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DLB posted Q3 non-GAAP EPS of $0.78 and revenue of $315.6M, topping estimates and rising year over year.
Licensing revenue hit $289.9M, boosted by earlier-than-expected activity and broad content adoption.
DLB reaffirmed FY25 non-GAAP EPS outlook of $3.88-$4.03 on stable margins and expanding platforms.
Dolby Laboratories, Inc. (DLB - Free Report) reported third-quarter fiscal 2025 non-GAAP earnings per share (EPS) of 78 cents, surpassing the Zacks Consensus Estimate by 8.3%. It reported 71 cents in the prior-year quarter.
Total revenues were $315.6 million, up from $288.8 million in the year-ago quarter and surpassed the Zacks Consensus Estimate by 3.9%. This uptick was driven by higher revenues in the Licensing segment and the Product and Services segment.
The company had a strong third quarter and it continues to experience robust engagement from creators, distributors and device manufacturers. The presence of Dolby Atmos and Dolby Vision keeps expanding across various forms of content, like music, sports, podcasts, user-generated videos, films and television, and across a broad array of devices, including mobile phones, TVs, PCs, automobiles and soundbars.
Following the announcement, shares of the company marginally declined in the after-market trading session yesterday. In the past six months, shares have lost 10.5% against the Zacks Audio Video Production industry’s growth of 9.1%.
Image Source: Zacks Investment Research
DLB’s Segmental Performance
Revenues from Licensing were $289.9 million, up 8.5% year over year. Licensing revenue reached the upper end of the company’s guidance, as some activity anticipated for the fourth quarter occurred earlier than expected.
Products and Services’ revenues were up 18% year over year to $25.6 million.
Our estimates were pegged at $279.1 million and $21.5 million for the Licensing and Products and Services revenues, respectively.
Broadcast Licensing contributed 38% to total licensing revenues in the quarter under review. Mobile Licensing, Consumer Electronics, PC Licensing and Licensing from Other Markets accounted for 19%, 10%, 12% and 21% of licensing revenues, respectively.
Dolby Laboratories Price, Consensus and EPS Surprise
Gross profit in the fiscal third quarter was $271.5 million compared with $253.2 million in the year-ago quarter. Total operating expenses increased to $223.9 million from $216.4 million reported in the year-ago quarter.
Operating income was $47.6 million compared with $36.8 million in the year-ago quarter.
DLB’s Cash Flow & Liquidity
For the fiscal year to date that ended on June 27, 2025, Dolby generated $349.4 million of net cash from operating activities.
As of June 27, 2025, the company had $698.6 million in cash and cash equivalents, with $581.8 million in total liabilities. It had $626.6 million in cash and cash equivalents, with $646 million in total liabilities, as of March 28, 2025.
The company repurchased approximately 526,000 shares of its common stock for around $40 million during the quarter and ended the period with roughly $312 million remaining under its stock repurchase authorization.
The company declared a cash dividend of 33 cents per share, payable on Aug. 20, 2025, to its shareholders of record on Aug. 12, 2025.
DLB’s 2025 Outlook
For the fourth quarter of fiscal 2025, the company estimates revenues between $288 million and $318 million. It expects GAAP EPS of 28-43 cents and non-GAAP EPS between 61 cents and 76 cents.
The company anticipates third-quarter licensing revenues to be between $263 million and $293 million.
On a GAAP basis, operating expenses are expected to be in the range of $225-$235 million. On a non-GAAP basis, the same is anticipated to be between $190 million and $200 million.
For fiscal 2025, the company expects revenues to be in the $1.33-$1.36 billion band, compared with the previous guidance of $1.31-$1.38 billion.
GAAP operating margin is still expected to be 20%, while the non-GAAP operating margin is projected to be nearly 33%. Licensing revenues are forecasted to be in the range of $1.23 billion to $1.26 billion compared with $1.21-$1.28 billion predicted earlier.
On a GAAP basis, operating expenses are expected to range from $910 million to $920 million compared with $905 million and $920 million projected earlier. On a non-GAAP basis, it is anticipated to range from $765 million to $775 million compared with $760-$775 million projected earlier.
The company expects GAAP EPS of $2.40 to $2.55, changed from $2.31-$2.46, and non-GAAP EPS is still anticipated to be $3.88-$4.03.
Recent Updates
Dolby continued to expand its presence across content, devices and platforms. Major sporting events such as the FIFA Club World Cup, Stanley Cup Finals, French Open and IPL playoffs and finals were broadcast in Dolby.
Audi announced support for Dolby Atmos in its Q7, Q8, A8 and E-Tron GT models, while in India, Tata launched the Harrier EV and Mahindra introduced the Thar ROXX AX7L SUV, both featuring Dolby Atmos. Motorola debuted its first smartphone with Dolby Vision Capture and the Xiaomi 15S Pro and Civi 5 Pro were launched with both Dolby Vision and Dolby Atmos. New Dolby-enabled TVs and speakers were released by Samsung, Haier, TCL, LG, Marshall and JBL.
Dolby also partnered with Lenovo and Google to launch the first Chromebook supporting Dolby Atmos. Meanwhile, HBO Max, offering most of its sports content in Dolby, announced plans to expand its streaming service to 12 more countries this summer, nearing availability in 100 markets.
Performance of Other Firms in Consumer Discretionary Space
LiveOne, Inc. (LVO - Free Report) incurred a fourth-quarter fiscal 2025 GAAP loss of 8 cents per share compared with a loss of 3 cents a year ago. The Zacks Consensus Estimate was pegged at a loss of 5 cents per share.
Quarterly revenues plunged 37.6% year over year to $19.3 million, mostly attributable to lower revenues from Slacker Radio, which has been transforming its business model. The consensus mark was pegged at $25 million.
In the past year, shares of LVO have lost 58.1%.
IMAX Corporation (IMAX - Free Report) reported second-quarter 2025 adjusted earnings of 26 cents per share, which beat the Zacks Consensus Estimate by 36.84% and increased 44.4% year over year.
Total revenues of $91.7 million beat the Zacks Consensus Estimate by 0.62% and increased 3.1% year over year.
In the past, shares of IMAX have gained 21.1%
Comcast (CMCSA - Free Report) reported second-quarter 2025 adjusted earnings of $1.25 per share, which beat the Zacks Consensus Estimate by 6.84% and increased 3.3% year over year.
Consolidated revenues increased 2.1% year over year to $30.31 billion. The figure beat the Zacks Consensus Estimate by 1.6%.
Shares of CMCSA have lost 16.7% in the past year.
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Dolby Q3 Earnings & Revenues Surpass Estimates, Increase Y/Y
Key Takeaways
Dolby Laboratories, Inc. (DLB - Free Report) reported third-quarter fiscal 2025 non-GAAP earnings per share (EPS) of 78 cents, surpassing the Zacks Consensus Estimate by 8.3%. It reported 71 cents in the prior-year quarter.
Total revenues were $315.6 million, up from $288.8 million in the year-ago quarter and surpassed the Zacks Consensus Estimate by 3.9%. This uptick was driven by higher revenues in the Licensing segment and the Product and Services segment.
The company had a strong third quarter and it continues to experience robust engagement from creators, distributors and device manufacturers. The presence of Dolby Atmos and Dolby Vision keeps expanding across various forms of content, like music, sports, podcasts, user-generated videos, films and television, and across a broad array of devices, including mobile phones, TVs, PCs, automobiles and soundbars.
Following the announcement, shares of the company marginally declined in the after-market trading session yesterday. In the past six months, shares have lost 10.5% against the Zacks Audio Video Production industry’s growth of 9.1%.
Image Source: Zacks Investment Research
DLB’s Segmental Performance
Revenues from Licensing were $289.9 million, up 8.5% year over year. Licensing revenue reached the upper end of the company’s guidance, as some activity anticipated for the fourth quarter occurred earlier than expected.
Products and Services’ revenues were up 18% year over year to $25.6 million.
Our estimates were pegged at $279.1 million and $21.5 million for the Licensing and Products and Services revenues, respectively.
Broadcast Licensing contributed 38% to total licensing revenues in the quarter under review. Mobile Licensing, Consumer Electronics, PC Licensing and Licensing from Other Markets accounted for 19%, 10%, 12% and 21% of licensing revenues, respectively.
Dolby Laboratories Price, Consensus and EPS Surprise
Dolby Laboratories price-consensus-eps-surprise-chart | Dolby Laboratories Quote
Other Details of DLB
Gross profit in the fiscal third quarter was $271.5 million compared with $253.2 million in the year-ago quarter. Total operating expenses increased to $223.9 million from $216.4 million reported in the year-ago quarter.
Operating income was $47.6 million compared with $36.8 million in the year-ago quarter.
DLB’s Cash Flow & Liquidity
For the fiscal year to date that ended on June 27, 2025, Dolby generated $349.4 million of net cash from operating activities.
As of June 27, 2025, the company had $698.6 million in cash and cash equivalents, with $581.8 million in total liabilities. It had $626.6 million in cash and cash equivalents, with $646 million in total liabilities, as of March 28, 2025.
The company repurchased approximately 526,000 shares of its common stock for around $40 million during the quarter and ended the period with roughly $312 million remaining under its stock repurchase authorization.
The company declared a cash dividend of 33 cents per share, payable on Aug. 20, 2025, to its shareholders of record on Aug. 12, 2025.
DLB’s 2025 Outlook
For the fourth quarter of fiscal 2025, the company estimates revenues between $288 million and $318 million. It expects GAAP EPS of 28-43 cents and non-GAAP EPS between 61 cents and 76 cents.
The company anticipates third-quarter licensing revenues to be between $263 million and $293 million.
On a GAAP basis, operating expenses are expected to be in the range of $225-$235 million. On a non-GAAP basis, the same is anticipated to be between $190 million and $200 million.
For fiscal 2025, the company expects revenues to be in the $1.33-$1.36 billion band, compared with the previous guidance of $1.31-$1.38 billion.
GAAP operating margin is still expected to be 20%, while the non-GAAP operating margin is projected to be nearly 33%. Licensing revenues are forecasted to be in the range of $1.23 billion to $1.26 billion compared with $1.21-$1.28 billion predicted earlier.
On a GAAP basis, operating expenses are expected to range from $910 million to $920 million compared with $905 million and $920 million projected earlier. On a non-GAAP basis, it is anticipated to range from $765 million to $775 million compared with $760-$775 million projected earlier.
The company expects GAAP EPS of $2.40 to $2.55, changed from $2.31-$2.46, and non-GAAP EPS is still anticipated to be $3.88-$4.03.
Recent Updates
Dolby continued to expand its presence across content, devices and platforms. Major sporting events such as the FIFA Club World Cup, Stanley Cup Finals, French Open and IPL playoffs and finals were broadcast in Dolby.
Audi announced support for Dolby Atmos in its Q7, Q8, A8 and E-Tron GT models, while in India, Tata launched the Harrier EV and Mahindra introduced the Thar ROXX AX7L SUV, both featuring Dolby Atmos. Motorola debuted its first smartphone with Dolby Vision Capture and the Xiaomi 15S Pro and Civi 5 Pro were launched with both Dolby Vision and Dolby Atmos. New Dolby-enabled TVs and speakers were released by Samsung, Haier, TCL, LG, Marshall and JBL.
Dolby also partnered with Lenovo and Google to launch the first Chromebook supporting Dolby Atmos. Meanwhile, HBO Max, offering most of its sports content in Dolby, announced plans to expand its streaming service to 12 more countries this summer, nearing availability in 100 markets.
DLB’s Zacks Rank
Dolby currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Firms in Consumer Discretionary Space
LiveOne, Inc. (LVO - Free Report) incurred a fourth-quarter fiscal 2025 GAAP loss of 8 cents per share compared with a loss of 3 cents a year ago. The Zacks Consensus Estimate was pegged at a loss of 5 cents per share.
Quarterly revenues plunged 37.6% year over year to $19.3 million, mostly attributable to lower revenues from Slacker Radio, which has been transforming its business model. The consensus mark was pegged at $25 million.
In the past year, shares of LVO have lost 58.1%.
IMAX Corporation (IMAX - Free Report) reported second-quarter 2025 adjusted earnings of 26 cents per share, which beat the Zacks Consensus Estimate by 36.84% and increased 44.4% year over year.
Total revenues of $91.7 million beat the Zacks Consensus Estimate by 0.62% and increased 3.1% year over year.
In the past, shares of IMAX have gained 21.1%
Comcast (CMCSA - Free Report) reported second-quarter 2025 adjusted earnings of $1.25 per share, which beat the Zacks Consensus Estimate by 6.84% and increased 3.3% year over year.
Consolidated revenues increased 2.1% year over year to $30.31 billion. The figure beat the Zacks Consensus Estimate by 1.6%.
Shares of CMCSA have lost 16.7% in the past year.