View all financial news

Dolby Laboratories Reports First Quarter Fiscal 2022 Financial Results

02/03/2022

SAN FRANCISCO, Feb. 03, 2022 (GLOBE NEWSWIRE) -- Dolby Laboratories, Inc. (NYSE:DLB) today announced the company's financial results for the first quarter of fiscal 2022. For the first quarter, Dolby reported total revenue of $351.6 million, compared to $389.9 million for the first quarter of fiscal 2021.

"We made great progress across each of our key initiatives this quarter," said Kevin Yeaman, President and CEO, Dolby Laboratories. "The inclusion of Dolby Atmos in Samsung’s latest TVs, Dell and ASUS supporting Dolby Vision and Dolby Atmos in their PCs, and positive momentum with Dolby.io are just a few examples of how Dolby is bringing spectacular experiences to even more people around the world."

First quarter GAAP net income was $80.0 million, or $0.77 per diluted share, compared to GAAP net income of $135.2 million, or $1.30 per diluted share, for the first quarter of fiscal 2021. On a non-GAAP basis, first quarter net income was $104.5 million, or $1.01 per diluted share, compared to $153.3 million, or $1.48 per diluted share, for the first quarter of fiscal 2021. First quarter cash flows from operations was $31.7 million, compared to $82.2 million for the first quarter of fiscal 2021. 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

  • Samsung announced the adoption of Dolby Atmos in their TVs for the first time.
  • Dell and ASUS will now support the combined Dolby Vision and Dolby Atmos experience in their latest PC line-ups.
  • Electric car manufacturer NIO announced their new ET5 model will include Dolby Atmos.
  • Comcast will deliver NBC’s coverage of the 2022 Winter Olympics with Dolby Vision and Dolby Atmos to their X1 customers.

COVID-19

Dolby continues to monitor the COVID-19 pandemic and its impact on our company. The safety and well-being of our employees and supporting our communities continue to be priorities. Our revenue continues to be impacted across various markets within licensing and products and services. The implications of COVID-19 on our future results of operations remain uncertain.

Dolby’s financial results for the first quarter of fiscal 2022 rely on estimates of royalty-based revenue that take into consideration the macroeconomic effect of global events, including COVID-19, supply chain constraints, and consumer demand for electronic products. For more information, see the section captioned "Risk Factors" in our Quarterly Report on Form 10-Q for the first quarter of fiscal 2022, filed on or around the date hereof.

Dividend

Today, Dolby announced a cash dividend of $0.25 per share of Class A and Class B common stock, payable on February 23, 2022, to stockholders of record as of the close of business on February 16, 2022.

Stock Repurchase Program

Today, Dolby also announced that its Board of Directors has approved increasing the size of its stock repurchase program by $250 million, bringing the amount available for future repurchases of its Class A Common Stock to approximately $506 million. Stock repurchases under this program may be made through open market transactions, negotiated purchases, or otherwise, at times and in amounts that the company considers appropriate.

Financial Outlook - Second Quarter and Full Year of Fiscal 2022

The volume of shipments, aggregated across various end markets and devices, continues to be impacted and difficult to predict because of economic uncertainty due to COVID-19. The global cinema market has been adversely impacted by COVID-19, and it remains uncertain when and where cinemas will resume operating at full capacity.

Our actual results could differ materially from the estimates we are providing due in part to the challenging economic environment and uncertain effects of COVID-19. The estimates we are providing for future periods reflect certain assumptions about the potential impact of COVID-19, based upon a consideration of external and internal data and information. For more information, see "Forward-Looking Statements" in this press release for a description of certain risks that we face, and the section captioned "Risk Factors" in our Quarterly Report on Form 10-Q for the first quarter of fiscal 2022, filed on or around the date hereof.

Second Quarter Fiscal 2022

Dolby is providing the following estimates for its second quarter of fiscal 2022:

  • Total revenue is estimated to range from $315 million to $345 million.
  • Gross margin percentages are anticipated to range from 88.5% to 89.5% on a GAAP basis and from 89.5% to 90.5% on a non-GAAP basis.
  • Operating expenses are anticipated to range from $224 million to $236 million on a GAAP basis and from $190 million to $200 million on a non-GAAP basis.
  • Effective tax rate is anticipated to range from 19% to 20% on a GAAP basis and 18% to 19% on a non-GAAP basis.
  • Diluted earnings per share is anticipated to range from $0.42 to $0.57 on a GAAP basis and from $0.72 to $0.87 on a non-GAAP basis.

Fiscal Year 2022

Dolby is also providing the following estimates for its fiscal year 2022:

  • Total revenue is estimated to range from $1.34 billion to $1.40 billion.
  • Operating expenses are anticipated to range from $877 million to $897 million on a GAAP basis and from $750 million to $770 million on a non-GAAP basis.
  • Operating margin percentages are anticipated to range from 24% to 26% on a GAAP basis and from 34% to 36% on a non-GAAP basis.
  • Diluted earnings per share is anticipated to range from $2.50 to $3.00 on a GAAP basis and from $3.52 to $4.02 on a non-GAAP basis.

Conference Call Information

Members of Dolby management will lead a conference call open to all interested parties to discuss first quarter fiscal 2022 financial results for Dolby Laboratories at 1:30 p.m. PT (4:30 p.m. ET) on Thursday, February 3, 2022. Access to the teleconference will be available at http://investor.dolby.com or by dialing 1-844-200-6205 (or dialing 1-929-526-1599 for international callers) and entering confirmation code 003699.

A replay of the call will be available from 4:30 p.m. PT (7:30 p.m. ET) on Thursday, February 3, 2022, until 10:30 p.m. PT on Thursday, February 10, 2022 (1:30 a.m. ET on Friday, February 11, 2022), by dialing 1-866-813-9403 (international callers can access the replay by dialing +44-204-525-0658) and entering the confirmation code 895879. 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 provides certain non-GAAP financial measures to provide investors with 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. Specifically, we exclude the following as adjustments from one or more of our 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 we grant. These assumptions may differ from those used by other companies. To facilitate more meaningful comparisons between our underlying operating results and those of other companies, we exclude stock-based compensation expense.

Amortization of acquisition-related intangibles: We amortize intangible assets acquired in connection with acquisitions. These intangible assets consist of patents and technology, customer relationships, and other intangibles. We record amortization charges relating to these intangible assets in our GAAP financial statements, and we view these charges as items arising from pre-acquisition activities that are determined by the timing and valuation of our acquisitions. As these amortization charges do not directly correlate to our operations during any particular period, and often remain unchanged between reporting periods, we exclude these charges to facilitate an evaluation of our current operating results and comparisons to our past operating performance.

Restructuring charges: 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. We exclude restructuring costs, including any adjustments to charges recorded in prior periods, as we believe that these costs are not representative of our normal operating activities and therefore, excluding these amounts enables a more effective comparison to our past operating performance.

Income tax adjustments: We believe that excluding the income tax effect of the aforementioned non-GAAP adjustments provides a more accurate view of our underlying operating results to management and investors.

Other operating income adjustments: We excluded a one-time gain on the sale of property, which was previously classified as held for sale, finalized during the first quarter of fiscal 2021. The property was 51% owned by the controlling interest, therefore 51% of the gain recognized has been attributed to the controlling interest.

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. Dolby's management does not itself, nor does it suggest that investors should, consider non-GAAP financial measures in isolation from, 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. 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, including, but not limited to, statements relating to Dolby's expected financial results for the second quarter of fiscal 2022 and fiscal 2022, our ability to advance our long-term objectives, and future dividend payments are "forward-looking statements" that are subject to 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 COVID-19 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; consumer demand for products that incorporate Dolby technologies; 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; the impact to the overall cinema market, including closures or limitations of cinema capacity and resulting adverse impact to Dolby’s revenue recognized on box-office sales and demand for cinema products and services; temporary Dolby office closures and other actions to protect Dolby’s workforce; and macroeconomic conditions that affect discretionary spending and access to products that contain Dolby technologies); risks associated with trends in the markets in which Dolby operates, including the Broadcast, Mobile, Consumer Electronics, PC, Cinema, Developer Platform Services, and Other Markets; the loss of, or reduction in sales by, a key customer, partner, or licensee; pricing pressures; risks that the continued shift in content distribution from optical disc-based and other traditional media to online and streaming media content could result in fewer devices with Dolby technologies or less revenue from such devices; risks relating to conducting business internationally, including trade restrictions and changes in diplomatic or trade relationships; risks relating to the expiration of patents; 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 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 industry 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 our most recent quarterly report on Form 10-Q. 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. We partner 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, Inc. in the United States and/or other countries. Other trademarks remain the property of their respective owners. DLB-F

 

DOLBY LABORATORIES, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts; unaudited)

  Fiscal Quarter Ended
  December 31,
2021
December 25,
2020
Revenue:    
Licensing $ 332,284   $ 373,005  
Products and services   19,349     16,869  
Total revenue   351,633     389,874  
     
Cost of revenue:    
Cost of licensing   14,935     12,946  
Cost of products and services   17,774     22,358  
Total cost of revenue   32,709     35,304  
     
Gross margin   318,924     354,570  
     
Operating expenses:    
Research and development   68,824     63,772  
Sales and marketing   97,170     75,445  
General and administrative   62,444     54,454  
Gain on sale of assets       (13,871 )
Restructuring charges/(credits)   (95 )   10,023  
Total operating expenses   228,343     189,823  
     
Operating income   90,581     164,747  
     
Other income/(expense):    
Interest income   716     974  
Interest expense   (84 )   (85 )
Other income, net   229     1,326  
Total other income   861     2,215  
     
Income before income taxes   91,442     166,962  
Provision for income taxes   (11,432 )   (24,272 )
Net income including controlling interest   80,010     142,690  
Less: net (income)/loss attributable to controlling interest   4     (7,492 )
Net income attributable to Dolby Laboratories, Inc. $ 80,014   $ 135,198  
     
Net income per share:    
Basic $ 0.79   $ 1.34  
Diluted $ 0.77   $ 1.30  
Weighted-average shares outstanding:    
Basic   101,230     100,716  
Diluted   103,801     103,876  


DOLBY LABORATORIES, INC.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands; unaudited)

  December 31,
2021
September 24,
2021
ASSETS    
Current assets:    
Cash and cash equivalents $ 1,056,686   $ 1,225,380  
Restricted cash   7,746     7,652  
Short-term investments   80,618     38,839  
Accounts receivable, net   241,449     232,609  
Contract assets, net   226,809     182,316  
Inventories, net   13,144     10,965  
Prepaid expenses and other current assets   68,693     62,737  
Total current assets   1,695,145     1,760,498  
Long-term investments   120,988     62,819  
Property, plant and equipment, net   533,706     534,381  
Operating lease right-of-use assets   63,141     67,128  
Goodwill and intangible assets, net   465,701     463,584  
Deferred taxes   164,909     156,020  
Other non-current assets   61,331     61,257  
Total assets $ 3,104,921   $ 3,105,687  
     
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Current liabilities:    
Accounts payable $ 19,104   $ 17,779  
Accrued liabilities   225,847     262,728  
Income taxes payable   1,601     1,334  
Contract liabilities   21,426     18,473  
Operating lease liabilities   15,312     15,403  
Total current liabilities   283,290     315,717  
Non-current contract liabilities   24,117     23,713  
Non-current operating lease liabilities   52,615     56,715  
Other non-current liabilities   102,378     105,310  
Total liabilities   462,400     501,455  
     
Stockholders’ equity:    
Class A common stock   59     59  
Class B common stock   41     41  
Retained earnings   2,649,175     2,607,909  
Accumulated other comprehensive loss   (11,521 )   (10,030 )
Total stockholders’ equity – Dolby Laboratories, Inc.   2,637,754     2,597,979  
Controlling interest   4,767     6,253  
Total stockholders’ equity   2,642,521     2,604,232  
Total liabilities and stockholders’ equity $ 3,104,921   $ 3,105,687  


DOLBY LABORATORIES, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands; unaudited)

  Fiscal Quarter Ended
  December 31,
2021
December 25,
2020
Operating activities:    
Net income including controlling interest $ 80,010   $ 142,690  
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization   23,477     22,168  
Stock-based compensation   32,656     26,313  
Amortization of operating lease right-of-use assets   3,944     4,194  
Amortization of premium on investments   311     329  
Provision for/(benefit from) credit losses   1,559     (1,367 )
Deferred income taxes   (9,004 )   (15,439 )
Gain on sale of assets       (13,871 )
Other non-cash items affecting net income   (358 )   1,276  
Changes in operating assets and liabilities:    
Accounts receivable, net   (9,965 )   (111,902 )
Contract assets   (44,428 )   (26,384 )
Inventories   (1,819 )   4,424  
Operating lease right-of-use assets   (77 )   (844 )
Prepaid expenses and other assets   (7,082 )   6,397  
Accounts payable and accrued liabilities   (34,034 )   30,397  
Income taxes, net   1,439     13,984  
Contract liabilities   3,350     5,153  
Operating lease liabilities   (4,038 )   (3,481 )
Other non-current liabilities   (4,281 )   (1,877 )
Net cash provided by operating activities   31,660     82,160  
     
Investing activities:    
Purchases of marketable securities   (108,147 )   (13,726 )
Proceeds from sales of marketable securities   2,001     1,854  
Proceeds from maturities of marketable securities   10,913     9,535  
Purchases of property, plant, and equipment   (14,452 )   (15,527 )
Proceeds from sale of assets       16,365  
Purchases of intangible assets   (11,426 )    
Purchases of other investments   (5,000 )    
Net cash used in investing activities   (126,111 )   (1,499 )
     
Financing activities:    
Proceeds from issuance of common stock   21,372     51,323  
Repurchase of common stock   (35,573 )   (39,985 )
Payment of cash dividend   (25,283 )   (22,231 )
Distribution to controlling interest   (1,435 )   (7,362 )
Shares repurchased for tax withholdings on vesting of restricted stock   (31,920 )   (28,085 )
Net cash used in financing activities   (72,839 )   (46,340 )
     
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash   (1,310 )   5,125  
Net increase/(decrease) in cash, cash equivalents, and restricted cash   (168,600 )   39,446  
Cash, cash equivalents, and restricted cash at beginning of period   1,233,032     1,079,979  
Cash, cash equivalents, and restricted cash at end of period $ 1,064,432   $ 1,119,425  

 

 

GAAP to Non-GAAP Reconciliations
(in millions, except per share data; unaudited)
           
The following tables present Dolby's GAAP financial measures reconciled to the non-GAAP financial measures included in this release for the first quarter of fiscal 2022 and 2021:
           
Net income:       Fiscal Quarter Ended
        December 31,
2021
December 25,
2020
GAAP net income       $ 80.0   $ 135.2  
Stock-based compensation (1)         32.7     26.3  
Amortization of acquisition-related intangibles (2)         2.8     2.5  
Restructuring charges/(credits)         (0.1 )   10.0  
Income tax adjustments         (10.9 )   (13.9 )
Other operating income adjustments             (6.8 )
Non-GAAP net income       $ 104.5   $ 153.3  
           
(1) Stock-based compensation included in above line items:          
Cost of products and services       $ 0.6   $ 0.6  
Research and development         10.1     7.9  
Sales and marketing         12.3     9.8  
General and administrative         9.7     8.0  
           
(2) Amortization of acquisition-related intangibles included in above line items:          
Cost of licensing       $ 0.7   $ 0.7  
Cost of products and services         0.9     0.9  
Research and development         0.1     0.1  
Sales and marketing         1.1     0.8  
           
Diluted earnings per share:       Fiscal Quarter Ended
        December 31,
2021
December 25,
2020
GAAP diluted earnings per share       $ 0.77   $ 1.30  
Stock-based compensation         0.31     0.25  
Amortization of acquisition-related intangibles         0.03     0.02  
Restructuring charges             0.10  
Income tax adjustments         (0.10 )   (0.13 )
Other operating income adjustments             (0.06 )
Non-GAAP diluted earnings per share       $ 1.01   $ 1.48  
           
           
Shares used in computing diluted earnings per share         104     104  
           
The following tables present a reconciliation between GAAP and non-GAAP versions of the estimated financial amounts for the second quarter of fiscal 2022 and fiscal 2022 included in this release:
           
Gross margin:         Q2 2022
GAAP gross margin (low - high end of range)         88.5% - 89.5%
Stock-based compensation           0.4% 
Amortization of acquisition-related intangibles           0.6% 
Non-GAAP gross margin (low - high end of range)         89.5% - 90.5%
           
Operating expenses:   Q2 2022     Fiscal 2022
GAAP operating expenses (low - high end of range)   $224 - $236     $877 - $897
Stock-based compensation     (28 )       (117 )
Amortization of acquisition-related intangibles     (1 )       (4 )
Restructuring charges, net (low - high end of range)   ($5) - ($7)       (6 )
Non-GAAP operating expenses (low - high end of range)   $190 - $200     $750 - $770
           
Operating margin:         Fiscal 2022
GAAP operating margin (low - high end of range)         24% - 26%
Stock-based compensation           9.0% 
Amortization of acquisition-related intangibles           1.0% 
Non-GAAP operating margin (low - high end of range)         34% - 36%
           
Effective tax rate:         Q2 2022
GAAP effective tax rate (low - high end of range)         19% - 20%
Stock-based compensation (low - high end of range)         2% - 3%
Amortization of acquisition-related intangibles (low - high end of range)         (1%) - 0%
Other (low - high end of range)         (1%) - 0%
Non-GAAP effective tax rate (low - high end of range)         18% - 19%
           
Diluted earnings per share: Q2 2022   Fiscal 2022
  Low High   Low High
GAAP diluted earnings per share $ 0.42   $ 0.57     $ 2.50   $ 3.00  
Stock-based compensation   0.27     0.27       1.14     1.14  
Amortization of acquisition-related intangibles   0.03     0.03       0.09     0.09  
Restructuring charges, net   0.06     0.06       0.06     0.06  
Income tax adjustments   (0.06 )   (0.06 )     (0.27 )   (0.27 )
Non-GAAP diluted earnings per share $ 0.72   $ 0.87     $ 3.52   $ 4.02  
           
Shares used in computing diluted earnings per share   104     104       104     104  


Investor Contact:

Ashley Schwenoha
Dolby Laboratories, Inc.
415-645-5506
investor@dolby.com

Media Contact:
Karen Hartquist
Dolby Laboratories, Inc.
415-505-8357
karen.hartquist@dolby.com


Primary Logo

Source: Dolby Laboratories

Multimedia Files:

Categories: Press Releases
View all news