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Dolby (DLB) Q1 Earnings & Revenues Lag Estimates, Down Y/Y
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Dolby Laboratories, Inc. (DLB - Free Report) reported unimpressive first-quarter fiscal 2022 (ended Dec 31, 2021) results, with both the bottom line and top line missing their respective Zacks Consensus Estimate. Supply chain constraints and lower demand for electronic products continue to hamper its operating momentum. However, accelerated adoption of Dolby Vision and Dolby Atmos was a major tailwind.
Net Income
On a GAAP basis, net income in the December quarter declined to $80 million or 77 cents per share from $135.2 million or $1.30 per share in the year-ago quarter. The year-over-year deterioration was primarily due to top-line contraction and lower operating income.
Non-GAAP net income came in at $104.5 million or $1.01 per share compared with $153.3 million or $1.48 per share in the prior-year quarter. The bottom line missed the Zacks Consensus Estimate by 5 cents.
Dolby Laboratories Price, Consensus and EPS Surprise
Total revenues in the reported quarter were $351.6 million, down from $389.9 million in the year-ago quarter. The downtick was due to negative true-up of about $6 million for fourth-quarter 2021 shipments reported that were below the original estimate. This was partly offset by higher adoption of Dolby Atmos and Dolby Vision technologies together with healthy traction of imaging patents. The top line, too, missed the consensus estimate of $364 million.
Segment Performance
Revenues from Licensing were $332.3 million, down from $373 million due to lower recoveries, timing of revenue and a larger true-up in the prior-year period. However, this was partly offset by higher adoption of Dolby Atmos and Dolby Vision in TVs and new licenses in imaging patent programs.
Broadcast Licensing contributed 37% to total licensing revenues in the fiscal first quarter. Mobile licensing accounted for 23%, consumer electronics (CE) 17%, PC licensing 10% and licensing from other markets contributed to 13% of the licensing revenues. CE benefited from higher foundational audio revenues for DMAs and soundbars as well as higher recoveries. PC licensing revenues were bolstered by new imaging patent licensees along with higher Dolby Vision adoption.
Products and services revenues came in at $19.3 million, up from $16.9 million driven by ongoing improvements in the cinema industry across the globe.
Positive momentum in Dolby.io and incorporation of Dolby Atmos in Samsung’s latest TV models for the first time, backed by Dell and ASUS supporting the combined Dolby Vision and Dolby Atmos experience in their latest PC lineups, were some of the important business highlights of first-quarter fiscal 2022.
Other Details
Gross profit in the fiscal first quarter was $318.9 million compared with $354.6 million in the year-earlier quarter. The year-over-year decline was mainly due to lower revenues. Total operating expenses increased to $228.3 million from $189.8 million, primarily due to higher sales and marketing expenses. Restructuring credits in the reported quarter and gain on sale of assets in the prior-year quarter were also responsible for higher operating expenses. Operating income was $90.6 million compared with $164.7 million in the year-ago quarter.
Cash Flow and Liquidity
During the first three months of fiscal 2022, Dolby generated $31.7 million of net cash from operating activities compared with $82.2 million a year ago. As of Dec 31, 2021, the company had $1,056.7 million in cash and cash equivalents with $102.4 million of other non-current liabilities.
Guidance
Dolby provided guidance for the fiscal second quarter and fiscal 2022. For the fiscal second quarter, the company expects GAAP earnings in the range of 42-57 cents per share and non-GAAP earnings in the range of 72 cents to 87 cents per share on revenues of $315-$345 million. On a GAAP basis, operating expenses are expected in the $224-$236 million band whereas on a non-GAAP basis, operating expenses are anticipated in the range of $190-$200 million.
For fiscal 2022, the company expects GAAP earnings in the range of $2.50-$3 per share and non-GAAP earnings in the range of $3.52-$4.02 per share on revenues of $1.34-$1.4 billion. On a GAAP basis, operating expenses are expected in the $877-$897 million band whereas on a non-GAAP basis, operating expenses are anticipated in the range of $750-$770 million.
Dolby expects its unit volume shipments across various end markets and devices to be negatively impacted by the macroeconomic uncertainties pertaining to the coronavirus outbreak. The global cinema market has also been affected by the pandemic and it remains uncertain when and where cinemas will recommence operating at full capacity.
The Zacks Consensus Estimate for GoPro’s next-year earnings has been revised 2.1% upward over the past 60 days.
GoPro delivered a trailing four-quarter earnings surprise of 90%, on average. It has returned 0.7% in the past year.
The Zacks Consensus Estimate for next year for PlayAGS has been narrowed from a loss of 19 cents per share to a loss of 14 cents over the past 60 days.
PlayAGS delivered a trailing four-quarter earnings surprise of 33.3%, on average. AGS shares have gained 19.9% in the past year.
The Zacks Consensus Estimate for Fox Corporation’s next-year earnings has been revised 0.3% upward over the past 60 days.
Fox Corporation delivered a trailing four-quarter earnings surprise of 81.1%, on average. The stock has gained 30.1% in the past year. FOXA has a long-term earnings growth expectation of 8.8%.
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Dolby (DLB) Q1 Earnings & Revenues Lag Estimates, Down Y/Y
Dolby Laboratories, Inc. (DLB - Free Report) reported unimpressive first-quarter fiscal 2022 (ended Dec 31, 2021) results, with both the bottom line and top line missing their respective Zacks Consensus Estimate. Supply chain constraints and lower demand for electronic products continue to hamper its operating momentum. However, accelerated adoption of Dolby Vision and Dolby Atmos was a major tailwind.
Net Income
On a GAAP basis, net income in the December quarter declined to $80 million or 77 cents per share from $135.2 million or $1.30 per share in the year-ago quarter. The year-over-year deterioration was primarily due to top-line contraction and lower operating income.
Non-GAAP net income came in at $104.5 million or $1.01 per share compared with $153.3 million or $1.48 per share in the prior-year quarter. The bottom line missed the Zacks Consensus Estimate by 5 cents.
Dolby Laboratories Price, Consensus and EPS Surprise
Dolby Laboratories price-consensus-eps-surprise-chart | Dolby Laboratories Quote
Revenues
Total revenues in the reported quarter were $351.6 million, down from $389.9 million in the year-ago quarter. The downtick was due to negative true-up of about $6 million for fourth-quarter 2021 shipments reported that were below the original estimate. This was partly offset by higher adoption of Dolby Atmos and Dolby Vision technologies together with healthy traction of imaging patents. The top line, too, missed the consensus estimate of $364 million.
Segment Performance
Revenues from Licensing were $332.3 million, down from $373 million due to lower recoveries, timing of revenue and a larger true-up in the prior-year period. However, this was partly offset by higher adoption of Dolby Atmos and Dolby Vision in TVs and new licenses in imaging patent programs.
Broadcast Licensing contributed 37% to total licensing revenues in the fiscal first quarter. Mobile licensing accounted for 23%, consumer electronics (CE) 17%, PC licensing 10% and licensing from other markets contributed to 13% of the licensing revenues. CE benefited from higher foundational audio revenues for DMAs and soundbars as well as higher recoveries. PC licensing revenues were bolstered by new imaging patent licensees along with higher Dolby Vision adoption.
Products and services revenues came in at $19.3 million, up from $16.9 million driven by ongoing improvements in the cinema industry across the globe.
Positive momentum in Dolby.io and incorporation of Dolby Atmos in Samsung’s latest TV models for the first time, backed by Dell and ASUS supporting the combined Dolby Vision and Dolby Atmos experience in their latest PC lineups, were some of the important business highlights of first-quarter fiscal 2022.
Other Details
Gross profit in the fiscal first quarter was $318.9 million compared with $354.6 million in the year-earlier quarter. The year-over-year decline was mainly due to lower revenues. Total operating expenses increased to $228.3 million from $189.8 million, primarily due to higher sales and marketing expenses. Restructuring credits in the reported quarter and gain on sale of assets in the prior-year quarter were also responsible for higher operating expenses. Operating income was $90.6 million compared with $164.7 million in the year-ago quarter.
Cash Flow and Liquidity
During the first three months of fiscal 2022, Dolby generated $31.7 million of net cash from operating activities compared with $82.2 million a year ago. As of Dec 31, 2021, the company had $1,056.7 million in cash and cash equivalents with $102.4 million of other non-current liabilities.
Guidance
Dolby provided guidance for the fiscal second quarter and fiscal 2022. For the fiscal second quarter, the company expects GAAP earnings in the range of 42-57 cents per share and non-GAAP earnings in the range of 72 cents to 87 cents per share on revenues of $315-$345 million. On a GAAP basis, operating expenses are expected in the $224-$236 million band whereas on a non-GAAP basis, operating expenses are anticipated in the range of $190-$200 million.
For fiscal 2022, the company expects GAAP earnings in the range of $2.50-$3 per share and non-GAAP earnings in the range of $3.52-$4.02 per share on revenues of $1.34-$1.4 billion. On a GAAP basis, operating expenses are expected in the $877-$897 million band whereas on a non-GAAP basis, operating expenses are anticipated in the range of $750-$770 million.
Dolby expects its unit volume shipments across various end markets and devices to be negatively impacted by the macroeconomic uncertainties pertaining to the coronavirus outbreak. The global cinema market has also been affected by the pandemic and it remains uncertain when and where cinemas will recommence operating at full capacity.
Zacks Rank & Stocks to Consider
Dolby currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader industry are GoPro, Inc. (GPRO - Free Report) , PlayAGS, Inc. (AGS - Free Report) and Fox Corporation (FOXA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for GoPro’s next-year earnings has been revised 2.1% upward over the past 60 days.
GoPro delivered a trailing four-quarter earnings surprise of 90%, on average. It has returned 0.7% in the past year.
The Zacks Consensus Estimate for next year for PlayAGS has been narrowed from a loss of 19 cents per share to a loss of 14 cents over the past 60 days.
PlayAGS delivered a trailing four-quarter earnings surprise of 33.3%, on average. AGS shares have gained 19.9% in the past year.
The Zacks Consensus Estimate for Fox Corporation’s next-year earnings has been revised 0.3% upward over the past 60 days.
Fox Corporation delivered a trailing four-quarter earnings surprise of 81.1%, on average. The stock has gained 30.1% in the past year. FOXA has a long-term earnings growth expectation of 8.8%.