Dolby Laboratories, Inc. (DLB) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings report shows strong financial performance, with revenue and EPS exceeding guidance, and a positive outlook on licensing growth. The dividend increase and share repurchase plan further signal confidence in financial health. Although some concerns about deal timing and macro impacts were noted, the overall sentiment remains positive, supported by new partnerships and technology adoption.
Key Financial Performance
Revenue for the quarter $347 million, above the high end of the guidance shared last quarter, primarily driven by the timing of deals coming in earlier than expected and a $7 million favorable true-up for Q4 shipments.
Non-GAAP earnings per share $1.06, above the high end of guidance, driven by higher revenue and lower OpEx.
Licensing revenue $320 million.
Products and Services revenue $27 million.
Operating cash flow Approximately $55 million.
Common stock repurchase $70 million, with approximately $207 million remaining on the share repurchase authorization.
Dividend declared $0.36, up 9% from the dividend a year ago.
Cash and investments Approximately $730 million.
GAAP operating expenses Included a $10 million restructuring charge as operations were streamlined and resources aligned with business priorities.
Mobile revenue Grew by over 20% year-over-year, primarily driven by timing of deals.
Broadcast revenue Down mid-teens year-over-year, primarily driven by timing of deals.
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Operating Highlights
Dolby Atmos and Dolby Vision in Automotive: Partnerships with over 35 OEMs, up from 20 last year. Demonstrations at CES showcased in-car entertainment experiences. Collaborations with Qualcomm, Mahindra, and Hyundai to integrate Dolby Atmos and Vision into vehicles.
Dolby Vision 2 for TVs: Introduced Dolby Vision 2 with enhanced features for modern TVs. Partnerships with Peacock, Canal+, TP Vision, Hisense, and TCL for content and TV model support.
Dolby Vision in Social Media: Meta supports Dolby Vision on Instagram and Facebook. Douyin (Chinese TikTok) supports Dolby Vision on iOS and Android.
Dolby OptiView: Partnerships with NFL, Veikkaus, and SIS to enhance streaming quality and reduce latency for live events.
Automotive Market Expansion: Increased partnerships with OEMs from 20 to 35. Collaborations with Qualcomm, Mahindra, and Hyundai to expand Dolby Atmos and Vision in vehicles.
TV Market Expansion: Launch of Dolby Vision 2 with support from major content providers and TV manufacturers.
Social Media Market Expansion: Increased adoption of Dolby Vision by Meta and Douyin for social media platforms.
Revenue Growth: Q1 revenue of $347 million, above guidance. Licensing revenue at $320 million. Full-year revenue guidance raised to $1.4-$1.45 billion.
Operational Efficiency: Streamlined operations with a $10 million restructuring charge. Improved operating margins by 50-100 basis points.
Strategic Growth in Licensing: Focus on Dolby Atmos, Dolby Vision, and imaging patents, which now comprise nearly 50% of licensing revenue. Targeting 15-20% annual growth in these areas.
Expansion of Addressable Market: New customers for Dolby OptiView and video distribution program, including Roku and sports betting operators.
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Risk or Challenges
Macroeconomic Events: Potential adverse impacts on business due to macroeconomic events, including inflation rates, changes in consumer spending, and geopolitical instability.
Supply Chain Issues: Challenges in supply chain management that could disrupt operations or delay product availability.
Memory Pricing Variability: Potential impact of fluctuating memory pricing on revenue, which varies by end market and customer.
Broadcast Revenue Decline: Mid-teens year-over-year decline in broadcast revenue, primarily driven by timing of deals.
Restructuring Charges: $10 million restructuring charge incurred to streamline operations, which may indicate operational inefficiencies or misalignment of resources.
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Guidance & Outlook
Revenue Guidance for FY 2026: The company has raised its full-year fiscal 2026 revenue guidance to a range of $1.4 billion to $1.45 billion, reflecting earlier and stronger deal closures in Q1, partially offset by slight revisions due to potential impacts of memory pricing.
Licensing Revenue Projections: Licensing revenue for fiscal 2026 is expected to be between $1.295 billion and $1.345 billion. Dolby Atmos, Dolby Vision, and imaging patents are projected to grow at 15% to 20% annually over the next few years, now comprising nearly 50% of licensing revenue.
Operating Margin Improvement: The company is targeting non-GAAP operating margin improvement of 50 to 100 basis points for fiscal 2026.
Non-GAAP Earnings Per Share (EPS): Non-GAAP EPS for fiscal 2026 is projected to be between $4.30 and $4.45.
Q2 FY 2026 Revenue Guidance: Revenue for Q2 fiscal 2026 is expected to be between $375 million and $405 million, with licensing revenue contributing $350 million to $380 million.
Q2 FY 2026 Non-GAAP EPS: Non-GAAP EPS for Q2 fiscal 2026 is expected to be between $1.29 and $1.44.
End Market Growth Expectations: For fiscal 2026, Mobile and Broadcast markets are expected to grow mid-single digits, while PC and CE markets are expected to decline.
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Shareholder Return Plan
Dividend Declaration: Declared a $0.36 dividend, up 9% from the previous year.
Share Repurchase: Repurchased $70 million of common stock and have approximately $207 million remaining on the share repurchase authorization.
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Key Q&A
Q:Was the upside driven by deal timing indicative of a change in the environment or customer urgency?
A:Kevin Yeaman stated that the upside was not indicative of a general change in the macro environment. Some deals came in earlier, which derisks the outlook for the year, but overall, things are progressing as expected.
Q:Was the $7 million true-up related to Mobile or another area?
A:Robert Park clarified that the $7 million true-up was primarily related to gaming and broadcast, not Mobile.
Q:Was the strong growth in Mobile due to new deals or renewals?
A:Robert Park explained that Mobile growth should be viewed on a full-year basis due to fluctuations in deal timing and volume commitments. The full year for Mobile is expected to be up slightly.
Q:Does the Sony TV venture spin-off with TCL present an opportunity for market share growth?
A:Kevin Yeaman avoided commenting on the pending transaction but emphasized strong relationships with both TCL and Sony. He highlighted the potential of Dolby Vision 2 to increase royalties and expand into midrange TVs.
Q:Why did Q1 cash flow generation resemble Q1 of 2024 rather than 2025?
A:Robert Park explained that cash flow can fluctuate due to deal timing, terms, and patent pool collections. He suggested using non-GAAP net income as a proxy for operating cash flow, which aligns closely over trailing four quarters.
Q:What is the update on the new patent pool monetization strategy?
A:Kevin Yeaman confirmed the strategy could represent 10% of revenue from content service providers within three years. He highlighted progress with the video distribution program, including Roku as the first U.S. streamer to join the pool, and noted pricing incentives for early sign-ups.
Q:Was the Q1 guidance at the high end due to favorable true-ups or other factors?
A:Robert Park attributed the high-end guidance to the $7 million favorable true-up and deals coming in earlier than expected, which derisks the pipeline for the full year.
Q:What were the key takeaways from CES 2023?
A:Kevin Yeaman highlighted strong engagement with partners, showcasing Dolby Vision 2 and automotive in-car entertainment. He noted excitement about Dolby Vision 2's impact on midrange TVs and the growing adoption of Dolby Atmos and Vision in cars.
Q:What is the significance of Peacock integrating Dolby's full suite of technologies?
A:Kevin Yeaman emphasized that Peacock's adoption of Dolby's full suite, including Dolby Vision 2 and Dolby Atmos, across movies, TV, and sports, is a significant milestone. It includes streaming the Super Bowl and Winter Olympics in Dolby Atmos.
Q:How does Meta's support for Dolby Vision on Facebook and Instagram influence Dolby's strategy?
A:Kevin Yeaman stated that Meta's adoption of Dolby Vision on Facebook and Instagram enhances demand for Dolby on mobile devices. He also noted Meta's use of Dolby Atmos and Vision on Oculus headsets, expanding their partnership.
Q:How are OEMs responding to macro issues like tariffs and memory pricing?
A:Kevin Yeaman noted that adjustments were not material but highlighted that Mobile is most impacted by memory pricing. TVs are less affected, and PC markets are down for the year.
Q:Is U.S. policy affecting the adoption of Dolby's in-car offerings?
A:Kevin Yeaman stated that U.S. policy changes have not impacted the adoption of Dolby's in-car offerings. The focus remains on expanding partnerships and integrating Dolby Vision and Atmos into more vehicles.
Q:Review of Unclear Management Responses
A:Management avoided directly commenting on the Sony TV venture spin-off with TCL, using vague language about strong relationships and focusing on Dolby Vision 2's potential. Additionally, Kevin Yeaman and Robert Park provided limited details on the macro impact of memory pricing and tariffs, offering general observations without specific data.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Atmos Neon
Atmos Vision
Atmos car
Atmos crossover
Atmos vehicle
Attendees Atmos
Audi tron
Automotive focus
CES
Laboratories
NFL
OptiView
Qualcomm
SIS
SUV
Veikkaus
Vision TVs
Vision imaging
Vision variety
attendee
car entertainment
device
distribution program
gaming
imaging patent
latency
launch partner
licensee
medium
model
momentum
movie TV
music
pool
provider
streamer
support Vision
video distribution
DLB Transcript
Dolby Laboratories, Inc. (DLB) Q1 2026 Earnings Call Transcript
Positive1-29
The earnings report shows strong financial performance, with revenue and EPS exceeding guidance, and a positive outlook on licensing growth. The dividend increase and share repurchase plan further signal confidence in financial health. Although some concerns about deal timing and macro impacts were noted, the overall sentiment remains positive, supported by new partnerships and technology adoption.
Dolby Laboratories, Inc. (DLB) Q4 2025 Earnings Call Transcript
Unknown11-18
The earnings call presents a mixed outlook. While there are positive developments like Dolby OptiView scaling and integration of Dolby Atmos in automobiles, the flat broadcast growth and decline in consumer electronics revenue offset these positives. The Q&A reveals some uncertainty about patent pool monetization and macroeconomic impacts. Share repurchase plans are in place, but without significant new catalysts, the stock price is likely to remain stable in the short term.
Dolby Laboratories, Inc. (DLB) Q3 2025 Earnings Call Transcript
Positive7-31
The earnings call reflects strong financial performance with 9% YoY revenue growth and a 10% increase in dividends. New partnerships in automotive and mobile sectors, coupled with a strategic focus on expanding Dolby technologies, indicate positive market strategy. Despite some revenue volatility and consumer electronics decline, optimistic guidance and shareholder returns, including stock repurchase, enhance sentiment. The Q&A section confirms management's confidence in growth opportunities, despite some geopolitical uncertainties. Overall, the positive outlook and strategic initiatives suggest a positive stock price movement.
Dolby Laboratories, Inc. (DLB) Q2 2025 Earnings Call Transcript
Unknown5-1
The earnings call presents a mixed outlook. Positive aspects include a 10% dividend increase and strong cash flow, but the revenue guidance has been revised downwards due to macroeconomic challenges. Licensing revenue growth is steady, but product revenue fell short. The Q&A highlighted uncertainties in consumer spending and geopolitical risks, though the company remains optimistic about automotive partnerships. Despite positive shareholder returns, the lowered guidance and economic uncertainties balance the sentiment, leading to a neutral prediction for stock price movement.
DLB Report
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