Dolby Laboratories, Inc DLB reported first-quarter fiscal 2025 results, with non-GAAP earnings per share (EPS) of $1.14 compared with $1.01 reported in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 6.5%. Strong revenues and higher gross margins were primary growth drivers.

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Total revenues were $357 million, up from $315.6 million in the year-ago quarter and beat the Zacks Consensus Estimate by 3.1%. This uptick was driven by higher revenues across both the business segments. 

Dolby Laboratories Price, Consensus and EPS Surprise

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

For fiscal 2025, the company expects Dolby Atmos and Dolby Vision along with imaging patents to grow around 15%. Revenues from foundational audio technology to be roughly flat on a year-over-year basis. 

The company announced a dividend of 33 cents per share, payable on Feb. 19, to its shareholders of record on Feb. 11, 2025.

Following the announcement, shares are down 1.1% in the pre-market trading today. In the past year, shares have lost 4.8% against the industry’s growth of 11.4%.

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DLB’s Segmental Performance

Revenues from Licensing were $330.5 million, up 12% year over year. DLB highlighted that the segmental revenues included a $70 million favorable true-up related to the fiscal fourth quarter shipments that were above the original estimate. The true-up was witnessed across all end markets but was most prominent in auto and broadcast verticals. 

Products and Services’ revenues were up 22% year over year to $26.5 million.

Our estimates were pegged at $319.5 million and $26.7 million for the Licensing, and Products and Services revenues, respectively. 

Broadcast Licensing contributed 35% to total licensing revenues in the quarter under review. Mobile Licensing, Consumer Electronics, PC Licensing and Licensing from Other Markets accounted for 19%, 15%, 9%, and 22% of licensing revenues, respectively.

For fiscal 2025, management continues to expect Consumer Electronics to be down mid-single digits, while it expects growth in mobile and other markets. Broadcast and PC are expected to witness flattish sales.

Other Details of DLB

Gross profit in the fiscal first quarter was $316.2 million compared with $283.5 million in the year-ago quarter. Total operating expenses increased to $236.4 million from $217.3 million reported in the year-ago quarter.

Operating income was $79.9 million compared with $66.2 million in the year-ago quarter.

DLB’s Cash Flow & Liquidity

For the fiscal quarter that ended on Dec. 27, Dolby generated $107 million of net cash from operating activities 

As of Dec. 27, 2024, the company had $520.8 million in cash and cash equivalents, with $641.6 million in total liabilities. It had $482 million in cash and cash equivalents, with $623 million in total liabilities, as of Sept. 27, 2024.

The company repurchased 186,000 shares of its common shares for $15 million and ended the quarter with $387 million of stock left under repurchase authorization.

DLB’s 2025 Outlook

For the second quarter of fiscal 2025, the company estimates revenues between $355 million and $385 million.  It expects GAAP EPS of 77-92 cents and non-GAAP EPS between $1.19 and $1.34.

On a GAAP basis, operating expenses are expected to be in the range of $230-$240 million, whereas, 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-$1.39 billion band. GAAP operating margin is expected to be 20%, while the non-GAAP operating margin is expected to be nearly 33%. Licensing revenues are forecasted to be in the range of $1.22 billion to $1.28 billion. 

On a GAAP basis, operating expenses are expected to be between $915 million and $925 million, whereas, on a non-GAAP basis, the same is anticipated to be in the range of $765-$775 million. The company expects GAAP EPS of $2.39-$2.54 and non-GAAP EPS of $3.99-$4.14.

DLB’s Zacks Rank

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

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Recent Performance of Other Companies

CACI International Inc CACI reported EPS of $5.95 for the second quarter of fiscal 2025, beating the Zacks Consensus Estimate by 15.1%. Quarterly net sales were $2.1 billion, up 14.5% from the year-ago quarter. This uptick resulted from strong growth across the board. 

Seagate Technology Holdings plc STX reported second-quarter fiscal 2025 non-GAAP earnings of $2.03 per share, beating the Zacks Consensus Estimate by 7.98%. The figure was toward the high end of management’s guidance of $1.85 per share (+/- 20 cents). Non-GAAP revenues of $2.325 billion beat the Zacks Consensus Estimate by 0.64%. The figure increased 49.5% year over year and 7.2% sequentially. This upside resulted from strong momentum in the nearline cloud segment and significant improvements in the enterprise markets. 

SAP SE SAP reported fourth-quarter 2024 non-IFRS EPS of €1.40, which increased 24% from the year-ago quarter. Driven by momentum in the cloud business, SAP reported total revenues on a non-IFRS basis of €9.38 billion, which increased 11% year over year (up 10% at constant currency or cc).

SAP achieved significant strides in cloud adoption, with half of the fourth-quarter cloud order entries incorporating artificial intelligence (AI) use cases. This highlights SAP's growing focus on Business AI, which is poised to play a pivotal role in driving revenue growth through 2027.

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