• Q2 Revenue: $370 million, up 1% year over year.
• Licensing Revenue: $346 million, up 2% year over year.
• Products and Services Revenue: $24 million, down 10% year over year.
• Non-GAAP Earnings per Share (EPS): $1.34, up 5% year over year.
• Operating Cash Flow: $175 million.
• Cash and Investments: $701 million at the end of the quarter.
• Stock Repurchase: $35 million worth of common stock repurchased.
• Dividend: $0.33 per share, up 10% from the previous year.
• Q3 Revenue Outlook: $290 million to $320 million.
• Full Year Revenue Outlook: Revised to $1.31 billion to $1.38 billion.
• Gross Margin (Q3 Outlook): Approximately 88% on a non-GAAP basis.
• Non-GAAP Operating Expenses (Q3 Outlook): $190 million to $200 million.
• Non-GAAP EPS (Q3 Outlook): $0.62 to $0.77 per diluted share.
• Full Year Non-GAAP EPS Outlook: $3.88 to $4.03.

• Warning! GuruFocus has detected 3 Warning Signs with DLB.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Licensing revenue and total revenue for the second quarter came in at the midpoint of the guidance range, with non-GAAP earnings at the high end.
• Dolby Laboratories Inc (NYSE:DLB) continues to have strong engagement across its ecosystem of content creators, distributors, and OEM partners.
• The automotive sector is showing high demand for Dolby Atmos, with Porsche and Cadillac announcing integration in their upcoming models.
• Dolby Vision is expanding into the mobile market, with new partnerships in China and increased support from video editing apps.
• Dolby Laboratories Inc (NYSE:DLB) announced plans to expand Dolby Cinemas with AMC and introduce Dolby Vision and Dolby Atmos in theaters in India and South Korea.

Negative Points

• The macroeconomic environment is uncertain, leading to a revised revenue range for the year, indicating potential slight headwinds.
• Products and services revenue was slightly below the midpoint of guidance and down 10% year-over-year.
• Broadcast revenue declined by 11% year-over-year due to timing factors.
• Consumer spending on devices is difficult to predict, impacting the company's ability to forecast revenue with precision.
• The company is facing challenges in forecasting due to a lack of visibility in the economic environment, which could affect device shipments and revenue.

Q & A Highlights

Q: As you're talking to your OEM partners, what's the ability for them to increase capacity in less tariff-affected regions? A: Kevin Yeaman, CEO: It varies by end market. For TVs, Mexico is a major manufacturing location, generally exempt from tariffs, with about 10% in China. Across other portfolios, it varies by OEM. We focus on device shipments and real-time adjustments in pricing and supply chains. Mobile is less sensitive to unit shipments in the short term, and TVs are mostly manufactured in Mexico. We anticipate slight headwinds but remain adaptable to changes.

Q: Can you clarify the reference to 25% of units sold in the US? A: Robert Park, CFO: Approximately 25% of our licensing revenue from consumer device shipments comes from those sold into the US. This applies to all our licensing revenue related to consumer devices in the US.

Q: Has the economic noise affected the momentum of Dolby Vision and Atmos? A: Kevin Yeaman, CEO: We continue to have strong engagement with partners. In Automotive, for example, there's significant investment in in-car entertainment. Porsche and Cadillac have announced plans to include Dolby Atmos in their models, and we now have three Dolby Vision customers. The momentum remains strong.

Q: If the environment continues to deteriorate, might you adjust OpEx for the back half of the year? A: Kevin Yeaman, CEO: We focus on long-term value and are not making quick changes to our operating plans. We remain attuned to changes in the environment and will adjust if necessary. We continue to seek efficiency opportunities.

Q: What will be the catalyst for Dolby Atmos Music in cars to reach a tipping point? A: Kevin Yeaman, CEO: We are pleased with the current momentum, with new manufacturers and deeper lineup expansions. The next milestone would be high-volume mainstream models. We are happy with the progress so far.

Q: What were the true-ups in the quarter? A: Robert Park, CFO: True-ups for Q2 amounted to about $1 million.

Q: Regarding Automotive, are Dolby Vision and Atmos more focused on EVs or specific screen sizes? A: Kevin Yeaman, CEO: Our first three customers are Chinese EV manufacturers, which tend to move fast and invest in in-car entertainment. EVs often have more screens, and people use cars as entertainment centers. This trend is driven by the ability to stream content in cars.

Q: What is the tariff exposure on products and services? A: Robert Park, CFO: The impact of tariffs on our products business is fairly small. We manufacture overseas, but a large portion is shipped to non-US markets, resulting in marginal tariff impacts.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.