, representing 92% of total revenue[242]. - Products and Services revenue increased by 2% to $26,935 from $26,520, accounting for 8% of total revenue[246]. Licensing and Patents - Dolby holds approximately 29,000 issued patents related to licensed technologies, which significantly contribute to licensing revenue[163]. - The company generated over 90% of its revenue from licensing agreements with around 1,000 electronic device manufacturers[163]. - Dolby's patent licensing primarily comes from standard essential patents associated with AAC, AVC, and HEVC codecs, which are critical for media technologies[182]. - Dolby's patent licensing revenue is primarily driven by royalty shares within patent pools, licensee penetration, and device shipments[208]. - Revenue from patent licensing is also influenced by the success of patent pools and the negotiation of licenses with companies using the relevant standards[213]. Technology and Innovation - Dolby Atmos and Dolby Vision are key branded technologies driving revenue growth, enabling immersive audio and video experiences[167]. - The company is exploring the use of artificial intelligence in the development of next-generation audio and video codecs[180]. - Dolby's branded technology licensing includes rights to software, patent rights, and know-how, with revenue driven by device shipments and consumer spending[205]. - Dolby Atmos and Dolby Vision have seen increased adoption, with major streaming services enhancing content using these technologies[207]. Market Dynamics - The company aims to expand the reach of its technologies to new content, media, devices, and audiences[159]. - Dolby's licensing customers typically enter into per unit royalty arrangements, which can lead to revenue variability[172]. - The company collaborates with content creators and device manufacturers to create a virtuous cycle of product development and demand for its solutions[158]. - The company faces challenges from macroeconomic conditions, including inflation and tariffs, which may impact revenue from licensing and product sales[202]. - The automotive industry's cyclical nature and long development cycles may affect revenue growth from automotive-related technologies[227]. Financial Performance - Gross profit for Products and Services decreased by 35% to $4,489, with a gross margin of 17%, down from 26%[246]. - Research and Development (R&D) expenses increased by $2,439 million, or 4%, from $66,638 million in Q1 2025 to $69,077 million in Q1 2026, representing 20% of total revenue[249]. - Sales and Marketing (S&M) expenses decreased by $2,847 million, or 3%, from $94,399 million in Q1 2025 to $91,552 million in Q1 2026, maintaining 26% of total revenue[252]. - General and Administrative (G&A) expenses slightly increased by $151 million, remaining stable at 20% of total revenue, from $70,092 million in Q1 2025 to $70,243 million in Q1 2026[254]. - Restructuring charges rose significantly by $5,250 million, or 101%, from $5,216 million in Q1 2025 to $10,466 million in Q1 2026, accounting for 3% of total revenue[257]. Cash Flow and Investments - Cash and cash equivalents decreased from $701,893 million as of September 26, 2025, to $643,845 million as of December 26, 2025[269]. - Net cash provided by operating activities decreased by $52.0 million, from $106,779 million in Q1 2025 to $54,799 million in Q1 2026, primarily due to higher accounts receivable[276]. - Net cash used in financing activities increased by $64.3 million, from $57,571 million in Q1 2025 to $121,834 million in Q1 2026, mainly due to higher common stock repurchases[278]. - The company has returned approximately $3.1 billion to stockholders through stock repurchases since the program's initiation in fiscal 2010[273]. - As of December 26, 2025, the company had cash and cash equivalents of $643.8 million and short-term and long-term investments of $85.8 million[282]. Foreign Currency Exposure - The company maintains exposure to foreign currency exchange risk due to operations in countries like Australia, China, Germany, Ireland, Poland, and the U.K.[283]. - The majority of revenue from international markets is denominated in U.S. dollars, while operating expenses are primarily in local currencies, leading to potential increases in expenses when the U.S. dollar weakens[283]. - The company uses forward currency contracts as cash flow hedges with maturities of thirteen months or less to mitigate currency volatility impacts on operating expenses[284]. - A sensitivity analysis indicated that a 10% increase in the U.S. dollar value would decrease the fair value of financial instruments by $3.7 million, while a 10% decrease would increase it by the same amount[289].

"With a good start to the fiscal year, we are optimistic about our position in the market and confident in our growth opportunities," said Kevin Yeaman, President and CEO, Dolby Laboratories. "We continue to have strong momentum with Dolby Atmos and Dolby Vision, while also expanding our addressable market with our imaging patent program for content streamers and Dolby OptiView." First Quarter Fiscal 2026 Financial Highlights A complete listing of Dolby's non-GAAP measures are described and reconciled to th ...