Dolby Laboratories Reports First Quarter 2024 Financial Results
"Our first quarter results were in line with our expectations," said
First Quarter Fiscal 2024 Financial Highlights
- Total revenue was
$315.6 million , compared to$334.9 million for the first quarter of fiscal 2023. - GAAP net income was
$67.0 million , or$0.69 per diluted share, compared to GAAP net income of$79.4 million , or$0.82 per diluted share, for the first quarter of fiscal 2023. On a non-GAAP basis, first quarter net income was$98.6 million , or$1.01 per diluted share, compared to$107.4 million , or$1.11 per diluted share, for the first quarter of fiscal 2023. -
Dolby repurchased 968 thousand shares of its common stock and ended the quarter with approximately$132 million of stock repurchase authorization available going forward.
A complete listing of
Recent Business Highlights
- Apple announced support for Dolby Atmos for CarPlay.
- A leading Indian online video streaming service announced that its platform will support Dolby Vision, in addition to currently supporting Dolby Atmos.
- Zeeker, a premium electric vehicle brand in
China , launched the Zeekr 007 that supports Dolby Atmos. -
Dolby andEd Sheeran celebrate the transformative experience of DolbyAtmos Music in new "Love More " global brand campaign.
Dividend
Today,
Financial Outlook
- Total revenue is estimated to range from
$345 million to$375 million . - Gross margins are anticipated to be approximately 90%.
- Operating expenses are anticipated to range from
$215 million to$225 million on a GAAP basis and from$180 million to$190 million on a non-GAAP basis. - Effective tax rate is anticipated to be roughly 23% on a GAAP basis and roughly 20% on a non-GAAP basis.
- Diluted earnings per share is anticipated to range from
$0.82 to$0.97 on a GAAP basis and from$1.14 to$1.29 on a non-GAAP basis.
- Total revenue is expected to be roughly
$1.30 billion . - Gross margins are anticipated to be roughly 89%.
- Operating expenses are anticipated to range from
$885 million to$895 million on a GAAP basis and from$740 million to$750 million on a non-GAAP basis. -
Dolby expects operating margins on a GAAP basis to be roughly 20% and on a non-GAAP basis to be roughly 32%. - Diluted earnings per share is anticipated to range from
$2.30 to$2.45 on a GAAP basis and from$3.60 to$3.75 on a non-GAAP basis.
Conference Call Information
Members of
A replay of the call will be available from
Non-GAAP Financial Information
To supplement
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
Amortization of acquisition-related intangibles:
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.
Income tax adjustments: The income tax effects of the aforementioned non-GAAP adjustments do not directly correlate to its operating performance so
Using the aforementioned adjustments,
Forward-Looking Statements
Certain statements in this press release and in our earnings calls, including, but not limited to, expected financial results for the second quarter of fiscal 2024 and full year fiscal 2024,
About
Dolby Laboratories (NYSE: DLB) is based in San Francisco,
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts; unaudited) |
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|
Fiscal Quarter Ended |
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|
|
|
Revenue: |
|
|
Licensing |
$ 293,767 |
$ 308,011 |
Products and services |
21,807 |
26,910 |
Total revenue |
315,574 |
334,921 |
|
|
|
Cost of revenue: |
|
|
Cost of licensing |
15,736 |
13,359 |
Cost of products and services |
16,324 |
21,091 |
Total cost of revenue |
32,060 |
34,450 |
|
|
|
Gross profit |
283,514 |
300,471 |
|
|
|
Operating expenses: |
|
|
Research and development |
67,033 |
64,450 |
Sales and marketing |
79,003 |
82,205 |
General and administrative |
65,166 |
59,972 |
Restructuring charges/(credits) |
6,091 |
(244) |
Total operating expenses |
217,293 |
206,383 |
|
|
|
Operating income |
66,221 |
94,088 |
|
|
|
Other income/(expense): |
|
|
Interest income/(expense), net |
9,187 |
4,797 |
Other income, net |
5,425 |
1,097 |
Total other income |
14,612 |
5,894 |
|
|
|
Income before income taxes |
80,833 |
99,982 |
Provision for income taxes |
(13,252) |
(20,534) |
Net income including noncontrolling interest |
67,581 |
79,448 |
Less: net income attributable to noncontrolling interest |
(600) |
(73) |
Net income attributable to |
$ 66,981 |
$ 79,375 |
|
|
|
Net income per share: |
|
|
Basic |
$ 0.70 |
$ 0.83 |
Diluted |
$ 0.69 |
$ 0.82 |
Weighted-average shares outstanding: |
|
|
Basic |
95,376 |
95,905 |
Diluted |
97,439 |
97,047 |
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands; unaudited) |
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|
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|
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 656,816 |
$ 745,364 |
Restricted cash |
51,842 |
72,602 |
Short-term investments |
140,823 |
139,148 |
Accounts receivable, net |
293,228 |
262,245 |
Contract assets, net |
217,559 |
182,130 |
Inventories, net |
37,568 |
35,623 |
Prepaid expenses and other current assets |
53,519 |
50,692 |
Total current assets |
1,451,355 |
1,487,804 |
Long-term investments |
92,876 |
97,812 |
Property, plant, and equipment, net |
479,321 |
481,581 |
Operating lease right-of-use assets |
38,001 |
40,199 |
|
570,329 |
575,836 |
Deferred taxes |
206,667 |
201,860 |
Other non-current assets |
96,980 |
94,674 |
Total assets |
$ 2,935,529 |
$ 2,979,766 |
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 14,395 |
$ 20,925 |
Accrued liabilities |
327,186 |
351,399 |
Income taxes payable |
6,189 |
4,769 |
Contract liabilities |
33,404 |
31,505 |
Operating lease liabilities |
12,922 |
13,628 |
Total current liabilities |
394,096 |
422,226 |
Non-current contract liabilities |
36,994 |
39,997 |
Non-current operating lease liabilities |
34,319 |
37,020 |
Other non-current liabilities |
107,810 |
108,339 |
Total liabilities |
573,219 |
607,582 |
|
|
|
Stockholders' equity: |
|
|
Class A common stock |
53 |
53 |
Class B common stock |
41 |
41 |
Retained earnings |
2,367,182 |
2,391,990 |
Accumulated other comprehensive loss |
(21,428) |
(36,984) |
Total stockholders' equity – |
2,345,848 |
2,355,100 |
Noncontrolling interest |
16,462 |
17,084 |
Total stockholders' equity |
2,362,310 |
2,372,184 |
Total liabilities and stockholders' equity |
$ 2,935,529 |
$ 2,979,766 |
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands; unaudited) |
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|
Fiscal Quarter Ended |
|
|
|
|
Operating activities: |
|
|
Net income including noncontrolling interest |
$ 67,581 |
$ 79,448 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
Depreciation and amortization |
17,872 |
19,155 |
Stock-based compensation |
31,894 |
31,240 |
Amortization of operating lease right-of-use assets |
3,088 |
3,207 |
Amortization of premium on investments |
(895) |
81 |
Benefit from credit losses |
(2,101) |
(1,030) |
Deferred income taxes |
(5,397) |
(8,255) |
Other non-cash items affecting net income |
(1,745) |
(3,467) |
Changes in operating assets and liabilities: |
|
|
Accounts receivable, net |
(28,935) |
(45,153) |
Contract assets, net |
(35,400) |
(39,843) |
Inventories |
(9,297) |
(501) |
Operating lease right-of-use assets |
570 |
1,690 |
Prepaid expenses and other assets |
5,866 |
2,168 |
Accounts payable and accrued liabilities |
(31,993) |
5,765 |
Income taxes, net |
6,184 |
15,292 |
Contract liabilities |
(1,116) |
3,277 |
Operating lease liabilities |
(4,264) |
(5,430) |
Other non-current liabilities |
(3,503) |
(1,249) |
Net cash provided by operating activities |
8,409 |
56,395 |
|
|
|
Investing activities: |
|
|
Purchases of marketable securities |
(35,753) |
(72,790) |
Proceeds from sales of marketable securities |
1,226 |
51,782 |
Proceeds from maturities of marketable securities |
41,259 |
56,525 |
Purchases of property, plant, and equipment |
(6,099) |
(7,217) |
Net cash provided by investing activities |
633 |
28,300 |
|
|
|
Financing activities: |
|
|
Proceeds from issuance of common stock |
18,301 |
10,954 |
Repurchase of common stock |
(80,002) |
(49,412) |
Payment of cash dividend |
(28,552) |
(25,869) |
Distribution to noncontrolling interest |
(1,047) |
(266) |
Shares repurchased for tax withholdings on vesting of restricted stock |
(34,562) |
(25,000) |
Equity issued in connection with business combination |
722 |
— |
Payment of deferred consideration for prior business combinations |
— |
(500) |
Net cash used in financing activities |
(125,140) |
(90,093) |
|
|
|
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash |
6,790 |
8,504 |
Net increase/(decrease) in cash, cash equivalents, and restricted cash |
(109,308) |
3,106 |
Cash, cash equivalents, and restricted cash at beginning of period |
817,966 |
628,371 |
Cash, cash equivalents, and restricted cash at end of period |
$ 708,658 |
$ 631,477 |
GAAP to Non-GAAP Reconciliations |
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(unaudited) |
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The following tables present first quarters of fiscal 2024 and fiscal 2023: |
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Net income: |
|
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|
Fiscal Quarter Ended |
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(in thousands) |
|
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|
|
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|
GAAP net income |
|
|
|
|
$ 66,981 |
$ 79,375 |
Stock-based compensation (1) |
|
|
|
|
31,894 |
31,240 |
Amortization of acquisition-related intangibles (2) |
|
|
|
|
3,124 |
1,347 |
Restructuring charges/(credits) |
|
|
|
|
6,091 |
(244) |
Income tax adjustments |
|
|
|
|
(9,450) |
(4,288) |
Non-GAAP net income |
|
|
|
|
$ 98,640 |
$ 107,430 |
|
|
|
|
|
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|
(1) Stock-based compensation included in above line items: |
|
|
|
|
|
|
Cost of products and services |
|
|
|
|
$ 410 |
$ 502 |
Research and development |
|
|
|
|
10,106 |
10,676 |
Sales and marketing |
|
|
|
|
10,481 |
10,727 |
General and administrative |
|
|
|
|
10,897 |
9,335 |
|
|
|
|
|
|
|
(2) Amortization of acquisition-related intangibles included in above line items: |
|
|
|
|||
Cost of licensing |
|
|
|
|
$ 62 |
$ 62 |
Cost of products and services |
|
|
|
|
534 |
866 |
Research and development |
|
|
|
|
— |
127 |
Sales and marketing |
|
|
|
|
656 |
805 |
General and administrative |
|
|
|
|
1,872 |
(513) |
|
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|
|
|
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Diluted earnings per share: |
|
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|
Fiscal Year Ended |
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|
GAAP diluted earnings per share |
|
|
|
|
$ 0.69 |
$ 0.82 |
Stock-based compensation |
|
|
|
|
0.33 |
0.32 |
Amortization of acquisition-related intangibles |
|
|
|
|
0.03 |
0.01 |
Restructuring charges |
|
|
|
|
0.06 |
— |
Income tax adjustments |
|
|
|
|
(0.10) |
(0.04) |
Non-GAAP diluted earnings per share |
|
|
|
|
$ 1.01 |
$ 1.11 |
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Weighted-average shares outstanding - diluted (in thousands) |
|
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|
97,439 |
97,047 |
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The following tables present a reconciliation between GAAP and non-GAAP versions of the estimated financial measures for the second quarter of fiscal 2024 and full year fiscal 2024 included in this release: |
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Operating expenses (in millions): |
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|
Q2 2024 |
|
|
Fiscal 2024 |
GAAP operating expenses (low - high end of range) |
|
|
|
|
|
|
Stock-based compensation |
|
|
(32) |
|
|
(127) |
Amortization of acquisition-related intangibles |
|
|
(3) |
|
|
(12) |
Restructuring charges |
|
|
— |
|
|
(6) |
Non-GAAP operating expenses (low - high end of range) |
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|
|
|
|
|
|
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Operating margin: |
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|
Fiscal 2024 |
|
GAAP operating margin |
|
|
|
|
|
20% +/- |
Stock-based compensation |
|
|
|
|
|
10 % |
Amortization of acquisition-related intangibles |
|
|
|
|
|
1 % |
Restructuring charges |
|
|
|
|
|
1 % |
Non-GAAP operating margin |
|
|
|
|
|
32% +/- |
|
|
|
|
|
|
|
Effective tax rate: |
|
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|
|
|
Q2 2024 |
GAAP effective tax rate |
|
|
|
|
|
23 % |
Stock-based compensation (low - high end of range) |
|
|
|
|
|
(2%) - (0%) |
Amortization of acquisition-related intangibles (low - high end of range) |
|
|
|
|
|
(1%) - 0% |
Restructuring charges (low - high end of range) |
|
|
|
|
|
(1%) - 1% |
Non-GAAP effective tax rate |
|
|
|
|
|
20 % |
|
|
|
|
|
|
|
Diluted earnings per share: |
|
Q2 2024 |
|
Fiscal 2024 |
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|
Low |
High |
|
Low |
High |
GAAP diluted earnings per share |
|
$ 0.82 |
$ 0.97 |
|
$ 2.30 |
$ 2.45 |
Stock-based compensation |
|
0.33 |
0.33 |
|
1.30 |
1.30 |
Amortization of acquisition-related intangibles |
|
0.03 |
0.03 |
|
0.14 |
0.14 |
Restructuring charges |
|
— |
— |
|
0.06 |
0.06 |
Income tax adjustments |
|
(0.04) |
(0.04) |
|
(0.20) |
(0.20) |
Non-GAAP diluted earnings per share |
|
$ 1.14 |
$ 1.29 |
|
$ 3.60 |
$ 3.75 |
|
|
|
|
|
|
|
Weighted-average shares outstanding - diluted (in millions) |
|
97 |
97 |
|
98 |
98 |
Investor Contact:
415-254-7415
peter.goldmacher@dolby.com
Media Contact:
media@dolby.com
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