Dolby Laboratories(US:DLB)2021-11-17 03:22Financial 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]