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Dolby's (DLB) Q3 Earnings Match Estimates, Revenues Up Y/Y

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Dolby Laboratories, Inc (DLB - Free Report) reported third-quarter fiscal 2023 results, with non-GAAP earnings per share (EPS) of 55 cents compared with 68 cents reported in the prior-year quarter. The bottom line was in line with the Zacks Consensus Estimate of 55 cents.

Total revenues were $298.4 million, up from $289.6 million in the year-ago quarter. The top line missed the Zacks Consensus Estimate by 0.7%. The uptick was caused by revenue growth across all business segments and increased adoption of Dolby Atmos and Dolby Vision.

The company announced a dividend of 27 cents per share, payable on Aug 22, to shareholders of record on Aug 14, 2023.

Dolby Laboratories Price, Consensus and EPS Surprise

Dolby Laboratories Price, Consensus and EPS Surprise

Dolby Laboratories price-consensus-eps-surprise-chart | Dolby Laboratories Quote

Segmental Performance

Revenues from Licensing were $273.1 million, up from $269.2 million reported in the prior-year quarter. Products and Services’ revenues were $25.2 million compared with $20.3 million reported in the year-ago quarter.

Broadcast Licensing contributed 38% to the total licensing revenues in the third quarter. Mobile Licensing accounted for 18%, Consumer Electronics 13%, PC Licensing 11% and Licensing from Other Markets contributed 20% to licensing revenues.

Other Details

Gross profit in the fiscal third quarter was $256.8 million compared with $253.6 million in the year-earlier quarter. Total operating expenses increased to $240.9 million from $208.1 million reported in the previous-year quarter.

Operating income was $15.9 million compared with $45.5 million in the year-ago quarter.

In the fiscal third quarter, the company repurchased 0.3 million of its common shares and ended the quarter with $237 million of stock repurchase authorization.

Cash Flow and Liquidity

For the six months that ended on Jun 30, Dolby generated $282.1 million of net cash from operating activities compared with $267.3 million in the prior-year period.

As of Jun 30, 2023, the company had $765.1 million in cash and cash equivalents, with $625.2 million in total liabilities.

Guidance

For the fourth quarter of fiscal 2023, the company expects GAAP EPS of 10-30 cents and non-GAAP EPS of 40-60 cents on revenues of $275-$305 million.

On a GAAP basis, operating expenses are expected to be in the range of $227-$237 million, whereas, on a non-GAAP basis, operating expenses are anticipated to be between $195 million and $205 million.

For fiscal 2023, the company expects revenues in the range of $1.285-$1.315 billion. GAAP operating margin is expected to be 18%, while the non-GAAP operating margin is expected to be nearly 30%. On a GAAP basis, operating expenses are expected to be between $900 million and $910 million, whereas, on a non-GAAP basis, operating expenses are anticipated to be in the range of $760-$770 million.

Zacks Rank & Other Stocks to Consider

Dolby currently has a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology space are InterDigital (IDCC - Free Report) , Badger Meter (BMI - Free Report) and Woodward (WWD - Free Report) . Badger Meter and Woodward sport a Zacks Rank #1 (Strong Buy), whereas InterDigital carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for InterDigital’s 2023 EPS has increased 0.1% in the past 60 days to $8.08. The company’s long-term earnings growth rate is 13.9%.

InterDigital’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 170.9%. Shares of IDCC have rallied 53.9% in the past year.

The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 4.8% in the past 60 days to $2.82.

Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 80.5% in the past year.

The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 9.7% in the past 60 days to $3.93.

WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 20.2% in the past year.

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