Dolby's (DLB) Q3 Earnings Top Estimates, Revenues Decline Y/Y

Core Viewpoint - Dolby Laboratories reported a third-quarter fiscal 2024 non-GAAP EPS of 71 cents, up from 55 cents in the prior-year quarter, exceeding the Zacks Consensus Estimate by 20.3% due to lower operating costs and higher operating income [1] Financial Performance - Revenues for the quarter decreased by 3% year over year to $288.8 million, slightly beating the Zacks Consensus Estimate by 0.9% [1] - Licensing revenues were $267 million, down 2% year over year, while Products and Services revenues fell 14% to $21.7 million, attributed to weak box office trends and device sales [3] - Gross profit was $253.1 million compared to $256.8 million in the year-ago quarter, with total operating expenses decreasing to $216.3 million from $240.9 million [5] Segmental Performance - Broadcast Licensing contributed 36% to total licensing revenues, while Mobile Licensing, Consumer Electronics, PC Licensing, and Other Markets accounted for 11%, 10%, 15%, and 19% respectively [4] - Management anticipates continued downward trends across Mobile, Consumer Electronics, and Broadcasting for the full year [4] Cash Flow and Liquidity - For the six months ending June 30, Dolby generated $211.1 million in net cash from operating activities, down from $282.1 million in the prior-year period [6] - As of June 30, 2024, the company had $741.6 million in cash and cash equivalents, with total liabilities of $526.2 million [6] Shareholder Returns - The company announced a cash dividend of 30 cents per share for Class A and Class B common stock, payable on August 27, 2024 [7] - Dolby repurchased nearly 423,000 shares during the quarter, with $72 million remaining in its stock repurchase authorization, and an increase of $350 million to its stock repurchase program was approved [8] Outlook - For the fourth quarter of fiscal 2024, Dolby expects GAAP EPS between 31-46 cents and non-GAAP EPS between 61-76 cents, with revenues projected at $300-$320 million [9] - Full-year revenue estimates have been revised to a range of $1.27-$1.29 billion, down from the previous estimate of $1.3 billion due to lower-than-anticipated shipments and cinema revenues [10] - The company projects GAAP operating margin at 20% and non-GAAP operating margin at nearly 31% [11]