Dolby Laboratories(DLB) - 2025 Q3 - Quarterly Results

Company Overview & Q3 Highlights Dolby Laboratories achieved robust Q3 FY2025 results, driven by strong engagement and expanding adoption of Dolby Atmos and Dolby Vision across various content and device categories Q3 Fiscal 2025 Performance Summary Dolby Laboratories achieved robust performance in Q3 FY2025, with year-over-year growth in total revenue and net income, driven by the expanding adoption of Dolby Atmos and Dolby Vision - CEO Kevin Yeaman stated the company achieved robust Q3 performance, with strong engagement from creators, distributors, and device manufacturers, and continued growth in Dolby Atmos and Dolby Vision experiences across music, sports, podcasts, user-generated content, film, and TV on mobile, TV, PC, automotive, and soundbars[3] Q3 Fiscal 2025 Performance Summary (in millions) | Metric | Q3 FY25 | Q3 FY24 | YoY Change | | :-------------------------------- | :---------------: | :---------------: | :------- | | Total Revenue | $316 million | $289 million | +9.34% | | GAAP Net Income | $46 million | $38 million | +21.05% | | GAAP Diluted EPS | $0.48 | $0.40 | +20.00% | | Non-GAAP Net Income | $76 million | $69 million | +10.14% | | Non-GAAP Diluted EPS | $0.78 | $0.71 | +9.86% | - The company repurchased approximately 526,000 shares of common stock for about $40 million, with approximately $312 million remaining under the stock repurchase authorization at quarter-end[7] Recent Business Highlights Dolby technology continues to expand its application across sports broadcasting, automotive, mobile devices, consumer electronics, and streaming platforms through collaborations with global brands - Dolby technology is widely adopted in sports broadcasting, including the FIFA Club World Cup, Stanley Cup Final, French Open, and Indian Premier League playoffs and finals[7] - In the automotive sector, Audi announced Dolby Atmos support for its Q7, Q8, A8, and E Tron GT models, while India's Tata (Harrier EV) and Mahindra (Thar ROXX AX7L SUV) also launched Dolby Atmos-enabled vehicles[7] - Motorola launched its first smartphone with Dolby Vision Capture, and Xiaomi 15S Pro and Xiaomi Civi 5 Pro feature Dolby Vision and Dolby Atmos; Samsung, Haier, TCL, LG, Marshall, and JBL introduced new TVs and soundbars with Dolby technology, and the company partnered with Lenovo and Google for the first Dolby Atmos-enabled Chromebook[7] - HBO Max streams most of its sports content in Dolby Atmos and Dolby Vision, planning to expand services to over a dozen countries this summer, reaching nearly 100 markets[7] Dividend Declaration The company declared a cash dividend of $0.33 per share Dividend Details | Metric | Details | | :--- | :--- | | Dividend Amount | $0.33 per share | | Payment Date | August 20, 2025 | | Record Date | Shareholders of record at the close of business on August 12, 2025 | Financial Statements This section presents the interim condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows Interim Condensed Consolidated Statements of Operations In Q3 FY2025, total revenue increased by 9.25% year-over-year to $315.5 million, driven by licensing revenue growth, with significant increases in gross profit, operating income, net income, and diluted EPS Interim Condensed Consolidated Statements of Operations (in thousands) | Metric (in thousands) | Q3 FY25 | Q3 FY24 | YoY Change | YTD FY25 | YTD FY24 | YoY Change | | :-------------------------------- | :---------------: | :---------------: | :------- | :------------: | :------------: | :------- | | Licensing Revenue | $289,905 | $267,082 | +8.54% | $966,390 | $899,089 | +7.49% | | Product and Service Revenue | $25,641 | $21,736 | +17.97% | $75,716 | $69,826 | +8.43% | | Total Revenue | $315,546 | $288,818 | +9.25% | $1,042,106 | $968,915 | +7.55% | | Gross Profit | $271,544 | $253,155 | +7.26% | $921,493 | $862,415 | +6.85% | | Operating Income | $47,639 | $36,783 | +29.51% | $235,282 | $211,972 | +10.99% | | Net Income Attributable to Dolby Laboratories, Inc. | $46,071 | $38,444 | +19.84% | $205,686 | $203,255 | +1.20% | | Diluted EPS | $0.48 | $0.40 | +20.00% | $2.11 | $2.09 | +0.96% | Interim Condensed Consolidated Balance Sheets As of June 27, 2025, total assets increased to $3.196 billion from September 27, 2024, with a significant rise in cash and cash equivalents, a decrease in total liabilities, and steady growth in stockholders' equity Interim Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 27, 2025 | September 27, 2024 | Change | | :------------------------------------------------ | :-------------: | :-------------: | :---------- | | Cash and Cash Equivalents | $698,566 | $482,047 | +$216,519 | | Total Current Assets | $1,338,119 | $1,194,417 | +$143,702 | | Total Assets | $3,196,001 | $3,109,928 | +$86,073 | | Total Current Liabilities | $388,785 | $417,836 | -$29,051 | | Total Liabilities | $581,750 | $623,035 | -$41,285 | | Stockholders' Equity Attributable to Dolby Laboratories, Inc. | $2,604,733 | $2,477,162 | +$127,571 | | Total Stockholders' Equity | $2,614,251 | $2,486,893 | +$127,358 | Interim Condensed Consolidated Statements of Cash Flows Year-to-date FY2025 saw a substantial increase in net cash from operating activities, a shift from net outflow to net inflow in investing activities, and reduced net cash outflow from financing activities, leading to a significant increase in total cash, cash equivalents, and restricted cash Interim Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | YTD FY25 | YTD FY24 | Change | | :------------------------------------------------ | :-----------: | :-----------: | :---------- | | Net Cash from Operating Activities | $349,367 | $211,082 | +$138,285 | | Net Cash from Investing Activities | $11,326 | -$24,984 | +$36,310 | | Net Cash from Financing Activities | -$183,183 | -$227,696 | +$44,513 | | Net Increase/(Decrease) in Cash, Cash Equivalents, and Restricted Cash | $178,812 | -$39,342 | +$218,154 | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $756,564 | $778,624 | -$22,060 | Licensing Revenue Breakdown This section details the company's licensing revenue segmented by market, highlighting contributions from various sectors Licensing Revenue by Market In Q3 FY2025, licensing revenue from broadcast and PC markets grew significantly, while mobile and consumer electronics (CE) saw slight declines, with broadcast remaining the largest revenue source at 38% Licensing Revenue by Market - Q3 (in thousands) | Market | Q3 FY25 (in thousands) | Share | Q3 FY24 (in thousands) | Share | YoY Change (in thousands) | YoY Change (%) | | :--------------- | :--------------------: | :---: | :--------------------: | :---: | :-----------------------: | :------------: | | Broadcast | $111,286 | 38% | $95,430 | 36% | +$15,856 | +16.62% | | Mobile | $56,295 | 19% | $63,096 | 24% | -$6,801 | -10.78% | | Consumer Electronics | $28,071 | 10% | $28,352 | 11% | -$281 | -0.99% | | PC | $33,589 | 12% | $27,606 | 10% | +$5,983 | +21.67% | | Other | $60,664 | 21% | $52,598 | 19% | +$8,066 | +15.34% | | Total Licensing Revenue | $289,905 | 100% | $267,082 | 100% | +$22,823 | +8.54% | Licensing Revenue by Market - YTD (in thousands) | Market | YTD FY25 (in thousands) | Share | YTD FY24 (in thousands) | Share | YoY Change (in thousands) | YoY Change (%) | | :--------------- | :--------------------: | :---: | :--------------------: | :---: | :-----------------------: | :------------: | | Broadcast | $321,297 | 33% | $313,326 | 35% | +$7,971 | +2.54% | | Mobile | $217,942 | 23% | $187,073 | 21% | +$30,869 | +16.49% | | Consumer Electronics | $115,668 | 12% | $123,793 | 14% | -$8,125 | -6.56% | | PC | $123,247 | 13% | $107,223 | 12% | +$16,024 | +14.94% | | Other | $188,236 | 19% | $167,674 | 18% | +$20,562 | +12.26% | | Total Licensing Revenue | $966,390 | 100% | $899,089 | 100% | +$67,201 | +7.47% | Financial Outlook & Non-GAAP Measures This section provides the company's financial guidance for Q4 and full fiscal year 2025, along with explanations and reconciliations of non-GAAP financial measures Q4 Fiscal 2025 Financial Outlook The company projects Q4 FY2025 total revenue between $288 million and $318 million, with licensing revenue ranging from $263 million to $293 million, and GAAP and non-GAAP gross margins expected at approximately 86% and 88%, respectively Q4 Fiscal 2025 Outlook | Metric | Q4 FY25 Outlook | | :-------------------------------- | :--------------------: | | Total Revenue | $288 - $318 million | | Licensing Revenue | $263 - $293 million | | GAAP Gross Margin | Approximately 86% | | Non-GAAP Gross Margin | Approximately 88% | | GAAP Operating Expenses | $225 - $235 million | | Non-GAAP Operating Expenses | $190 - $200 million | | GAAP Effective Tax Rate | Approximately 24.5% | | Non-GAAP Effective Tax Rate | Approximately 21.0% | | GAAP Diluted EPS | $0.28 - $0.43 | | Non-GAAP Diluted EPS | $0.61 - $0.76 | Full Year Fiscal 2025 Financial Outlook The company anticipates full-year FY2025 total revenue between $1.33 billion and $1.36 billion, with licensing revenue from $1.23 billion to $1.26 billion, and GAAP and non-GAAP gross margins projected at approximately 88% and 90%, respectively Full Year Fiscal 2025 Outlook | Metric | Full Year FY25 Outlook | | :-------------------------------- | :--------------------: | | Total Revenue | $1.33 - $1.36 billion | | Licensing Revenue | $1.23 - $1.26 billion | | GAAP Gross Margin | Approximately 88% | | Non-GAAP Gross Margin | Approximately 90% | | GAAP Operating Expenses | $910 - $920 million | | Non-GAAP Operating Expenses | $765 - $775 million | | GAAP Operating Margin | Approximately 20% | | Non-GAAP Operating Margin | Approximately 33% | | GAAP Effective Tax Rate | Approximately 21.5% | | Non-GAAP Effective Tax Rate | Approximately 20.0% | | GAAP Diluted EPS | $2.40 - $2.55 | | Non-GAAP Diluted EPS | $3.88 - $4.03 | Non-GAAP Financial Information & Reconciliation The company provides non-GAAP financial metrics to supplement GAAP statements, aiming to offer a clearer view of ongoing operational performance and facilitate comparisons with peer companies Explanation of Non-GAAP Adjustments Non-GAAP adjustments primarily exclude stock-based compensation, amortization of acquisition-related intangibles, restructuring charges, and their related income tax effects to better reflect core business performance - The company uses non-GAAP financial measures to evaluate operating performance, believing these metrics help investors compare performance across periods and with peer companies[11] - Non-GAAP adjustments primarily include stock-based compensation expense (due to subjective valuation assumptions), amortization of acquisition-related intangible assets (considered to arise from pre-acquisition activities and not directly related to current operations), restructuring charges (not representative of normal operating activities), and the income tax effects of these adjustments[13][14][15][16] GAAP to Non-GAAP Reconciliation (Q3 Actuals) This section provides a reconciliation of GAAP to non-GAAP net income and diluted EPS for the third quarter, detailing specific adjustments Net Income (in thousands) | Net Income (in thousands) | June 27, 2025 | June 28, 2024 | | :------------------------------------------------ | :-------------: | :-------------: | | GAAP Net Income Attributable to Dolby Laboratories, Inc. | $46,071 | $38,444 | | Stock-based compensation expense | $30,728 | $29,337 | | Amortization of acquisition-related intangible assets | $10,016 | $3,101 | | Restructuring charges/(credit) | -$547 | $4,078 | | Income tax adjustments | -$10,606 | -$6,210 | | Non-GAAP Net Income Attributable to Dolby Laboratories, Inc. | $75,662 | $68,750 | Diluted EPS | Diluted EPS | June 27, 2025 | June 28, 2024 | | :------------------------------------------------ | :-------------: | :-------------: | | GAAP Diluted EPS | $0.48 | $0.40 | | Stock-based compensation expense | $0.32 | $0.30 | | Amortization of acquisition-related intangible assets | $0.10 | $0.03 | | Restructuring charges/(credit) | -$0.01 | $0.04 | | Income tax adjustments | -$0.11 | -$0.06 | | Non-GAAP Diluted EPS | $0.78 | $0.71 | GAAP to Non-GAAP Reconciliation (Outlook) This section provides a reconciliation of GAAP to non-GAAP financial outlooks for gross margin, operating expenses, operating margin, effective tax rate, and diluted EPS for Q4 and full fiscal year 2025 Gross Margin | Gross Margin | Q4 FY25 | Full Year FY25 | | :-------------------------------- | :---------------: | :------------: | | GAAP Gross Margin | 86.0% | 88.0% | | Stock-based compensation expense | 0.1% | 0.1% | | Amortization of acquisition-related intangible assets | 1.9% | 1.9% | | Non-GAAP Gross Margin | 88.0% | 90.0% | Operating Expenses (in millions) | Operating Expenses (in millions) | Q4 FY25 | Full Year FY25 | | :-------------------------------- | :---------------: | :------------: | | GAAP Operating Expenses (Low-High) | $225 - $235 | $910 - $920 | | Stock-based compensation expense | -$32 | -$127 | | Amortization of acquisition-related intangible assets | -$3 | -$9 | | Restructuring charges | — | -$9 | | Non-GAAP Operating Expenses (Low-High) | $190 - $200 | $765 - $775 | Operating Margin | Operating Margin | Full Year FY25 | | :-------------------------------- | :------------: | | GAAP Operating Margin | 20% +/- | | Stock-based compensation expense | 9% | | Amortization of acquisition-related intangible assets | 3% | | Restructuring charges | 1% | | Non-GAAP Operating Margin | 33% +/- | Effective Tax Rate | Effective Tax Rate | Q4 FY25 | Full Year FY25 | | :-------------------------------- | :---------------: | :------------: | | GAAP Effective Tax Rate | 24.5% | 21.5% | | Stock-based compensation expense | (3%) - 1% | (2%) - 0% | | Amortization of acquisition-related intangible assets | (1%) - 0% | (1%) - 0% | | Non-GAAP Effective Tax Rate | 21.0% | 20.0% | Diluted EPS | Diluted EPS | Q4 FY25 (Low-High) | Full Year FY25 (Low-High) | | :-------------------------------- | :----------------------: | :--------------------: | | GAAP Diluted EPS | $0.28 - $0.43 | $2.40 - $2.55 | | Stock-based compensation expense | $0.31 | $1.32 | | Amortization of acquisition-related intangible assets | $0.11 | $0.42 | | Restructuring charges | — | $0.09 | | Income tax adjustments | -$0.09 | -$0.35 | | Non-GAAP Diluted EPS | $0.61 - $0.76 | $3.88 - $4.03 | Additional Information This section includes forward-looking statements, company information, and details for investor and media contacts Forward-Looking Statements This press release contains forward-looking statements regarding future financial performance and business objectives, which are subject to significant risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are based on management's current expectations, but actual results may differ materially due to economic conditions, geopolitical issues, supply chain disruptions, consumer demand, delayed new product launches, delayed licensing fee reporting or payments, extended sales cycles, film market impacts, and macroeconomic conditions[6][18] - Other significant risk factors include the level of Dolby technology integration in products, loss of key customers or partners, pricing pressure, evolving content distribution and consumption trends, international business risks (including trade restrictions), intellectual property maintenance, changes in tax regulations, revenue recognition timing, maintaining industry relationships, ability to develop innovative products, competitive risks, and risks associated with acquiring and integrating businesses or technologies[18] About Dolby Laboratories Dolby Laboratories (NYSE: DLB) is a global leader in immersive entertainment, delivering exceptional audio-visual experiences to billions worldwide through innovative technologies like Dolby Atmos, Dolby Vision, Dolby Cinema, and Dolby OptiView - Dolby Laboratories is a global leader in immersive entertainment, dedicated to transforming audio-visual science into exceptional experiences across film, TV, music, sports, and gaming[19] - The company collaborates with artists, storytellers, and brands to revolutionize entertainment and digital experiences through groundbreaking innovations such as Dolby Atmos, Dolby Vision, Dolby Cinema, and Dolby OptiView[19] - Dolby, Dolby Atmos, Dolby Vision, Dolby Cinema, Dolby OptiView, and the double-D symbol are registered and unregistered trademarks of Dolby Laboratories in the United States and/or other countries[20] Conference Call Details The company will host a conference call on July 31, 2025, to discuss Q3 FY2025 financial results, with replay and website archive options available Conference Call Information | Item | Details | | :--- | :--- | | Date | Thursday, July 31, 2025 | | Time | 2:00 PM PT (5:00 PM ET) | | Webcast | http://investor.dolby.com | | Dial-in Number | 1-888-210-2212 (International: +1-646-960-0390) | | Conference ID | 5587811 | | Replay Availability | July 31, 2025, 5:00 PM PT to August 7, 2025, 8:59 PM PT | | Replay Dial-in Number | 1-800-770-2030 (International: +1-647-362-9199) | | Replay Conference ID | 5587811 | Investor and Media Contacts Contact information for investor relations and media inquiries is provided Contacts | Category | Name/Email | Contact | | :--------------- | :----------------- | :------------------------------------ | | Investor Contact | Peter Goldmacher | 415-254-7415, peter.goldmacher@dolby.com | | Media Contact | media@dolby.com | |