Dolby Laboratories Reports Fourth Quarter and Fiscal Year 2024 Financial Results

SAN FRANCISCO, Nov. 19, 2024 /PRNewswire/ -- Dolby Laboratories, Inc. (NYSE:DLB) today announced the company's financial results for the fourth quarter and fiscal year 2024.

"We are pleased with the progress we made in fiscal 2024," said Kevin Yeaman, President and CEO, Dolby Laboratories. "As we enter fiscal 2025, we have strong momentum with Dolby Atmos and Dolby Vision, our imaging patent portfolio has gotten stronger with the GE Licensing acquisition, and we are excited about our opportunity with Dolby.io, which is well positioned to provide real time interactive experiences for sports and entertainment."

Fourth Quarter Fiscal 2024 Financial Highlights

• Total revenue was $305 million, compared to $291 million for the fourth quarter of fiscal 2023.
• GAAP net income was $59 million, or $0.61 per diluted share, compared to GAAP net income of $9 million, or $0.09 per diluted share, for the fourth quarter of fiscal 2023. On a non-GAAP basis, fourth quarter net income was $78 million, or $0.81 per diluted share, compared to $64 million, or $0.65 per diluted share, for the fourth quarter of fiscal 2023.
• Dolby repurchased approximately 251,000 shares of its common stock and ended the quarter with approximately $402 million of stock repurchase authorization available going forward.

Full Year Fiscal 2024 Financial Highlights

• Total revenue was $1.27 billion, compared to $1.30 billion for the full year of fiscal 2023.
• GAAP net income was $262 million, or $2.69 per diluted share, compared to GAAP net income of $201 million, or $2.05 per diluted share, for the full year of fiscal 2023. On a non-GAAP basis, full year net income was $369 million, or $3.79 per diluted share, compared to $348 million, or $3.56 per diluted share, for the full year of fiscal 2023.
• Cash flows from operations were $327 million, compared to $367 million for the full year of fiscal 2023.

A complete listing of Dolby's non-GAAP measures are described and reconciled to the corresponding GAAP measures at the end of this release.

Recent Business Highlights

• We closed the acquisition of GE Licensing, which we expect to be accretive to margins and earnings on a non-GAAP basis in fiscal 2025, and which gives us a stronger position in imaging patents.
• We acquired THEO Technologies, expanding Dolby.io's ability to offer customers the best solutions for real-time streaming experiences that drive fan engagement and interactivity.
• We added two new automotive partners in Q4; WEY, a Chinese car company that specializes in premium Crossovers and SUVs, and Smart, a JV between Mercedes and Geely. We now have over 20 automotive OEM partners supporting Dolby Atmos, up from 10 partners one year ago.
• Meta announced support for Dolby Atmos across its MetaQuest headset device lineup.
• Apple launched the iPhone 16, which supports Dolby Atmos and Dolby Vision, and records in Dolby Vision.
• Xiaomi announced new 4K QLED TVs that support Dolby Vision.
• Australia selected Dolby AC-4 as part of its new broadcast set-top-box specification.
• Polytron, an Indonesian TV OEM, launched a new TV that supports Dolby Atmos and Dolby Vision.
• Lenovo's new Thinkpad X1 Carbon Gen 13 Aura Edition supports Dolby Vision, and its Thinkbook 16 Gen7+ and Thinkbook 16 Gen 7 supports Dolby Atmos.
• Alienware released 27 4K Dual Resolution Gaming Monitor that supports Dolby Atmos.

Upcoming Investor Event

Dolby is hosting an event at CES for the financial community where we will demonstrate a wide array of our technologies. The event will be held at 7:00 a.m. PT on Wednesday, January 8, 2025. Please send an email to IR@dolby.com for more information.

Dividend

Today, Dolby announced a cash dividend of $0.33 per share of Class A and Class B common stock, payable on December 10, 2024, to stockholders of record as of the close of business on December 3, 2024.

Revolving Credit Facility

On November 14, 2024, Dolby entered into a Credit Agreement with Bank of America for a $250 million revolving credit facility. The facility includes $150 million of uncommitted incremental capacity, has a five-year term and can be terminated early without penalty. Dolby has not drawn on the facility. Further details regarding the Credit Agreement are set out in a Form 8-K filed by Dolby with the U.S. Securities and Exchange Commission on November 19, 2024.

Financial Outlook

Dolby's financial outlook relies, in part, on estimates of royalty-based revenue that take into consideration various factors that are subject to uncertainty, including consumer demand for electronic products. In addition, actual results could differ materially from the estimates Dolby is providing below due in part to uncertainty resulting from the macroeconomic effect of certain conditions, including supply chain constraints, international conflicts, geopolitical instability, and fluctuations in inflation and interest rates. The uncertainty resulting from these factors has greatly reduced its visibility into Dolby's future outlook. To the extent possible, the estimates Dolby is providing for future periods reflect certain assumptions about the potential impact of certain of these items, based upon a consideration of currently available external and internal data and information. These assumptions are subject to risks and uncertainties. For more information, see "Forward-Looking Statements" in this press release for a description of certain risks that Dolby faces, and the section captioned "Risk Factors" in its Annual Report on Form 10-K for fiscal 2024, to be filed on or around the date hereof.

Dolby is providing the following estimates for its first quarter of fiscal 2025:

• Total revenue is estimated to range from $330 million to $360 million.
• Licensing revenue is estimated to range from $305 million to $335 million.
• Gross margins are anticipated to be approximately 87% on a GAAP basis and approximately 90% on a non-GAAP basis.
• Operating expenses are anticipated to range from $230 million to $240 million on a GAAP basis and from $190 million to $200 million on a non-GAAP basis.
• Effective tax rate is anticipated to be around 20.5% on a GAAP basis and around 18.5% on a non-GAAP basis.
• Diluted earnings per share is anticipated to range from $0.53 to $0.68 on a GAAP basis and from $0.96 to $1.11 on a non-GAAP basis.

Dolby is providing the following estimates for the full year of fiscal 2025:

• Total revenue is expected to range from $1.33 billion to $1.39 billion.
• Gross margins are anticipated to be approximately 87% on a GAAP basis and approximately 90% on a non-GAAP basis.
• Operating expenses are anticipated to range from $908 million to $918 million on a GAAP basis and from $765 million to $775 million on a non-GAAP basis.
• Dolby expects operating margins to be roughly 20% on a GAAP basis and to be roughly 33% on a non-GAAP basis.
• Diluted earnings per share is anticipated to range from $2.43 to $2.58 on a GAAP basis and from $3.99 to $4.14 on a non-GAAP basis.

Conference Call Information

Members of Dolby management will lead a conference call open to all interested parties to discuss fourth quarter and full year fiscal 2024 financial results for Dolby Laboratories at 2:00 p.m. PT (5:00 p.m. ET) on Tuesday, November 19, 2024. Access to the teleconference will be available at http://investor.dolby.com or by dialing 1-800-715-9871 (+1-646-307-1963 for international callers) and entering confirmation code 5587811.

A replay of the call will be available from 5:00 p.m. PT (8:00 p.m. ET) on Tuesday, November 19, 2024, until 8:59 p.m. PT (11:59 p.m. ET) on Tuesday, November 26, 2024 by dialing 1-800-770-2030 (+1-609-800-9909 for international callers) and entering the confirmation code 5587811. An archived version of the teleconference will also be available on the Dolby website, http://investor.dolby.com.

Non-GAAP Financial Information

To supplement Dolby's financial statements presented on a GAAP basis, Dolby management uses, and Dolby provides to investors, certain non-GAAP financial measures as an additional tool to evaluate Dolby's operating results in a manner that focuses on what Dolby's management believes to be its ongoing business operations and performance. We believe these non-GAAP financial measures are also helpful to investors in enabling comparability of operating performance between periods and among peer companies. Additionally, Dolby's management regularly uses our supplemental non-GAAP financial measures to make operating decisions, for planning and forecasting purposes and determining bonus payouts. Specifically, Dolby excludes the following as adjustments from one or more of its non-GAAP financial measures:

Stock-based compensation expense: Stock-based compensation, unlike cash-based compensation, utilizes subjective assumptions in the methodologies used to value the various stock-based award types that Dolby grants. These assumptions may differ from those used by other companies. To facilitate more meaningful comparisons between its underlying operating results and those of other companies, Dolby excludes stock-based compensation expense.

Amortization of acquisition-related intangibles: Dolby amortizes intangible assets acquired in connection with business combinations. These intangible assets consist of patents and technology, customer relationships, and other intangibles. Dolby records amortization charges relating to these intangible assets in its GAAP financial statements, and Dolby views these charges as items arising from pre-acquisition activities that are determined by the timing and valuation of its acquisitions. As these amortization charges do not directly correlate to its operations during any particular period, Dolby excludes these charges to facilitate an evaluation of its current operating performance and comparisons to its past operating results. In addition, while amortization expense of acquisition-related intangible assets is excluded from Non-GAAP Net Income, the revenue generated from those assets is not excluded.

Restructuring charges or credits: Restructuring charges are costs associated with restructuring plans and primarily relate to costs associated with exit or disposal activities, employee severance benefits, and asset impairments. For the fourth quarter of fiscal 2023, we excluded from non-GAAP net income and diluted earnings per share a restructuring charge of about $30 million comprised of approximately $13 million for severance and related benefits and an impairment loss of approximately $17 million related primarily to internally developed software for projects we are no longer pursuing. Dolby excludes restructuring costs, including any adjustments to charges recorded in prior periods (which may be credits), as Dolby believes that these costs are not representative of its normal operating activities and therefore, excluding these amounts enables a more effective comparison of its past operating performance and to that of other companies.

Income tax adjustments: The income tax effects of the aforementioned non-GAAP adjustments do not directly correlate to its operating performance so Dolby believes that excluding such income tax effects provides a more meaningful view of its underlying operating results to management and investors.

Impact from Tax Reform: The enactment of the U.S. Tax Cuts and Jobs Act (Tax Reform), and any related amendments or revisions, requires certain discrete and infrequent charges that are not representative of current operating results and therefore, excluding these amounts enables a more effective comparison to our past operating performance.

Using the aforementioned adjustments, Dolby provides various non-GAAP financial measures including, but not limited to: non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating margin, and non-GAAP effective tax rate. Dolby's management believes it is useful for itself and investors to review both GAAP and non-GAAP measures to assess the performance of Dolby's business, including as a means to evaluate period-to-period comparisons. Dolby's management does not itself, nor does it suggest that investors should, consider non-GAAP financial measures in isolation from, superior to, or as a substitute for, financial information prepared in accordance with GAAP. Whenever Dolby uses non-GAAP financial measures, it provides a reconciliation of the non-GAAP financial measures to the most closely applicable GAAP financial measures. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures as detailed above and below. Investors are also encouraged to review Dolby's GAAP financial statements as reported in its US Securities and Exchange Commission (SEC) filings. A reconciliation between GAAP and non-GAAP financial measures is provided at the end of this press release and on the Dolby investor relations website, http://investor.dolby.com.

Forward-Looking Statements

Certain statements in this press release and in our earnings calls, including, but not limited to, expected financial results for the first quarter of fiscal 2025 and full year fiscal 2025, Dolby's ability to expand existing business, navigate challenging periods, pursue its long-term growth opportunities, and advance its other long-term objectives are "forward-looking statements" that inherently involve substantial risks and uncertainties. These forward-looking statements are based on management's current expectations, and as a result of certain risks and uncertainties, actual results may differ materially from those provided. The following important factors, without limitation, could cause actual results to differ materially from those in the forward-looking statements: the potential impacts of economic conditions on Dolby's business operations, financial results, and financial position (including the impact to Dolby partners and disruption of the supply chain and delays in shipments of consumer products; the level at which Dolby technologies are incorporated into products and the consumer demand for such products; delays in the development and release of new products or services that contain Dolby technologies; delays in royalty reporting or delinquent payment by partners or licensees; lengthening sales cycles; the impact to the overall cinema market including adverse impact to Dolby's revenue recognized on box-office sales and demand for cinema products and services; and macroeconomic conditions that affect discretionary spending and access to products that contain Dolby technologies); risks associated with geopolitical issues and international conflicts; risks associated with trends in the markets in which Dolby operates, including the broadcast, mobile, consumer electronics, PC, and other markets; the loss of, or reduction in sales by, a key customer, partner, or licensee; pricing pressures; risks relating to changing trends in the way that content is distributed and consumed; risks relating to conducting business internationally, including trade restrictions and changes in diplomatic or trade relationships; risks relating to maintaining patent coverage; the timing of Dolby's receipt of royalty reports and payments from its licensees, including recoveries; changes in tax regulations; timing of revenue recognition under licensing agreements and other contractual arrangements; Dolby's ability to develop, maintain, and strengthen relationships with industry participants; Dolby's ability to develop and deliver innovative products and technologies in response to new and growing markets; competitive risks; risks associated with conducting business in China and other countries that have historically limited recognition and enforcement of intellectual property and contractual rights; risks associated with the health of the motion picture and cinema industries generally; Dolby's ability to increase its revenue streams and to expand its business generally, and to continue to expand its business beyond its current technology offerings; risks associated with acquiring and successfully integrating businesses or technologies; and other risks detailed in Dolby's SEC filings and reports, including the risks identified under the section captioned "Risk Factors" in its Annual Report on Form 10-K filed on or around the date hereof. Dolby may not actually achieve the plans, intentions, or expectations disclosed in its forward-looking statements. Forward-looking statements are based upon information available to us as of the date of such statements, and while Dolby believes such information forms a reasonable basis for such statements, such information may be limited or incomplete. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Except as required by law, Dolby disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.

About Dolby Laboratories

Dolby Laboratories (NYSE: DLB) is based in San Francisco, California with offices around the globe. From movies and TV shows, to apps, music, sports and gaming, Dolby transforms the science of sight and sound into spectacular experiences for billions of people worldwide. Dolby partners with artists, storytellers, developers, and businesses to revolutionize entertainment and communications with Dolby Atmos, Dolby Vision, Dolby Cinema, and Dolby.io.

Dolby, Dolby Atmos, Dolby Vision, Dolby Cinema, Dolby.io, and the double-D symbol are among the registered and unregistered trademarks of Dolby Laboratories in the United States and/or other countries. Other trademarks remain the property of their respective owners.

Investor Contact:
Peter Goldmacher
415-254-7415
peter.goldmacher@dolby.com

Media Contact:
media@dolby.com

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SOURCE Dolby Laboratories, Inc.