• Q1 Revenue: $357 million, up 13% year-over-year.
• Licensing Revenue: $330 million, up 12% year-over-year.
• Products and Services Revenue: $27 million, up 22% year-over-year.
• Mobile Revenue: Up 74% year-over-year.
• Non-GAAP Earnings Per Share (EPS): $1.14 per diluted share.
• Operating Cash Flow: $107 million.
• Stock Repurchase: $15 million worth of common stock repurchased.
• Dividend: $0.33 per share, up 10% from the previous year.
• Cash and Investments: Approximately $611 million.
• Restructuring Charge: Approximately $5 million.
• Q2 Revenue Guidance: $355 million to $385 million.
• Q2 Licensing Revenue Guidance: $330 million to $360 million.
• Q2 Gross Margin Guidance: Approximately 91% on a non-GAAP basis.
• Q2 Non-GAAP Operating Expenses Guidance: $190 million to $200 million.
• Q2 Non-GAAP EPS Guidance: $1.19 to $1.34 per diluted share.
• Full-Year Revenue Guidance: $1.33 billion to $1.39 billion.
• Full-Year Non-GAAP Earnings Guidance: $3.99 to $4.14 per share.
• Full-Year Licensing Revenue Guidance: $1.22 billion to $1.28 billion.
• Full-Year Non-GAAP Operating Expenses Guidance: $765 million to $775 million.

• Warning! GuruFocus has detected 6 Warning Signs with DLB.

Release Date: January 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Licensing revenue and total revenue came in towards the high end of the guidance range, with non-GAAP earnings exceeding expectations.
• Dolby Atmos and Dolby Vision are expected to grow roughly 15% for the full year, indicating strong market demand.
• The company has announced partnerships with over 20 OEMs in the automotive sector, expanding Dolby Atmos into more car models.
• Dolby Laboratories Inc (NYSE:DLB) reported a 13% increase in Q1 revenue compared to the previous year, driven by strong licensing performance.
• The company has a robust ecosystem with strong engagement from content creators, distributors, and OEM partners, supporting future growth.

Negative Points

• Foundational revenues are expected to be roughly flat for the full year, indicating limited growth in some core areas.
• The timing of recoveries, minimum volume commitments, and true-ups can drive volatility between quarters, affecting financial predictability.
• Consumer Electronics revenue is expected to decline mid-single digits for the year, reflecting challenges in that segment.
• The macroeconomic environment, including supply chain issues and geopolitical instability, poses risks to the company's outlook.
• GAAP operating expenses included a restructuring charge of approximately $5 million, indicating ongoing adjustments in resource allocation.

Q & A Highlights

Q: In the comment on the relative flatness of foundational revenue for the year, was that also true in Q1 or are you seeing any different trends at the beginning of the year? A: Robert Park, CFO: We focus on the full year being flattish, and nothing in Q1 indicated anything other than that.

Q: Regarding the outsized growth in Mobile in Q1, was that a pull-in of something expected later in the year, or is there anything about penetration rates or deal sizes to note? A: Robert Park, CFO: The growth was due to the timing of minimum volume commitments and the integration of GE licensing, which had the largest impact on Mobile.

Q: What is the expected timetable for Samsung OLED screens for cars to begin showing up in models? A: Robert Park, CFO: We are excited about the opportunity with Dolby Vision in automotive. The ecosystem is ready, and we expect more progress throughout the year, with Samsung's integration making implementation cycles easier.

Q: Can you discuss the key variables that would drive growth for Atmos, Vision, and image patent licensing to the higher end of your target range? A: Robert Park, CFO: The biggest factors are automotive adoption pace, TV market penetration, and Mobile's Dolby Vision Capture. Upside depends on shipping volumes and the popularity of models.

Q: Could you provide an update on the Dolby Cinema screen base? A: Robert Park, CFO: We added screens this quarter, and there's a significant pickup in the outlook for adding scale. The percentage of box office revenue from premium screens like Dolby Cinema has increased significantly.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.