Exhibit 99.1

Dolby Laboratories Reports Second Quarter 2024 Financial Results

SAN FRANCISCO, May 2, 2024 — Dolby Laboratories, Inc. (NYSE:DLB) today announced the company’s financial results for the second quarter of fiscal 2024.

“Our second quarter results were in line with our expectations,” said Kevin Yeaman, President and CEO, Dolby Laboratories. “Dolby Atmos and Dolby Vision content is expanding across movies, TV, sports, music and more, driving more consumer device adoption and bringing Dolby to more people worldwide.”

Second Quarter Fiscal 2024 Financial Highlights

 

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Total revenue was $364.5 million, compared to $375.9 million for the second quarter of fiscal 2023.

 

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GAAP net income was $97.8 million, or $1.01 per diluted share, compared to GAAP net income of $95.7 million, or $0.98 per diluted share, for the second quarter of fiscal 2023. On a non-GAAP basis, second quarter net income was $123.2 million, or $1.27 per diluted share, compared to $122.6 million, or $1.26 per diluted share, for the second quarter of fiscal 2023.

 

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Dolby repurchased 294 thousand shares of its common stock and ended the quarter with approximately $107 million of stock repurchase authorization available going forward.

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

 

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Max announced the launch of Dolby Vision for live sports in addition to Dolby Atmos.

 

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The Indian Premier League broadcasted cricket in Dolby Atmos and Dolby Vision for the first time.

 

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Transsion, a global mobile device maker, announced that their latest smartphones will support Dolby Atmos.

 

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Xiaomi expanded its premium smartphone portfolio in India with smartphones supporting Dolby Vision Capture, Dolby Vision, and Dolby Atmos.

 

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Oppo recently announced that they introduced five new phones supporting Dolby Vision Capture.

 

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Honor launched the Magic 6 Pro smartphone that supports Dolby Vision.

 

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Lava Mobiles launched its new Blaze Curve 5G smartphone in India that supports Dolby Atmos.

 

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Xiaomi also announced that their first electric vehicle, the SU7, will support Dolby Atmos.

 

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Automotive manufacturer Hyundai began shipping its Genesis model that supports Dolby Atmos.

Dividend

Today, Dolby announced a cash dividend of $0.30 per share of Class A and Class B common stock, payable on May 22, 2024, to stockholders of record as of the close of business on May 14, 2024.

Financial Outlook

Dolby’s financial outlook relies, in part, on estimates of royalty-based revenue that take into consideration various factors that are subject to uncertainty, including consumer demand for electronic products. In addition, actual results could differ materially from the estimates Dolby is providing below due in part to uncertainty resulting from the macroeconomic effect of certain conditions, including supply chain constraints, international conflicts, geopolitical instability, and fluctuations in inflation and interest rates. The uncertainty resulting from these factors has greatly reduced its visibility into Dolby’s future outlook. To the extent possible, the estimates Dolby is providing for future periods reflect certain assumptions about the potential impact of certain of these items, based upon a consideration of currently available external and internal data and information. These assumptions are subject to risks and uncertainties. For more information, see “Forward-Looking Statements” in this press release for a description of certain risks that Dolby faces, and the section captioned “Risk Factors” in its Quarterly Report on Form 10-Q for the second quarter of fiscal 2024, to be filed on or around the date hereof.

Dolby is providing the following estimates for its third quarter of fiscal 2024:

 

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Total revenue is estimated to range from $270 million to $300 million.

 

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Licensing revenue is estimated to range from $245 million to $275 million.

 

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Gross margins are anticipated to be approximately 87%.

 

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Operating expenses are anticipated to range from $215 million to $225 million on a GAAP basis and from $180 million to $190 million on a non-GAAP basis.

 

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Effective tax rate is anticipated to be around 24% on a GAAP basis and around 21% on a non-GAAP basis.

 

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Diluted earnings per share is anticipated to range from $0.21 to $0.36 on a GAAP basis and from $0.51 to $0.66 on a non-GAAP basis.

Dolby is providing the following estimates for the full year of fiscal 2024:

 

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Total revenue is expected to be roughly $1.30 billion.

 

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Gross margins are anticipated to be roughly 89%.

 

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Operating expenses are anticipated to range from $885 million to $895 million on a GAAP basis and from $740 million to $750 million on a non-GAAP basis.

 

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Dolby expects operating margins on a GAAP basis to be roughly 20% and on a non-GAAP basis to be roughly 32%.

 

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Diluted earnings per share is anticipated to range from $2.30 to $2.45 on a GAAP basis and from $3.60 to $3.75 on a non-GAAP basis.

Conference Call Information

Members of Dolby management will lead a conference call open to all interested parties to discuss second quarter fiscal 2024 financial results for Dolby Laboratories at 2:00 p.m. PT (5:00 p.m. ET) on Thursday, May 2, 2024. Access to the teleconference will be available at http://investor.dolby.com or by dialing 1-888-210-2212 (+1-646-960-0390 for international callers) and entering confirmation code 5587811.

A replay of the call will be available from 5:00 p.m. PT (8:00 p.m. ET) on Thursday, May 2, 2024, until 8:59 p.m. PT (11:59 p.m. ET) on Tuesday, May 7, 2024 by dialing 1-800-770-2030 (+1-647-362-9199 for international callers) and entering the confirmation code 5587811. 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 management uses, and Dolby provides to investors, certain non-GAAP financial measures as 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 and performance. We believe these non-GAAP financial measures are also helpful to investors in enabling comparability of operating performance between periods and among peer companies. Additionally, Dolby’s management regularly uses our supplemental non-GAAP financial measures to make operating decisions, for planning and forecasting purposes and determining bonus payouts. Specifically, Dolby excludes the following as adjustments from one or more of its 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 Dolby grants. These assumptions may differ from those used by other companies. To facilitate more meaningful comparisons between its underlying operating results and those of other companies, Dolby excludes stock-based compensation expense.

Amortization of acquisition-related intangibles: Dolby amortizes intangible assets acquired in connection with acquisitions. These intangible assets consist of patents and technology, customer relationships, and other intangibles. Dolby records amortization charges relating to these intangible assets in its GAAP financial statements, and Dolby views these charges as items arising from pre-acquisition activities that are determined by the timing and valuation of its acquisitions. As these amortization charges do not directly correlate to its operations during any particular period, Dolby excludes these charges to facilitate an evaluation of its current operating performance and comparisons to its past operating results. In addition, while amortization expense of acquisition-related intangible assets is excluded from Non-GAAP Net Income, the revenue generated from those assets is not excluded.

Restructuring charges or credits: 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. Dolby excludes restructuring costs, including any adjustments to charges recorded in prior periods (which may be credits), as Dolby believes that these costs are not representative of its normal operating activities and therefore, excluding these amounts enables a more effective comparison of its past operating performance and to that of other companies.

Income tax adjustments: The income tax effects of the aforementioned non-GAAP adjustments do not directly correlate to its operating performance so Dolby believes that excluding such income tax effects provides a more meaningful view of its underlying operating results to management and investors.

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, including as a means to evaluate period-to-period comparisons. Dolby’s management does not itself, nor does it suggest that investors should, consider non-GAAP financial measures in isolation from, superior to, 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 and below. 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 and in our earnings calls, including, but not limited to, expected financial results for the third quarter of fiscal 2024 and full year fiscal 2024, Dolby’s ability to expand existing business, navigate challenging periods, pursue its long-term growth opportunities, and advance its other long-term objectives are “forward-looking statements” that inherently involve substantial 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 economic conditions 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; the level at which Dolby technologies are incorporated into products and the consumer demand for such products; 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; lengthening sales cycles; the impact to the overall cinema market including adverse impact to Dolby’s revenue recognized on box-office sales and demand for cinema products and services; and macroeconomic conditions that affect discretionary spending and access to products that contain Dolby technologies); risks associated with geopolitical issues and international conflicts; risks associated with trends in the markets in which Dolby operates, including the broadcast, mobile, consumer electronics, PC, and other markets; the loss of, or reduction in sales by, a key customer, partner, or licensee; pricing pressures; risks relating to changing trends in the way that content is distributed and consumed; risks relating to conducting business internationally, including trade restrictions and changes in diplomatic or trade relationships; risks relating to maintaining patent coverage; 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 products and 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 and cinema industries generally, including the potential impacts of the recent strikes by the WGA and SAG-AFTRA; 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 its Quarterly Report on Form 10-Q filed on or around the date hereof. Dolby may not actually achieve the plans, intentions, or expectations disclosed in its forward-looking statements. Forward-looking statements are based upon information available to us as of the date of such statements, and while Dolby believes such information forms a reasonable basis for such statements, such information may be limited or incomplete. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Except as required by law, 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. Dolby partners 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 in the United States and/or other countries. Other trademarks remain the property of their respective owners.

DOLBY LABORATORIES, INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts; unaudited)

 

		Fiscal Quarter Ended								Fiscal Year-To-Date Ended
		March 29, 2024				March 31, 2023				March 29, 2024				March 31, 2023
Revenue:
Licensing		$	338,240			$	351,608			$	632,007			$	659,619
Products and services			26,283				24,283				48,090				51,193
Total revenue			364,523				375,891				680,097				710,812
Cost of revenue:
Cost of licensing			15,318				21,365				31,054				34,724
Cost of products and services			23,459				19,684				39,783				40,775
Total cost of revenue			38,777				41,049				70,837				75,499
Gross profit			325,746				334,842				609,260				635,313
Operating expenses:
Research and development			62,493				67,951				129,526				132,401
Sales and marketing			90,038				95,695				169,041				177,900
General and administrative			66,742				61,939				131,908				121,911
Restructuring charges/(credits)			(2,495	)			33				3,596				(211	)
Total operating expenses			216,778				225,618				434,071				432,001
Operating income			108,968				109,224				175,189				203,312
Other income/(expense):
Interest income/(expense), net			8,597				6,807				17,784				11,604
Other income, net			4,183				1,250				9,608				2,347
Total other income			12,780				8,057				27,392				13,951
Income before income taxes			121,748				117,281				202,581				217,263
Provision for income taxes			(23,534	)			(21,398	)			(36,786	)			(41,932	)
Net income including noncontrolling interest			98,214				95,883				165,795				175,331
Less: net income attributable to noncontrolling interest			(384	)			(187	)			(984	)			(260	)
Net income attributable to Dolby Laboratories, Inc.		$	97,830			$	95,696			$	164,811			$	175,071
Net income per share:
Basic		$	1.02			$	1.00			$	1.72			$	1.83
Diluted		$	1.01			$	0.98			$	1.69			$	1.80
Weighted-average shares outstanding:
Basic			95,718				95,820				95,547				95,862
Diluted			96,856				97,298				97,397				97,392

DOLBY LABORATORIES, INC.

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands; unaudited)

 

		March 29, 2024				September 29, 2023
ASSETS
Current assets:
Cash and cash equivalents		$	709,535			$	745,364
Restricted cash			114,821				72,602
Short-term investments			115,863				139,148
Accounts receivable, net			282,131				262,245
Contract assets, net			243,170				182,130
Inventories, net			35,797				35,623
Prepaid expenses and other current assets			50,421				50,692
Total current assets			1,551,738				1,487,804
Long-term investments			127,973				97,812
Property, plant, and equipment, net			481,492				481,581
Operating lease right-of-use assets			43,057				40,199
Goodwill and intangible assets, net			560,801				575,836
Deferred taxes			208,494				201,860
Other non-current assets			71,173				94,674
Total assets		$	3,044,728			$	2,979,766
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	19,727			$	20,925
Accrued liabilities			362,883				351,399
Income taxes payable			8,384				4,769
Contract liabilities			37,702				31,505
Operating lease liabilities			14,206				13,628
Total current liabilities			442,902				422,226
Non-current contract liabilities			36,453				39,997
Non-current operating lease liabilities			37,711				37,020
Other non-current liabilities			89,975				108,339
Total liabilities			607,041				607,582
Stockholders’ equity:
Class A common stock			53				53
Class B common stock			41				41
Retained earnings			2,449,876				2,391,990
Accumulated other comprehensive loss			(29,068	)			(36,984	)
Total stockholders’ equity – Dolby Laboratories, Inc.			2,420,902				2,355,100
Noncontrolling interest			16,785				17,084
Total stockholders’ equity			2,437,687				2,372,184
Total liabilities and stockholders’ equity		$	3,044,728			$	2,979,766

DOLBY LABORATORIES, INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands; unaudited)

 

		Fiscal Year-To-Date Ended
		March 29, 2024				March 31, 2023
Operating activities:
Net income including noncontrolling interest		$	165,795			$	175,331
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			35,890				40,388
Stock-based compensation			60,809				61,067
Amortization of operating lease right-of-use assets			5,847				6,565
Amortization of premium on investments			(1,757	)			37
Benefit from credit losses			(1,454	)			(2,072	)
Deferred income taxes			(6,779	)			(19,544	)
Other non-cash items affecting net income			(2,500	)			(4,417	)
Changes in operating assets and liabilities:
Accounts receivable, net			(18,509	)			(37,769	)
Contract assets, net			(61,008	)			(99,162	)
Inventories			(7,836	)			(4,728	)
Operating lease right-of-use assets			(7,848	)			(2,643	)
Prepaid expenses and other assets			33,527				12,943
Accounts payable and accrued liabilities			3,923				21,609
Income taxes, net			5,215				17,370
Contract liabilities			2,651				3,852
Operating lease liabilities			1,028				(5,415	)
Other non-current liabilities			(17,176	)			(2,475	)
Net cash provided by operating activities			189,818				160,937
Investing activities:
Purchases of marketable securities			(104,135	)			(80,561	)
Proceeds from sales of marketable securities			4,451				52,345
Proceeds from maturities of marketable securities			97,459				94,843
Purchases of property, plant, and equipment			(15,015	)			(14,741	)
Net cash provided by (used in) investing activities			(17,240	)			51,886
Financing activities:
Proceeds from issuance of common stock			29,345				21,394
Repurchase of common stock			(104,999	)			(99,276	)
Payment of cash dividend			(57,268	)			(51,741	)
Distribution to noncontrolling interest			(1,047	)			(266	)
Shares repurchased for tax withholdings on vesting of restricted stock			(36,054	)			(26,800	)
Equity issued in connection with business combination			722				—
Payment of deferred consideration for prior business combinations			—				(500	)
Net cash used in financing activities			(169,301	)			(157,189	)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash			3,113				9,415
Net increase/(decrease) in cash, cash equivalents, and restricted cash			6,390				65,049
Cash, cash equivalents, and restricted cash at beginning of period			817,966				628,371
Cash, cash equivalents, and restricted cash at end of period		$	824,356			$	693,420

GAAP to Non-GAAP Reconciliations

(unaudited)

The following tables present Dolby’s GAAP financial measures reconciled to the non-GAAP financial measures included in this release for the second quarter and year-to-date periods ended March 29, 2024 and March 31, 2023:

 

Net income:		Fiscal Quarter Ended								Fiscal Year-To-Date Ended
(in thousands)		March 29, 2024				March 31, 2023				March 29, 2024				March 31, 2023
GAAP net income attributable to Dolby Laboratories, Inc.		$	97,830			$	95,696			$	164,811			$	175,071
Stock-based compensation (1)			28,915				29,827				60,809				61,067
Amortization of acquisition-related intangibles (2)			3,031				2,372				6,155				3,719
Restructuring charges/(credits)			(2,495	)			33				3,596				(211	)
Income tax adjustments			(4,091	)			(5,367	)			(13,541	)			(9,655	)
Non-GAAP net income attributable to Dolby Laboratories, Inc.		$	123,190			$	122,561			$	221,830			$	229,991
(1) Stock-based compensation included in above line items:
Cost of products and services		$	356			$	432			$	766			$	934
Research and development			8,949				9,473				19,055				20,148
Sales and marketing			9,927				10,275				20,408				21,003
General and administrative			9,683				9,647				20,580				18,982
(2) Amortization of acquisition-related intangibles included in above line items:
Cost of licensing		$	(15	)		$	62			$	47			$	123
Cost of products and services			524				866				1,058				1,733
Research and development			—				126				—				254
Sales and marketing			650				805				1,306				1,609
General and administrative			1,872				513				3,744				—
Diluted earnings per share:		Fiscal Quarter Ended								Fiscal Year-To-Date Ended
		March 29, 2024				March 31, 2023				March 29, 2024				March 31, 2023
GAAP diluted earnings per share		$	1.01			$	0.98			$	1.69			$	1.80
Stock-based compensation			0.30				0.31				0.63				0.63
Amortization of acquisition-related intangibles			0.03				0.02				0.06				0.03
Restructuring charges			(0.03	)			—				0.04				—
Income tax adjustments			(0.04	)			(0.05	)			(0.14	)			(0.10	)
Non-GAAP diluted earnings per share		$	1.27			$	1.26			$	2.28			$	2.36
Weighted-average shares outstanding - diluted (in thousands)			96,856				97,298				97,397				97,392

The following tables present a reconciliation between GAAP and non-GAAP versions of the estimated financial measures for the third quarter of fiscal 2024 and full year fiscal 2024 included in this release:

 

Operating expenses (in millions):		Q3 2024				Fiscal 2024
GAAP operating expenses (low - high end of range)		$	215 - $225			$	885 - $895
Stock-based compensation			(32	)			(128	)
Amortization of acquisition-related intangibles			(3	)			(13	)
Restructuring charges			—				(4	)
Non-GAAP operating expenses (low - high end of range)		$	180 - $190			$	740 - $750

 

Operating margin:		Fiscal 2024
GAAP operating margin			20% +/-
Stock-based compensation			10%
Amortization of acquisition-related intangibles			1%
Restructuring charges			1%
Non-GAAP operating margin			32% +/-

Effective tax rate:		Q3 2024
GAAP effective tax rate			24	%
Stock-based compensation (low - high end of range)			(2	%) - 0%
Amortization of acquisition-related intangibles (low - high end of range)			(1	%) - 0%
Non-GAAP effective tax rate			21	%

 

Diluted earnings per share:		Q3 2024								Fiscal 2024
		Low				High				Low				High
GAAP diluted earnings per share		$	0.21			$	0.36			$	2.30			$	2.45
Stock-based compensation			0.33				0.33				1.30				1.30
Amortization of acquisition-related intangibles			0.03				0.03				0.14				0.14
Restructuring charges			—				—				0.04				0.04
Income tax adjustments			(0.06	)			(0.06	)			(0.18	)			(0.18	)
Non-GAAP diluted earnings per share		$	0.51			$	0.66			$	3.60			$	3.75
Weighted-average shares outstanding - diluted (in thousands)			97,300				97,300				97,600				97,600

Investor Contact:

Peter Goldmacher

415-254-7415

peter.goldmacher@dolby.com

Media Contact:

Rachel Lowery

media@dolby.com