Dolby Laboratories(US:DLB)2022-02-03 23:34Financial 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]