Revenue Performance - Total revenue for the fiscal quarter ended March 28, 2025, was $369,561 thousand, a slight increase from $364,523 thousand for the same period in 2024, representing a year-over-year growth of approximately 1%[162] - Licensing revenue accounted for 94% of total revenue in the fiscal quarter ended March 28, 2025, amounting to $346,006 thousand, compared to $338,240 thousand in the prior year[162] - In Q2 of fiscal 2025, 94% of Dolby's revenue was derived from licensing technology, brand, and patents, primarily to device manufacturers[202] - Licensing revenue for Q2 2025 reached $346,006 million, a 2% increase from $338,240 million in Q2 2024[243] Licensing and Patents - The company generated over 90% of its revenue from licensing agreements with approximately 1,000 electronic device manufacturers, enhancing their audio and visual capabilities[164] - As of March 28, 2025, the company held approximately 26,700 issued patents related to licensed technologies, which significantly contribute to licensing revenue[164] - Dolby's patent licensing revenue primarily comes from essential standardized audio and video technologies, which are embodied in billions of products sold annually[178] - The majority of Dolby's patent licensing revenue comes from patent pools, with a minority generated from bilateral licensing agreements[192] - Revenue from the patent licensing model is driven by royalty share within patent pools, licensee penetration, and device shipments[209] Technology and Market Trends - Dolby Atmos and Dolby Vision are key branded technologies driving revenue, enabling immersive audio and video experiences, with strong momentum in various content categories including user-generated content and live sports[170] - The company aims to expand the reach of its technologies to new content, media, devices, and audiences, enhancing overall market presence[160] - Dolby's technologies are broadly adopted in mobile ecosystems, with Dolby Atmos and Dolby Vision included in Apple devices and supported on all iPhones since the iPhone 12[219] - Over 8,300 Dolby Atmos screens are installed or committed globally, with more than 3,800 theatrical titles announced or released as of the end of Q2 fiscal 2025[233] - The breadth of mobile devices supporting Dolby technologies continues to increase, with OPPO launching multiple models that support Dolby Vision capture and playback[219] Financial Performance - Gross margin for licensing increased to $326,321 million, reflecting a 1% growth compared to $322,922 million in the previous year[243] - Mobile licensing revenue grew by 29% to $100,123 million, up from $88,690 million in Q2 2024[243] - Products and services revenue decreased by 10% to $23,555 million in Q2 2025, down from $26,283 million in Q2 2024[248] - Gross margin for products and services surged by 162% to $7,403 million, compared to $2,824 million in Q2 2024[248] Expenses and Restructuring - Research and development expenses slightly decreased by 1% to $61,707 million in Q2 2025, from $62,493 million in Q2 2024[252] - Sales and marketing expenses remained stable at $89,629 million for Q2 2025, a negligible change from $90,038 million in Q2 2024[256] - General and administrative expenses increased by 6% to $70,415 million in Q2 2025, compared to $66,742 million in Q2 2024[261] - Restructuring charges for Q2 2025 amounted to $4,210 million, a significant increase from $(2,495) million in Q2 2024[265] - The company anticipates gross pre-tax operating income savings of approximately $20 million in fiscal 2025 from restructuring actions[265] Cash Flow and Investments - Cash and cash equivalents as of March 28, 2025, were $626.6 million, up from $482.0 million as of September 27, 2024[280] - Net cash provided by operating activities increased by $91.9 million year-to-date, totaling $281.7 million for fiscal 2025[287] - The company acquired 100% of GE Intellectual Property Licensing and GE Technology Development, impacting cash and cash equivalents significantly[282] - The stock repurchase program has completed approximately $2.9 billion in repurchases since its initiation in fiscal 2010[285] - The company paid a quarterly dividend of $0.33 per share in Q2 2025, continuing its dividend program initiated in fiscal 2015[285] Market Challenges - Macroeconomic conditions, including inflation and trade barriers, pose risks to Dolby's revenue and may impact technology adoption[203][204] - Key challenges include the need for compelling reasons for consumers to demand Dolby technologies and the impact of changing trends in content distribution[218] - The automotive industry's cyclical nature and long development cycles may impact revenue growth from automotive-related technologies[228] Foreign Currency and Sensitivity Analysis - The total notional amounts of outstanding foreign currency contracts increased from $111.7 million to $138.6 million from September 27, 2024, to March 28, 2025[301] - A sensitivity analysis on foreign currency forward contracts was conducted as of March 28, 2025, focusing on a 10% shift in exchange rates relative to the U.S. dollar[302] - A 10% increase in the value of the U.S. dollar would decrease the fair value of financial instruments by $0.6 million[302] - Conversely, a 10% decrease in the value of the U.S. dollar would increase the fair value of these financial instruments by $0.6 million[302]

Financial Performance - Total revenue for Q2 2025 was $370 million, a 1.4% increase from $365 million in Q2 2024[6] - GAAP net income was $92 million or $0.94 per diluted share, down from $98 million or $1.01 per diluted share in Q2 2024; non-GAAP net income was $131 million or $1.34 per diluted share, up from $123 million or $1.27 per diluted share[6] - Total revenue for the fiscal quarter ended March 28, 2025, was $369,561 thousand, a slight increase from $364,523 thousand in the same quarter of 2024, representing a growth of 1%[20] - Licensing revenue reached $346,006 thousand for the quarter, up from $338,240 thousand year-over-year, with a notable contribution from the mobile market at 29%[26] - Net income attributable to Dolby Laboratories, Inc. for the fiscal quarter was $91,793 thousand, down from $97,830 thousand in the prior year, a decline of 6%[20] - Basic net income per share for the quarter was $0.95, compared to $1.02 in the same quarter of 2024, representing a decrease of 7%[20] Revenue Projections - Dolby expects Q3 2025 total revenue to range from $290 million to $320 million, with licensing revenue estimated between $265 million and $295 million[10] - For the full year of fiscal 2025, total revenue is projected to be between $1.31 billion and $1.38 billion, with licensing revenue estimated at $1.21 billion to $1.28 billion[10] Expenses and Margins - Gross margins are anticipated to be approximately 86% on a GAAP basis and 88% on a non-GAAP basis for Q3 2025[10] - GAAP operating expenses for Q3 2025 range from $225 million to $235 million, with non-GAAP operating expenses ranging from $190 million to $200 million[29] - Total GAAP operating expenses for fiscal 2025 are estimated to be between $905 million and $920 million, while non-GAAP operating expenses are estimated to be between $760 million and $775 million[29] Cash and Assets - Cash and cash equivalents increased to $626,551 thousand as of March 28, 2025, from $482,047 thousand at the end of September 2024, a growth of 30%[22] - Total assets rose to $3,229,036 thousand as of March 28, 2025, compared to $3,109,928 thousand in the previous period, marking an increase of 4%[22] Shareholder Returns - Dolby repurchased approximately 429,000 shares for about $35 million, with $352 million remaining in stock repurchase authorization[6] - The company announced a cash dividend of $0.33 per share, payable on May 21, 2025[5] Economic Outlook - The company acknowledges economic uncertainties affecting its financial outlook, including supply chain constraints and geopolitical instability[7] Product Development - New product launches include support for Dolby Atmos and Dolby Vision in various devices, including the Sky Glass Gen 2 TV and OPPO's Find X8 series[6] - Dolby's partnership with AMC Entertainment will expand to add 40 Dolby Cinema screens by 2027[6] Tax and Earnings Projections - The effective tax rate for Q3 2025 is 23.0% under GAAP and 20.5% under non-GAAP[29] - Full year fiscal 2025 GAAP diluted earnings per share is projected between $2.31 and $2.46, with non-GAAP diluted earnings per share projected between $3.88 and $4.03[29] - GAAP diluted earnings per share for Q3 2025 is projected between $0.26 and $0.41, while non-GAAP diluted earnings per share is projected between $0.62 and $0.77[29] - The effective tax rate for fiscal 2025 is projected to be 22.5% under GAAP and 20.0% under non-GAAP[29] Operating Income - Operating income for the fiscal quarter was $107,763 thousand, slightly down from $108,968 thousand in the same quarter last year, indicating a decrease of 1%[20] - Research and development expenses for the fiscal quarter were $61,707 thousand, slightly down from $62,493 thousand in the same quarter last year[20]

Core Insights - Dolby Laboratories showcased its next-generation in-cabin entertainment experience featuring Dolby Vision HDR imaging and Dolby Atmos immersive audio at the 2025 Shanghai Auto Show [1] - Over 25 automotive brands have adopted Dolby experiences, doubling the number from 12 months ago [8] Group 1: Industry Trends - The automotive industry is evolving from a mere transportation tool to a diversified mobile living space, with increasing consumer demand for high-quality in-cabin entertainment experiences [3] - Dolby is strategically positioning itself in the in-car entertainment market by collaborating with automotive manufacturers and streaming content platforms to enhance the in-car entertainment experience [3] Group 2: Consumer Insights - A survey by Counterpoint revealed that 97% of Chinese car owners are aware of Dolby's innovative technology, with 80% recognizing its significant enhancement of entertainment content quality [7] - Among consumers planning to purchase a vehicle in the next six months, 90% expressed interest in models equipped with Dolby Vision and Dolby Atmos, with 20% considering these features as crucial decision factors and willing to pay a premium [7] Group 3: Product Launches - Several automotive brands introduced new models supporting Dolby experiences at the auto show, including Li Auto's MEGA Ultra and MEGA Home, which are the first to offer both Dolby Vision and Dolby Atmos [8][10] - Zeekr, WEY, and other brands also announced models featuring Dolby Atmos, highlighting the growing trend of integrating Dolby technology into various vehicle types [10] Group 4: Future Collaborations - Dolby aims to deepen partnerships with automotive manufacturers and streaming content platforms to provide car owners with a diverse and high-quality entertainment experience comparable to home and mobile settings [10]

Industry Overview - The Zacks Audio Video Production industry focuses on the premium segment of branded products for growth, with key players like Sony, Dolby, and GoPro benefiting from investments in advanced technology solutions [1] - The industry includes manufacturers of televisions, speakers, video players, camcorders, gaming consoles, drones, and high-end cameras, enhancing entertainment and communication experiences [2] Trends Impacting the Industry - Technological advancements, such as the shift to digital technology and wireless transmission, are driving growth by catering to high-resolution video demands and improving productivity [3] - There is an increasing demand for premium entertainment, with strong growth expected from record labels, TV producers, and advertisers, supported by a direct-to-consumer model [4] Economic Challenges - Global macroeconomic uncertainties, including trade tensions and inflation, are likely to restrain consumer spending, particularly on discretionary purchases [5] - The industry faces aggressive competition from low-priced imports, particularly from countries like China, Vietnam, and Mexico, leading to price wars and margin contraction [6] Industry Performance and Valuation - The Zacks Audio Video Production industry ranks 3 within the Zacks Consumer Discretionary sector, indicating bright near-term prospects [7][8] - The industry has outperformed the S&P 500, with a growth of 31.2% over the past year compared to the S&P 500's 5.4% [11] - The industry has a trailing 12-month price-to-sales (P/S) ratio of 1.51X, significantly lower than the S&P 500's 5.07X and the sector's 2.05X [14] Company Highlights - **GoPro**: Focused on subscription revenue growth, with a retention rate of 69% and 2.52 million subscribers. The company aims to enhance its subscription service and improve operational efficiencies, projecting a significant reduction in operating expenses [19][20][21] - **Sony Group Corporation**: Expected to grow through its Game & Network Services segment, with a projected revenue growth of 8% and operating income growth of 31% for the current year. The company has raised its fiscal 2024 sales outlook to ¥13,200 billion [24][26][27][28] - **Dolby Laboratories**: Gaining from the adoption of Dolby Atmos and Dolby Vision, with strategic acquisitions like GE Licensing expected to enhance its revenue and operating margins. The Zacks Consensus Estimate for its fiscal 2025 earnings is $4.06 per share [31][35][36]

Core Viewpoint - Dolby Laboratories, Inc. will announce its financial results for the second quarter of fiscal year 2025 on May 1, 2025, after market close [1] Group 1: Financial Results Announcement - The financial results for Q2 fiscal year 2025 will be released after the close of regular trading on May 1, 2025 [1] - A conference call will be held at 2:00 p.m. PT (5:00 p.m. ET) on the same day to discuss the financial results [1] Group 2: Teleconference Access - Access to the teleconference can be obtained via the investor relations website or by dialing the provided phone numbers [2] - A replay of the call will be available from May 1, 2025, at 5:00 p.m. PT until May 8, 2025, at 8:59 p.m. PT [3] Group 3: Company Overview - Dolby Laboratories is based in San Francisco and operates globally, focusing on enhancing entertainment experiences through technology [4] - The company collaborates with various stakeholders in the entertainment and communications sectors to innovate with products like Dolby Atmos and Dolby Vision [4]

Core Insights - Dolby Laboratories, Inc. (DLB) is expanding its collaboration with AMC Entertainment (AMC) by adding 40 more Dolby Cinema locations across the United States by the end of 2027, resulting in a total of over 200 locations, marking a 25% increase [1] - Dolby Cinema offers an immersive movie experience with Dolby Vision's picture quality and Dolby Atmos' sound, reinforcing both companies' commitment to enhancing the existing network [2][3] - The expansion aligns with AMC's strategy to enhance premium offerings, ensuring audiences receive the best visual experience [3] Industry Trends - The industry is shifting towards premium formats, with audiences increasingly preferring higher-quality viewing experiences [4] - In 2024, Dolby Cinema achieved its strongest box office performance, surpassing revenues from 2023, with 49 out of the top 50 films presented in Dolby Cinema over the past five years [4] - The robust content pipeline, with over 725 theatrical features confirmed in Dolby Vision and Dolby Atmos, is a key driver of Dolby Cinema's success [5] Technological Advancements - Advancements in visual and audio technology are expected to enhance the Dolby Cinema experience as the collaboration between Dolby and AMC continues [6] - The adoption of Dolby Atmos in various sectors, including music production, is driving top-line momentum for DLB, with 93% of Billboard's 2024 Top 100 Artists releasing music in Dolby Atmos [7] - In 2024, nearly 80% of the domestic box office and almost 70% of global box office titles were released in Dolby Atmos and Dolby Vision formats [8] Financial Outlook - For fiscal 2025, DLB expects growth of around 15% from Dolby Atmos and Dolby Vision, along with imaging patents [9] - DLB currently holds a Zacks Rank 2 (Buy), with shares having lost 3.7% in the past year compared to a 15.7% decline in the Zacks Audio Video Production industry [10]

Company Overview - Dolby Laboratories (DLB) is currently ranked 2 (Buy) in the Zacks Rank system, indicating a favorable outlook for the stock [3] - The Zacks Consensus Estimate for DLB's full-year earnings has increased by 1.1% over the past quarter, reflecting improved analyst sentiment [4] Performance Analysis - DLB has returned 2.3% year-to-date, outperforming the Consumer Discretionary sector, which has seen an average return of -5% [4] - In comparison, Fox Corporation (FOX) has returned 10.5% year-to-date and has a Zacks Rank of 1 (Strong Buy) [5] Industry Context - Dolby Laboratories is part of the Audio Video Production industry, which is currently ranked 10 in the Zacks Industry Rank, with an average loss of 5.2% this year [6] - The Broadcast Radio and Television industry, to which Fox Corporation belongs, is ranked 68 and has seen a positive return of +4.8% year-to-date [6]

Core Insights - AMC and Dolby are expanding their partnership by adding 40 new Dolby Cinema locations in the US by the end of 2027, representing a nearly 25% increase in Dolby Cinema auditoriums, bringing the total to over 200 [2][4] - Dolby Cinema offers a premium moviegoing experience with Dolby Vision ultra-vivid picture quality and Dolby Atmos immersive sound, enhancing the overall cinematic experience for audiences [3][4] - The partnership reflects AMC's commitment to innovative technology and premium experiences, which are increasingly defining the modern box office [4][5] Company Overview - Dolby Laboratories is a leader in immersive entertainment experiences, with a strong content pipeline of over 725 theatrical features released or confirmed in Dolby Vision and Dolby Atmos [6][7] - AMC Entertainment is the largest theatrical exhibitor globally, with approximately 900 theatres and 10,000 screens, and has been a pioneer in the exhibition industry through various innovations [8][9]

Group 1 - Dolby Laboratories is part of the Consumer Discretionary sector, which includes 268 companies and is currently ranked 12 in the Zacks Sector Rank [2] - The Zacks Rank system focuses on earnings estimates and revisions, with Dolby Laboratories holding a Zacks Rank of 2 (Buy), indicating a positive earnings outlook [3] - Over the past quarter, the Zacks Consensus Estimate for Dolby's full-year earnings has increased by 1.1%, reflecting improved analyst sentiment [4] Group 2 - Dolby Laboratories has gained approximately 4% year-to-date, outperforming the average return of -4.8% for the Consumer Discretionary sector [4] - In the Audio Video Production industry, which includes 8 stocks, Dolby is ranked 12 and has performed better than the industry's average loss of 2.7% this year [6] - Comparatively, Netflix, another stock in the Consumer Discretionary sector, has a year-to-date return of 3.2% and a Zacks Rank of 1 (Strong Buy) [5][7]

Core Insights - Dolby Laboratories and General Motors announced that Dolby Atmos will be integrated into Cadillac's entire 2026 electric vehicle lineup, including models like ESCALADE IQL, ESCALADE IQ, LYRIQ-V, OPTIQ, and VISTIQ [1][2] - The collaboration aims to enhance in-car entertainment, providing a transformative audio experience that aligns with Cadillac's innovation strategy [4] Company Overview - Dolby Laboratories is a leader in immersive entertainment experiences, focusing on transforming audio and visual technology for various media [6] - General Motors is advancing towards an all-electric future, emphasizing safety, smart technology, and lower emissions across its vehicle lineup [7] Market Trends - There is a growing consumer demand for high-quality, immersive audio experiences, with nearly 90% of music streaming subscribers considering enhanced audio quality essential [4] - The integration of Dolby Atmos comes at a time when U.S. drivers collectively travel over 3 trillion miles annually, highlighting the increasing time spent in vehicles [4]