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Dolby Laboratories(DLB) - 2023 Q1 - Quarterly Report
2023-02-01 16:00
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended December 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From To Commission File Number: 001-32431 DOLBY LABORATORIES, INC. (Exact name of registrant as specified in its charter) Delaware 90-0199783 (State or o ...
Dolby Laboratories(DLB) - 2022 Q4 - Earnings Call Transcript
2022-11-18 02:52
Financial Data and Key Metrics Changes - Total revenue in Q4 2022 was $278 million, down 2% year-over-year, primarily due to lower unit shipments in PCs, broadcast, consumer electronics, and gaming [49][53] - Fiscal year 2022 revenues were $1.25 billion, a decline of 2% from $1.28 billion in fiscal year 2021, with licensing revenue at $1.16 billion, down 4% year-over-year [54][56] - Non-GAAP net income for Q4 was $53 million or $0.54 per diluted share, compared to $60 million or $0.58 per diluted share in Q4 2021 [66] Business Line Data and Key Metrics Changes - Foundational audio revenue declined nearly 15% year-over-year, making up roughly 70% of licensing revenues [17][55] - Revenue from Dolby Atmos, Dolby Vision, and imaging patents grew approximately 30% year-over-year, driven by increased adoption and box office improvements [19][56] - Products and services revenue increased to $89 million in fiscal year 2022 from $67 million in fiscal year 2021, primarily due to higher product sales in the cinema industry [63] Market Data and Key Metrics Changes - Broadcast revenues represented about 37% of total licensing in fiscal year 2022, declining by $42 million or 9% year-over-year due to lower TV unit shipments [57] - Mobile revenues also declined by $22 million or 9% year-over-year, impacted by timing of deals and lower unit shipments [59] - Consumer Electronics revenues increased by $4 million or 2% year-over-year, driven by growth in Dolby Atmos and Dolby Vision [60] Company Strategy and Development Direction - The company aims to double the size of revenues from Dolby Atmos, Dolby Vision, and imaging patents over the mid-term, targeting 15% to 25% annual growth [22][72] - Focus areas include expanding the movies and TV ecosystem, enhancing music and automotive initiatives, and developing user-generated content with Dolby Vision Capture [14][31] - Dolby.io is seen as a long-term growth factor, expanding the addressable market for immersive experiences [36][81] Management's Comments on Operating Environment and Future Outlook - The management highlighted ongoing challenges from macroeconomic factors, including inflation and supply chain issues, impacting consumer device shipments [9][70] - Despite near-term headwinds, the company remains confident in the long-term demand for entertainment content and immersive experiences [46][81] - Guidance for fiscal year 2023 anticipates low single-digit revenue growth, with foundational audio projected to decline mid-single-digits [72][70] Other Important Information - The company generated $51 million in cash from operations in Q4, down from $110 million in the previous year [67] - A cash dividend of $0.27 per share was announced, an increase of 8% compared to the prior quarter [67] - The company repurchased approximately 2.9 million shares during the fourth quarter [67] Q&A Session Summary Question: Macro outlook and its impact on Dolby - The macro environment remains uncertain, but there is strong demand for immersive experiences, particularly Dolby Atmos and Dolby Vision [84][85] Question: Drivers of mobile revenue decline - Mobile revenues decreased 9% year-over-year due to timing of deals and lower unit shipments [86][87] Question: Growth trajectory for Dolby Vision and Atmos - Demand for adoption remains strong, but engagement cycles are taking longer due to the uncertain environment [91][92] Question: Revenue guidance for Q1 and fiscal year 2023 - Q1 revenue is expected to range from $300 million to $330 million, with licensing revenue estimated between $280 million and $305 million [77][79] Question: Contribution of Dolby.io to product sales - Revenue from Dolby.io is included in the products and services line, contributing to growth but not highlighted as a major growth factor yet [104]
Dolby Laboratories(DLB) - 2022 Q4 - Annual Report
2022-11-17 16:00
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From To Commission File Number: 001-32431 DOLBY LABORATORIES, INC. (Exact name of registrant as specified in its charter) Delaware 90-0199783 (State or other ju ...
Dolby Laboratories(DLB) - 2022 Q3 - Earnings Call Transcript
2022-08-10 02:02
Dolby Laboratories, Inc. (NYSE:DLB) Q3 2022 Earnings Conference Call August 9, 2022 4:30 PM ET Company Participants Ashley Schwenoha - Senior Manager, IR Maggie O'Donnell - Head, IR Kevin Yeaman - President, CEO & Director Robert Park - SVP & CFO Conference Call Participants Steven Frankel - Rosenblatt Securities Ralph Schackart - William Blair & Company Paul Chung - JPMorgan Chase & Co. James Goss - Barrington Research Associates Operator Ladies and gentlemen, thank you for standing by. Welcome to the Dolb ...
Dolby Laboratories(DLB) - 2022 Q3 - Quarterly Report
2022-08-08 16:00
PART I [Unaudited Interim Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Statements) Dolby Laboratories' unaudited financial statements for Q3 and nine months ended July 1, 2022, show total revenue of **$289.6 million** and net income of **$39.6 million** for the quarter, and **$975.6 million** and **$156.1 million** respectively for the nine months Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | July 1, 2022 | September 24, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | **$1,504,719** | **$1,760,498** | | Cash and cash equivalents | $858,905 | $1,225,380 | | **Total Assets** | **$2,919,936** | **$3,105,687** | | **Total Current Liabilities** | **$285,485** | **$315,717** | | **Total Liabilities** | **$460,411** | **$501,455** | | **Total Stockholders' Equity** | **$2,459,525** | **$2,604,232** | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share) | Metric | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$289,585** | **$286,799** | **$975,589** | **$996,231** | | Licensing Revenue | $269,289 | $271,569 | $915,406 | $948,159 | | Products and Services Revenue | $20,296 | $15,230 | $60,183 | $48,072 | | **Operating Income** | **$45,566** | **$56,091** | **$179,497** | **$304,025** | | **Net Income** | **$39,597** | **$54,621** | **$156,331** | **$266,036** | | **Diluted EPS** | **$0.39** | **$0.52** | **$1.52** | **$2.54** | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | YTD Ended July 1, 2022 | YTD Ended June 25, 2021 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$267,267** | **$337,980** | | **Net cash used in investing activities** | **($255,213)** | **($29,948)** | | **Net cash used in financing activities** | **($368,131)** | **($165,650)** | | Net (decrease)/increase in cash | ($365,775) | $147,273 | [Note 3. Revenue Recognition](index=12&type=section&id=Note%203.%20Revenue%20Recognition) This note details revenue recognition policies, showing **93%** of Q3 2022 revenue from licensing, disaggregated by market and geography, with Broadcast as the largest licensing contributor and international sales dominating total revenue Licensing Revenue by Market (Q3 2022 vs Q3 2021) | Market | Q3 2022 Revenue (in thousands) | % of Licensing | Q3 2021 Revenue (in thousands) | % of Licensing | | :--- | :--- | :--- | :--- | :--- | | Broadcast | $99,327 | 37% | $123,955 | 46% | | Mobile | $63,237 | 23% | $49,861 | 18% | | CE | $38,663 | 14% | $37,805 | 14% | | PC | $26,947 | 10% | $24,870 | 9% | | Other | $41,115 | 16% | $35,078 | 13% | | **Total** | **$269,289** | **100%** | **$271,569** | **100%** | Total Revenue by Geographic Location (Q3 2022 vs Q3 2021) | Geography | Q3 2022 Revenue (in thousands) | % of Total | Q3 2021 Revenue (in thousands) | % of Total | | :--- | :--- | :--- | :--- | :--- | | United States | $78,471 | 27% | $73,355 | 26% | | International | $211,114 | 73% | $213,444 | 74% | | **Total** | **$289,585** | **100%** | **$286,799** | **100%** | - As of July 1, 2022, the company had **$44.4 million** of remaining performance obligations, with **20%** expected in fiscal 2022, **31%** in fiscal 2023, and **49%** thereafter[63](index=63&type=chunk) [Note 9. Stockholders' Equity and Stock-Based Compensation](index=25&type=section&id=Note%209.%20Stockholders%27%20Equity%20and%20Stock-Based%20Compensation) This note details equity structure, stock incentive plans, and dividend policy, highlighting a **$2.6 billion** authorized stock repurchase program with **$230.9 million** remaining, and quarterly dividends of **$0.25** per share Quarterly Share Repurchase Activity (Fiscal 2022) | Quarter | Shares Repurchased | Cost (in thousands) | Average Price Paid Per Share | | :--- | :--- | :--- | :--- | | Q1 | 408,508 | $35,573 | $87.08 | | Q2 | 1,116,032 | $84,913 | $76.08 | | Q3 | 2,549,474 | $190,000 | $74.53 | | **Total YTD** | **4,074,014** | **$310,486** | **N/A** | - As of July 1, 2022, the remaining authorization for the stock repurchase program was approximately **$230.9 million**[131](index=131&type=chunk) - The company declared a quarterly cash dividend of **$0.25** per common share for Q1, Q2, and Q3 of fiscal 2022[133](index=133&type=chunk) [Note 12. Income Taxes](index=32&type=section&id=Note%2012.%20Income%20Taxes) This note explains income tax expense and effective tax rate, with Q3 2022 at **19.8%**, up from **7.7%** in Q3 2021, primarily due to earnings mix and lower stock-based award benefits Effective Tax Rate Comparison | Period | Effective Tax Rate | | :--- | :--- | | Q3 Fiscal 2022 | 19.8% | | Q3 Fiscal 2021 | 7.7% | | YTD Fiscal 2022 | 15.3% | | YTD Fiscal 2021 | 12.2% | - The increase in the Q3 effective tax rate was mainly driven by a shift in the mix of earnings to jurisdictions with higher tax rates and lower tax benefits from stock-based award settlements[147](index=147&type=chunk) [Note 15. Commitments and Contingencies](index=34&type=section&id=Note%2015.%20Commitments%20and%20Contingencies) This note outlines contractual obligations and legal contingencies, with total commitments of **$150.9 million** as of July 1, 2022, and a **$34.4 million** charge for resolving a legal matter with Intertrust Technologies - The company recorded a charge of **$34.4 million** within G&A expenses in the fiscal year-to-date period ended July 1, 2022, to resolve a legal matter with Intertrust Technologies concerning patent infringement allegations against Dolby's customers[162](index=162&type=chunk) Contractual Obligations and Commitments as of July 1, 2022 (in thousands) | Commitment | Total Amount | | :--- | :--- | | Naming rights | $106,791 | | Purchase obligations | $41,425 | | Donation commitments | $2,698 | | **Total** | **$150,914** | [Note 16. Business Combination](index=35&type=section&id=Note%2016.%20Business%20Combination) This note describes the acquisition of Millicast, Inc. on January 31, 2022, for **$38.8 million**, allocating **$8.7 million** to intangible assets and **$31.7 million** to goodwill, enhancing Dolby.io's streaming capabilities - On January 31, 2022, Dolby acquired Millicast, Inc. for a total purchase consideration of **$38.8 million**[164](index=164&type=chunk)[165](index=165&type=chunk) - The acquisition resulted in the recording of **$31.7 million** in goodwill and **$8.7 million** in identifiable intangible assets, primarily developed technology[165](index=165&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Q3 fiscal 2022 financial performance, business strategy, and market conditions, discussing COVID-19 impacts, strategic expansion into new content areas, revenue breakdown, operating expenses, liquidity, and cash flows [Executive Summary](index=40&type=section&id=Executive%20Summary) This section highlights the ongoing impact of COVID-19 on supply chains and the cinema market, emphasizing a strategic focus on expanding Dolby's audio and imaging leadership into new content areas like music and gaming - The COVID-19 pandemic continues to negatively affect the business through supply chain constraints, component shortages, and disruptions in the cinema market, impacting royalties and product demand[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) - A key strategic focus is expanding Dolby experiences into new content areas such as music, gaming, live sports, and user-generated content to create additional value and drive adoption on devices like mobile, PCs, and gaming consoles[198](index=198&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) This section analyzes Q3 and YTD fiscal 2022 financial results, noting a slight decrease in Q3 licensing revenue, a **33%** increase in products and services revenue, and significant operating expense changes including a **$34.4 million** legal settlement - Q3 Licensing revenue decreased **1%** YoY, primarily due to lower Broadcast revenue from higher prior-year recoveries, partially offset by growth in Mobile from timing of contracts and higher adoption of Dolby Atmos and Dolby Vision[238](index=238&type=chunk)[240](index=240&type=chunk) - Q3 Products and Services revenue increased **33%** YoY, driven by higher sales of cinema equipment as the exhibitor market continues to recover[242](index=242&type=chunk)[244](index=244&type=chunk) - YTD G&A expenses increased by **$48.3 million (28%)** YoY, primarily due to a **$34.4 million** charge for the resolution of a legal matter with Intertrust[252](index=252&type=chunk) [Liquidity, Capital Resources, and Financial Condition](index=51&type=section&id=Liquidity%2C%20Capital%20Resources%2C%20and%20Financial%20Condition) As of July 1, 2022, Dolby maintained strong liquidity with **$858.9 million** in cash and **$263.5 million** in investments, returning capital via **$310.5 million** in YTD stock repurchases and **$75.8 million** in dividends, despite a decrease in operating cash flow to **$267.3 million** Key Liquidity Metrics (in thousands) | Metric | July 1, 2022 | September 24, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $858,905 | $1,225,380 | | Total Investments | $263,538 | $101,658 | | Working capital | $1,219,234 | $1,444,781 | - YTD cash used in financing activities increased significantly to **$368.1 million** from **$165.7 million** in the prior year, driven by higher common stock repurchases[278](index=278&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate sensitivity, with a **1%** rate change impacting the investment portfolio by **$2.3 million**, and foreign currency exchange risk, where a **10%** USD shift impacts derivative instruments by **$7.3 million** - A hypothetical **1%** change in interest rates would impact the carrying value of the company's investment portfolio by approximately **$2.3 million** as of July 1, 2022[285](index=285&type=chunk) - A sensitivity analysis on foreign currency forward contracts indicated that a **10%** shift in the value of the U.S. dollar would change the fair value of these instruments by **$7.3 million**[293](index=293&type=chunk) [Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of July 1, 2022, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that as of July 1, 2022, the company's disclosure controls and procedures were effective to meet their objectives at a reasonable assurance level[297](index=297&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[298](index=298&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, not expecting a material adverse impact, except for the Intertrust litigation matter detailed in Note 15 - The company is involved in various legal proceedings but does not expect them to have a material adverse impact, other than the litigation matter with Intertrust discussed in Note 15[301](index=301&type=chunk) [Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks, including COVID-19 impacts, dependence on licensees, media distribution trends, intense competition, intellectual property protection challenges, supplier reliance, and international operations and tax regulations - COVID-19 continues to pose a significant risk, impacting supply chains, consumer product demand, and particularly the cinema market through social distancing and operational disruptions[304](index=304&type=chunk)[305](index=305&type=chunk) - The business is highly dependent on licensees incorporating Dolby technologies into their products, and is exposed to risks from changing media consumption trends, such as the shift from optical discs and cable to streaming services[311](index=311&type=chunk)[312](index=312&type=chunk) - Protecting intellectual property is critical, with risks including patent expiration, unauthorized IP use in markets like China, and potential for costly IP litigation[343](index=343&type=chunk)[347](index=347&type=chunk)[351](index=351&type=chunk)[352](index=352&type=chunk) - The Dolby family and their affiliates control approximately **85.1%** of the combined voting power of the company's stock, giving them significant influence over management and corporate matters[395](index=395&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=72&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on equity repurchase activity, with Dolby repurchasing **2,549,474** shares for approximately **$190.0 million** in Q3 fiscal 2022, leaving **$230.9 million** authorized for future repurchases Share Repurchase Activity (Q3 Fiscal 2022) | Period | Total Shares Repurchased | Average Price Paid Per Share | Remaining Authorization | | :--- | :--- | :--- | :--- | | Apr 2 - Apr 29, 2022 | — | $— | $420.9 million | | Apr 30 - May 27, 2022 | 1,071,950 | $74.73 | $340.7 million | | May 28 - Jul 1, 2022 | 1,477,524 | $74.38 | $230.9 million | | **Total for Quarter** | **2,549,474** | **N/A** | **$230.9 million** | [Exhibits](index=73&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications pursuant to the Sarbanes-Oxley Act and XBRL interactive data files - The exhibits filed with this report include certifications from the Chief Executive Officer and Chief Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act[412](index=412&type=chunk)
Dolby Laboratories(DLB) - 2022 Q2 - Earnings Call Transcript
2022-05-08 13:21
Dolby Laboratories, Inc. (NYSE:DLB) Q2 2022 Earnings Conference Call May 5, 2022 4:30 PM ET Company Participants Ashley Schwenoha - Senior Manager-Investor Relations Kevin Yeaman - Chief Executive Officer Robert Park - Chief Financial Officer Conference Call Participants Ralph Schackart - William Blair Paul Chung - JPMorgan Jim Goss - Barrington Research Operator Ladies and gentlemen, thank you for standing by. Welcome to the Dolby Laboratories Conference Call discussing Fiscal Second Quarter Results. Durin ...
Dolby Laboratories(DLB) - 2022 Q2 - Quarterly Report
2022-05-04 16:00
Revenue Generation and Licensing - Dolby Laboratories generates the majority of its revenue from licensing audio technologies, with approximately 500 active licensing arrangements as of April 1, 2022[178]. - The company holds around 16,400 issued patents related to its technologies, which significantly contribute to its licensing revenue[178]. - The revenue composition for the fiscal year ending April 1, 2022, shows that 33% comes from broadcast, 21% from mobile, 17% from consumer electronics, 18% from PCs, and 11% from other sources[179]. - Dolby's key technologies include Dolby Atmos, Dolby Vision, and various audio codecs, which enhance media playback experiences across multiple platforms[179]. - The company has implemented a two-tier licensing model, where semiconductor manufacturers first license technologies before they are sold to OEMs[180]. - Dolby Cinema partnerships allow the company to earn revenue through a share of box office receipts, recognized as licensing revenue[187]. - Dolby's licensing revenue is primarily driven by the adoption of audio and imaging technologies, with foundational audio technologies expected to reflect market trends in device shipments[201]. Market Challenges and COVID-19 Impact - The COVID-19 pandemic has negatively impacted consumer purchasing activity and supply chains, affecting demand for products incorporating Dolby's technologies[195]. - The company continues to monitor the evolving situation of COVID-19 and its impact on business operations and revenue[196]. - The company faces challenges in the broadcast market due to geopolitical issues and the impact of COVID-19 on consumer demand and manufacturing capabilities[211]. - COVID-19 continues to impact the cinema market, with uncertainty regarding full capacity operations and box office receipts fluctuating[199]. - The ongoing impact of COVID-19 has negatively affected demand for cinema products and services, with supply chain constraints also posing challenges[234]. Product and Service Offerings - The company offers various services to support theatrical and television production, including equipment training and maintenance[192]. - The developer platform, Dolby.io, enables access to audio and video APIs, expanding the addressable market for the company's technologies[191]. - Dolby Cinema sites are operating at approximately 85% capacity, subject to local regulations, with over 400 theatrical titles in Dolby Vision and Dolby Atmos announced or released, up from over 375 at the end of fiscal 2021[227]. - As of the end of the second quarter of fiscal 2022, there are over 6,500 Dolby Atmos screens installed or committed, with over 2,200 Dolby Atmos theatrical titles announced or released[231]. - Major streaming partners like Netflix, Disney+, and Amazon continue to enable more content in Dolby formats, enhancing the adoption of Dolby Vision and Dolby Atmos across devices[205]. - Dolby has expanded its presence in the mobile market, with new devices from Lenovo, Xiaomi, and OPPO supporting Dolby Atmos and Dolby Vision[214]. - The company continues to focus on expanding its leadership in audio and imaging solutions for premium entertainment content, including music and gaming[200]. Financial Performance - Licensing revenue for the fiscal quarter ended April 1, 2022, was $313,833, a 3% increase from $303,585 for the same quarter in 2021[242]. - Total revenue for the fiscal year-to-date ended April 1, 2022, was $646,117, down 5% from $676,590 for the same period in 2021[242]. - Products revenue increased by 29% to $20,538 for the fiscal quarter ended April 1, 2022, compared to $15,973 for the same quarter in 2021[246]. - Gross margin for licensing was 95% for both the fiscal quarter ended April 1, 2022, and the same quarter in 2021[242]. - The company reported a gross margin percentage of 8% for products and services revenue for the fiscal quarter ended April 1, 2022, compared to a negative 2% for the same quarter in 2021[246]. - Net income attributable to controlling interest for the quarter ended April 1, 2022, was $201 million, compared to a loss of $128 million in the same quarter of the previous year, representing a 257% change[268]. Expenses and Investments - Research and Development expenses primarily consist of employee compensation, stock-based compensation, and consulting costs[249]. - Sales and marketing expenses for Q1 2022 were $84,230, an increase of $6,184 or 8% compared to $78,046 in Q1 2021, representing 25% of total revenue[251]. - General and administrative expenses for Q1 2022 were $98,693, an increase of $39,295 or 66% compared to $59,398 in Q1 2021, representing 30% of total revenue[255]. - Restructuring charges for Q1 2022 were $5,162, an increase of $4,421 or 597% compared to $741 in Q1 2021, representing 2% of total revenue[260]. - Year-to-date research and development expenses increased to $136,245, up $6,665 or 5% from $129,580 in the previous year[250]. - Year-to-date sales and marketing expenses increased to $181,400, up $27,909 or 18% from $153,491 in the previous year[251]. - Year-to-date general and administrative expenses increased to $161,137, up $47,285 or 42% from $113,852 in the previous year[255]. - Year-to-date restructuring charges decreased to $5,067, down $5,697 or 53% from $10,764 in the previous year[260]. Cash Flow and Investments - Cash and cash equivalents as of April 1, 2022, totaled $900.4 million, down from $1.2 billion as of September 24, 2021[273]. - Net cash provided by operating activities decreased by $71 million to $94.7 million for the year-to-date period ended April 1, 2022, compared to $165.6 million for the same period last year[280]. - Net cash used in investing activities increased significantly to $(247.1) million for the year-to-date period ended April 1, 2022, compared to $(15.8) million for the same period last year[281]. - The company had short and long-term investments totaling $265.8 million as of April 1, 2022, primarily in corporate bonds and government securities[272]. - The weighted-average credit quality of the investment portfolio was AA+ with a weighted-average maturity of approximately ten months as of April 1, 2022[290]. - A 10% increase in the value of the U.S. dollar would decrease the fair value of financial instruments by $2.9 million, while a 10% decrease would increase the fair value by the same amount[299]. - The total notional amounts of outstanding foreign currency contracts were $87.8 million as of April 1, 2022, compared to $51.0 million as of September 24, 2021[298]. Internal Controls and Legal Matters - The company maintains disclosure controls and procedures to ensure timely and accurate reporting of required information[302]. - There were no changes in internal control over financial reporting during the fiscal quarter ending April 1, 2022, that materially affected the internal control[304]. - The company is involved in various legal proceedings, but resolution of these matters is not expected to materially impact operating results or financial condition[307].
Dolby Laboratories(DLB) - 2022 Q1 - Earnings Call Transcript
2022-02-03 23:34
Financial Data and Key Metrics Changes - Total revenue for Q1 2022 was $352 million, which was within the guidance range but included a negative true-up of $6 million due to lower than estimated unit shipments in foundational audio technologies [27] - Year-over-year, Q1 revenue was approximately $38 million lower than Q1 2021, impacted by a $21 million true-up in Q1 2021 versus the $6 million negative true-up in Q1 2022 [28] - Net income on a GAAP basis was $80 million or $0.77 per diluted share, compared to $135.2 million or $1.30 per diluted share in Q1 of the previous year [37] Business Line Data and Key Metrics Changes - Licensing revenue comprised $332.3 million, while products and services revenue was $19.3 million, reflecting ongoing improvements in the cinema industry globally [28] - Broadcast licensing represented 37% of total licensing but declined by about $18 million or 13% year-over-year due to timing of revenue and lower recoveries [29] - Mobile licensing decreased by $31 million or 29% compared to Q1 of last year, although growth is anticipated for the full year [30] Market Data and Key Metrics Changes - Consumer electronics licensing increased by approximately $6 million or 11% year-over-year, driven by higher foundational audio revenues for DMAs and soundbars [31] - PC revenues increased by 6% or $2 million compared to the prior year, driven by new imaging patent licenses and higher Dolby Vision adoption [32] - Other markets were essentially flat year-over-year, with lower revenues from gaming offset by higher revenues from Dolby Cinema [33] Company Strategy and Development Direction - The company is focused on expanding Dolby Atmos and Dolby Vision experiences across various devices and services, with a strong emphasis on partnerships with major brands like Samsung and LG [10][11] - Dolby.io is seen as a significant growth area, with a market opportunity estimated at about $5 billion, focusing on virtual live performances, online events, and gaming [20] - The acquisition of Millicast is expected to enhance the capabilities of Dolby.io, allowing developers to stream interactive experiences to larger audiences [23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain economic environment due to the ongoing pandemic, particularly regarding supply chain issues and consumer spending behavior [40] - For Q2, total revenues are expected to range from $315 million to $345 million, with licensing revenues anticipated to increase primarily from higher broadcast and PC revenues [41] - The full-year revenue guidance remains at $1.34 billion to $1.4 billion, reflecting a year-over-year growth of about 5% to 9% [46] Other Important Information - The company announced a cash dividend of $0.25 per share, payable on February 23, 2022 [39] - The total gross margin for Q1 was 90.7% on a GAAP basis and 91.3% on a non-GAAP basis [34] - Operating expenses for Q1 on a GAAP basis were $228.3 million, an increase from $189.8 million in the prior year [34] Q&A Session Summary Question: Visibility into back half recovery and revenue shape for the year - Management indicated that while there are uncertainties, strength in Dolby Vision, Atmos, and imaging patents provides confidence in the latter half of the year [52][53] Question: Details on Samsung's adoption of Dolby Atmos - Management expressed excitement about the progression of the relationship with Samsung, highlighting the importance of bringing more content to their devices [54] Question: Progress on Dolby.io and customer examples - Management shared that the programmable spatial audio feature has generated significant interest, with developers creating virtual concert experiences and other interactive applications [56][57] Question: Interest from other auto OEMs for Dolby Atmos - Management confirmed strong engagement across the automotive industry, particularly with Mercedes and Neo, showcasing the impact of Dolby Atmos in vehicles [66] Question: Future acquisition plans and stock buyback acceleration - Management expressed excitement about the Millicast acquisition and indicated that there will be opportunities for further acquisitions in the Dolby.io space [68] - The company plans to increase stock buybacks in the coming quarters due to the newly authorized buyback capacity [70]
Dolby Laboratories(DLB) - 2022 Q1 - Quarterly Report
2022-02-03 16:00
Revenue Generation and Licensing - Dolby Laboratories generates the majority of its revenue from licensing audio technologies, with over 500 active licensing arrangements as of December 31, 2021[171]. - The company holds approximately 16,200 issued patents related to its technologies, which significantly contribute to its licensing revenue[171]. - The revenue composition for the fiscal year ended December 31, 2021, shows that 37% came from broadcast, 23% from mobile, 17% from consumer electronics, 10% from PC, and 13% from other sources[172]. - Dolby's licensing revenue is primarily driven by the adoption of foundational audio technologies, with a focus on DD+, Dolby Atmos, and Dolby Vision[192]. - Dolby's licensing models include a two-tier model and an integrated licensing model, allowing for flexibility in how technologies are licensed to OEMs and software vendors[173][177]. - Licensing revenue for the quarter ended December 31, 2021, was $332.3 million, a decrease of 11% from $373.0 million for the quarter ended December 25, 2020[234]. - The Broadcast market accounted for $121.6 million in licensing revenue, while Mobile and CE markets contributed $74.9 million and $57.6 million, respectively[234]. Impact of COVID-19 - Dolby's cinema market has been adversely affected by COVID-19, leading to a significant reduction in box office receipts and lower demand for cinema products and services[188]. - The COVID-19 pandemic has caused supply chain disruptions and economic uncertainty, negatively impacting consumer demand for products incorporating Dolby's technologies[187]. - Dolby expects continued impact from COVID-19 on business operations, influenced by factors such as vaccine distribution and government actions[190]. - The company continues to monitor the impact of COVID-19 on demand and supply chain constraints affecting cinema products and services[225]. Technology and Product Development - The company has launched its developer platform, Dolby.io, to expand its addressable market and enable developers to create high-quality, interactive applications[170]. - Dolby's key technologies include Dolby Atmos, which provides an immersive audio experience, and Dolby Vision, which enhances image quality through high dynamic range[172]. - The company aims to significantly expand the types of content that can be enhanced through its technologies and capabilities over time[181]. - The company introduced the Spatial Audio feature in Q1 2022, enhancing the Dolby.io platform for developers[227]. - Dolby.io is still in its early stages, and its future revenue contribution remains uncertain, dependent on developer engagement and service monetization[228]. Market Presence and Partnerships - Major streaming partners like Netflix and Disney+ continue to support Dolby formats, enhancing content availability and driving adoption[196]. - Dolby's technologies are increasingly integrated into mobile devices, with new flagship smartphones from Xiaomi and Motorola supporting Dolby Vision and Atmos[205]. - Dolby's presence in the PC market is bolstered by partnerships with manufacturers like Dell and Lenovo, with new models featuring Dolby technologies[210]. - The automotive sector is expected to generate future revenue from Dolby Atmos music playback, with NIO's ET5 model supporting Dolby Atmos[215]. - The company partners with exhibitors to deliver Dolby Cinema offerings, receiving revenue through a share of box office receipts recognized as licensing revenue[180]. Financial Performance and Expenses - Gross margin for licensing decreased to $317.3 million, representing a gross margin percentage of 96%, down from 97% in the prior year[234]. - Research and Development expenses increased by 8% to $68.8 million, accounting for 20% of total revenue, compared to 16% in the previous year[240]. - Sales and Marketing expenses rose significantly by 29% to $97.2 million, representing 28% of total revenue, up from 19% in the prior year[243]. - General and Administrative expenses increased by 15% to $62.4 million, which is 18% of total revenue, compared to 14% in the previous year[245]. - The company reported a gain on the sale of assets of $13.9 million in Q1 2021, which did not recur in Q1 2022[246]. Cash Flow and Investments - Cash and cash equivalents as of December 31, 2021, were $1,056.7 million, down from $1,225.4 million as of September 24, 2021[260]. - Total working capital decreased to $1,411.9 million as of December 31, 2021, from $1,444.8 million as of September 24, 2021[260]. - Net cash used in investing activities increased by $124.6 million to $(126.1) million in Q1 2022 compared to $(1.5) million in Q1 2021[269]. - Net cash used in financing activities rose by $26.5 million to $(72.8) million in Q1 2022 from $(46.3) million in Q1 2021[270]. - The company has returned approximately $2.1 billion to stockholders through stock repurchases since the program's initiation in fiscal 2010[264]. - The investment portfolio had a weighted-average credit quality of AA and a weighted-average maturity of approximately ten months as of December 31, 2021[276]. Risk Management and Legal Matters - The company uses forward currency contracts to hedge against foreign currency exchange rate exposure, which helps mitigate the impact of currency volatility on operating expenses[279]. - The total notional amounts of outstanding foreign currency forward contracts were $85.2 million as of December 31, 2021, compared to $51.0 million as of September 24, 2021[282]. - A 10% increase in the value of the U.S. dollar would decrease the fair value of financial instruments by $4.3 million, while a 10% decrease would increase it by the same amount[283]. - The company is involved in various legal proceedings, but resolution of these matters is not expected to materially impact operating results or financial condition[291]. Internal Controls and Taxation - The company maintains disclosure controls and procedures to ensure timely and accurate reporting of required information[286]. - There were no changes in internal control over financial reporting that materially affected the company during the fiscal quarter ending December 31, 2021[288]. - The effective tax rate improved to 12.5% in Q1 2022 from 14.5% in Q1 2021, influenced by lower income in higher tax jurisdictions[253].
Dolby Laboratories(DLB) - 2021 Q4 - Earnings Call Transcript
2021-11-17 03:22
Financial Data and Key Metrics Changes - Q4 EPS exceeded the midpoint of guidance while revenue was at the low end of the guidance range [7] - Full year 2021 revenue was $1.28 billion, a 10% increase from $1.16 billion in 2020, with licensing revenue at $1.21 billion and products and services revenue at $67 million [30] - Q4 revenue was $285 million, including a favorable true-up of about $3 million for Q3 shipments [29] - Operating income for Q4 was $40.4 million (14.2% of revenue) compared to $30.1 million (11.1% of revenue) in Q4 of the previous year [40] - Net income for Q4 was $44.2 million ($0.42 per diluted share), up from $26.8 million ($0.26 per diluted share) in the prior year [42] Business Line Data and Key Metrics Changes - Foundational audio technologies accounted for roughly three-quarters of licensing business in FY 2021, growing about 11% year-over-year [11] - Licensing revenue from Dolby Atmos, Dolby Vision, and imaging patent technologies grew nearly 20% in FY 2021, with expectations of over 35% growth in FY 2022 [13] - Mobile revenue increased by 15% in FY 2021, while consumer electronics licensing grew by 19% [33][34] - Other markets, including gaming and Dolby Cinema, saw a 21% increase in FY 2021, with expectations of over 25% growth in FY 2022 [37] Market Data and Key Metrics Changes - Broadcast represented about 39% of total licensing in FY 2021, with growth driven by higher adoption of Dolby technologies [31] - Mobile represented approximately 22% of total licensing, with anticipated mid to high single-digit growth in FY 2022 [33] - Consumer electronics licensing is expected to remain relatively flat year-over-year in FY 2022 [35] - PC licensing revenues were up 7% in FY 2021, with low to mid single-digit growth expected in FY 2022 [36] Company Strategy and Development Direction - The company aims to expand its addressable market through initiatives like Dolby.io, focusing on virtual live performances, online events, and gaming [22] - Continued momentum in Dolby Atmos and Dolby Vision is seen as a key driver for future growth [14] - The company is focused on increasing adoption across various content and devices while investing in growth areas [26] Management's Comments on Operating Environment and Future Outlook - Management noted a dynamic environment with uncertainties around global supply constraints and consumer spending impacting forecasts [12] - For FY 2022, the company anticipates revenue growth in the mid to high single digits, driven by Dolby Atmos and Dolby Vision [9] - Operating margins are expected to remain higher than pre-pandemic levels while investing in growth initiatives [25] Other Important Information - The company ended Q4 with approximately $1.3 billion in cash and investments, with a cash dividend of $0.25 per share announced [43] - The company plans to continue share buybacks, with $291 million of stock repurchase authorization available [43][82] Q&A Session Summary Question: Inquiry on FY 2022 revenue guidance for foundational audio revenues - Management indicated that the decrease in low single digits is influenced by unit shipment estimates and timing of contracts [51][53] Question: Comments on Dolby.io adoption and features - Management noted that improvements in API features and self-service activity are expected to drive further adoption [55][58] Question: Discussion on the metaverse and its implications - Management sees opportunities in the metaverse as it relates to audiovisual experiences, particularly through Dolby.io [60] Question: Clarification on a contract that slipped into the new fiscal year - Management explained that revenue from certain contracts can shift in timing, impacting quarterly forecasts [64][65] Question: Expectations for Dolby.io success metrics in FY 2022 - Management suggested focusing on developer engagement and experiences within targeted verticals as indicators of success [66] Question: Insights on operating expense guidance - Management highlighted factors such as a 53-week fiscal year and returning expenses from the pandemic as drivers for increased operating expenses [84][85] Question: Market share for Dolby Vision in the 4K market - Management estimated Dolby Vision's market share in 4K TVs at about 20% to 25%, up from 10% in 2019 [70] Question: State of discussions for new cinema screen signings - Management expects growth in Dolby Cinema revenues as theaters reopen, although new openings may be lower than pre-pandemic years [72]