Sign in

You're signed outSign in or to get full access.

DL

Dolby Laboratories, Inc. (DLB)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY25 revenue was $370M (+1% YoY) with licensing at $346M; non‑GAAP EPS was $1.34 at the high end of guidance, while GAAP EPS was $0.94 .
  • Guidance was widened and lowered: FY25 revenue to $1.31–$1.38B (from $1.33–$1.39B), citing macro/trade uncertainty and reduced visibility; Q3 revenue guided to $290–$320M .
  • Automotive and Mobile momentum continued (Porsche, Cadillac, Volvo, Xiaomi, Hyundai; Android UGC expansion), supporting medium‑term adoption drivers .
  • Capital returns remained consistent: $35M buybacks (429K shares), $0.33 dividend, ~$352M authorization remaining; cash and investments at ~$701M with strong operating cash flow .
  • Near‑term stock reaction catalyst: lowered FY guide and macro commentary versus strong execution in Auto/Mobile and non‑GAAP beat; narrative likely pivots to visibility on device shipments and tariff outcomes .

What Went Well and What Went Wrong

What Went Well

  • Non‑GAAP EPS landed at the high end; management: “non‑GAAP earnings for the quarter came in at the high end of the range” .
  • Ecosystem wins: automotive (Porsche 2026 lineup, Cadillac EVs), TV/sports distribution (Super Bowl/March Madness, Sky Glass Gen2), Android UGC expansion (CapCut to Android) .
  • Operational discipline: OpEx shifted to 2H, supporting EPS; strong cash generation and buybacks; dividend up y/y .

What Went Wrong

  • FY25 guide lowered/widened on macro/trade uncertainty; Broadcast licensing declined 11% YoY in Q2 .
  • Products & services revenue down 10% YoY; true‑ups only ~$1M in Q2, limiting upside from royalty timing .
  • Reduced visibility: management emphasized limited forecasting precision due to device shipment uncertainty and trade dynamics .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$304.806 $356.999 $369.561
GAAP Diluted EPS ($USD)$0.61 $0.70 $0.94
Non-GAAP Diluted EPS ($USD)$0.81 $1.14 $1.34
Gross Margin %88.9% (270.810/304.806) 88.6% (316.225/356.999) 90.3% (333.724/369.561)
Operating Margin %15.2% (46.354/304.806) 22.4% (79.880/356.999) 29.1% (107.763/369.561)
QoQ revenue change—+17.2% +3.5%
YoY revenue change—+13.1% vs Q1’24 ($315.574) +1.4% vs Q2’24 ($364.523)

Segment mix

Revenue Breakdown ($USD Millions)Q4 2024Q1 2025Q2 2025
Licensing$282.705 $330.479 $346.006
Products & Services$22.101 $26.520 $23.555
Total$304.806 $356.999 $369.561

Licensing revenue by market

Market ($USD Thousands)Q4 2024Q1 2025Q2 2025
Broadcast$95,779 $115,762 $94,249
Mobile$48,701 $61,524 $100,123
CE$42,024 $49,457 $38,140
PC$34,077 $31,256 $58,402
Other$62,124 $72,480 $55,092
Total Licensing$282,705 $330,479 $346,006

KPIs

KPIQ4 2024Q1 2025Q2 2025
Shares repurchased251K 186K 429K
Buybacks ($USD Millions)$160 in FY’24 $15 $35
Dividend per share$0.33 $0.33 $0.33 (payable May 21, 2025)
Cash & investments$571M cash & ST/LT investments end FY’24 $607M cash+restricted ~$701M cash & investments (CFO)
Operating Cash Flow$327M FY’24 $106.8M (Q1) ~$175M (Q2)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025$1.33–$1.39B $1.31–$1.38B Lowered/Widened
Licensing RevenueFY 2025$1.22–$1.28B $1.21–$1.28B Lowered bottom end
Gross Margin (GAAP / non‑GAAP)FY 202587% / 90% 87% / 90% Maintained
OpEx (GAAP / non‑GAAP)FY 2025$915–$925M / $765–$775M $905–$920M / $760–$775M Slightly Lower (GAAP)
Operating Margin (GAAP / non‑GAAP)FY 2025~20% / ~33% ~20% / ~33% Maintained
Effective Tax Rate (GAAP / non‑GAAP)FY 2025~22.5% / ~20% ~22.5% / ~20% Maintained
Diluted EPS (GAAP / non‑GAAP)FY 2025$2.39–$2.54 / $3.99–$4.14 $2.31–$2.46 / $3.88–$4.03 Lowered
Total RevenueQ3 2025N/A$290–$320M New
Licensing RevenueQ3 2025N/A$265–$295M New
Gross Margin (GAAP / non‑GAAP)Q3 2025N/A~86% / ~88% New
OpEx (GAAP / non‑GAAP)Q3 2025N/A$225–$235M / $190–$200M New
Effective Tax Rate (GAAP / non‑GAAP)Q3 2025N/A~23% / ~20.5% New
Diluted EPS (GAAP / non‑GAAP)Q3 2025N/A$0.26–$0.41 / $0.62–$0.77 New
DividendQ2 2025$0.33 (prior quarters) $0.33 declared (payable May 21, 2025) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Automotive adoption (Atmos/Vision)Added new OEMs; over 20 partners supporting Atmos; iPhone 16 supports Dolby; GE Licensing acquisition strengthens imaging Porsche (Taycan/Panamera/Cayenne/911 2026), Cadillac EVs 2026; Volvo/Xiaomi/Hyundai announcements; early days in auto, mostly non‑U.S. shipments Broadening OEM and models; EV focus; moving toward mainstream
Mobile & UGC ecosystemSocial media partner RedNote (Xiaohongshu); broad device launches (ASUS/Dell/Lenovo/Samsung) Expanding Dolby Vision capture/playback across Android; CapCut adding Android; Filmora support; new Oppo/Realme/Xiaomi models Strengthening creator tools; deeper Android integration
Living room & sports contentPremium TV and broadcast wins; Australia AC‑4; OEMs Hisense/TCL; Lenovo/Alienware devices Super Bowl/March Madness in Atmos/Vision; Sky Glass Gen2 (built‑in Atmos soundbar); Waipu.tv & TOD 4K STB Sustained premium content/device cycle
Cinema premium mixDolby Cinema’s strongest box office year; pipeline of >725 titles AMC to add 40 Dolby Cinema screens by 2027; AMC selects Dolby Vision HDR Expanding footprint; premium box office share rising
Macro/trade visibilityFY25 guide set; credit facility for flexibility Lowered/widened FY guide; visibility reduced; device shipment sensitivity 2–4% revenue impact per 5% shipment change; ~25% licensing from U.S. device sales Visibility reduced; monitoring tariffs and shipments

Management Commentary

  • CEO: “We had a strong second quarter with continued momentum across our end markets, especially in Auto and Mobile… we remain focused on driving long‑term growth.” .
  • CEO on visibility: “We are revising our revenue range… our current assessment… we are likely to experience slight headwinds as a result of the macroeconomic environment.” .
  • CFO: “Q2 revenue came in at the midpoint… earnings came in at the high end… we are adjusting the full year revenue range to reflect the current environment.” .
  • CEO on Auto: “Momentum continues to build… Porsche… Cadillac… we are excited to move from Dolby Atmos Music in the car and expanding that into the entire audiovisual experience.” .
  • Mobile/UGC: “CapCut… expanding support to include Android… Filmora… increased interest in Dolby Vision for user‑generated content.” .

Q&A Highlights

  • Tariffs and supply chain: TVs largely manufactured in Mexico (tariff‑exempt); mobile less sensitive near‑term due to minimum volume commitments; expectation of slight headwinds pending trade outcomes .
  • U.S. exposure: ~25% of licensing revenue from consumer devices sold in the U.S. .
  • OpEx flexibility: Staying the course but ready to adjust if environment changes; ongoing efficiency focus .
  • Auto tipping point: Building wins across OEMs; moving from high‑end models toward mainstream over time .
  • Royalty timing: Q2 true‑ups about ~$1M; timing can drive quarterly volatility .

Estimates Context

MetricQ4 2024 Consensus*Q4 2024 ActualQ1 2025 Consensus*Q1 2025 ActualQ2 2025 Consensus*Q2 2025 Actual
Revenue ($USD)$307.938M*$304.806M $345.445M*$356.999M $376.382M*$369.561M
Primary EPS ($USD)$0.697*$0.81 (non‑GAAP) $0.977*$1.14 (non‑GAAP) $1.267*$1.34 (non‑GAAP)

Values retrieved from S&P Global.*

Implications: Q2 FY25 showed an EPS beat versus consensus and a modest revenue miss; prior two quarters beat on both revenue and EPS (Q1) and beat EPS with slight revenue miss (Q4) .

Key Takeaways for Investors

  • Mix shift toward Mobile and PC in Q2 licensing, offsetting Broadcast softness; full‑year expectation: strong Mobile/Other, flat Broadcast/PC, CE down mid‑single digits .
  • Guidance reset reflects reduced device‑shipment visibility; monitor tariff outcomes and trade clarity as key swing factors (management sensitivities: 5% shipment change ≈ 2–4% revenue impact) .
  • Automotive is an emerging growth vector with marquee OEM wins; watch for expansion into mainstream price points and additional Vision deployments .
  • Consistent capital return with $0.33 dividend and buybacks; ample authorization ($352M) and strong liquidity (~$701M cash/investments) provide flexibility .
  • Near‑term: expect muted P&S and quarterly volatility from royalty timing; true‑ups in Q2 were only ~$1M .
  • Medium‑term: content/device ecosystem wins (sports, TV OEMs, UGC apps) support durable attach rates for Atmos/Vision .
  • Estimate revisions likely: FY EPS and revenue modestly lower post‑guide; Q3 non‑GAAP EPS guide $0.62–$0.77 anchors near‑term modeling .

Appendix: Other Q2 2025 Press Releases

  • AMC expansion: +40 Dolby Cinema screens in U.S. by 2027; AMC selects Dolby Vision for HDR, reinforcing premium theatrical footprint .
  • GM/Cadillac: Dolby Atmos across Cadillac’s 2026 EV lineup; select 2025 models via OTA updates .
  • Q2 results press release mirrors 8‑K Exhibit 99.1; highlights across Auto, TV, UGC, soundbars .