Sign in

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

DL

Dolby Laboratories, Inc. (DLB)·Q3 2025 Earnings Summary

Executive Summary

  • Dolby delivered a solid Q3 FY25 with total revenue of $315.5M, up 9% YoY, and non-GAAP diluted EPS of $0.78, above the high end of guidance; GAAP diluted EPS was $0.48 .
  • Reported results beat Wall Street consensus: revenue $315.5M vs $305.2M consensus, and non-GAAP EPS $0.78 vs $0.71 consensus; only three estimates contributed to the consensus, indicating a thin sample size [*].
  • Guidance was largely maintained vs last quarter but tightened: FY25 revenue range to $1.33–$1.36B (from $1.31–$1.38B), GAAP gross margin raised to ~88% (from ~87%), GAAP tax rate lowered to ~21.5%, GAAP EPS raised to $2.40–$2.55; Q4 FY25 revenue guided to $288–$318M with non-GAAP EPS $0.61–$0.76 .
  • Strategic momentum continued across automotive, mobile, TV/speakers, and sports streaming in Dolby Atmos/Vision, and management cited strong ecosystem engagement as a driver of long-term growth .

What Went Well and What Went Wrong

What Went Well

  • Non-GAAP EPS beat guidance and consensus, with CFO noting non-GAAP earnings “just above the high end” on higher revenue and lower OpEx; revenue landed above the midpoint of the Q2 guide .
  • Ecosystem wins: Audi supporting Dolby Atmos in Q7/Q8/A8/E Tron GT; Lenovo/Google launching the first Chromebook with Atmos; multiple TV and speaker launches from Samsung, Haier, TCL, LG, Marshall, JBL .
  • Content momentum: sports (FIFA Club World Cup, Stanley Cup, French Open, IPL) broadcast in Dolby; HBO Max expanding into ~12 countries with most sports content in Dolby Atmos/Vision .
  • Quote: “We continue to see strong engagement with creators, distributors and device manufacturers… The number of experiences in Dolby Atmos and Dolby Vision continues to grow…” — Kevin Yeaman, CEO .

What Went Wrong

  • CE shipments softness and a negative true-up of $4M in set-top boxes within Broadcast pressured the quarter; CE now expected down “low teens” for FY25 vs prior “mid single digits” decline .
  • Mobile licensing declined 11% YoY in Q3; macro/trade policy uncertainty continues to reduce visibility, though guidance was maintained .
  • Non-operating income was lower, partially offsetting lower OpEx; management reiterated timing variability in recoveries and true-ups can drive quarter-to-quarter volatility .

Financial Results

Reported Financials (GAAP/Non-GAAP)

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$288.8 $357.0 $369.6 $315.5
GAAP Diluted EPS ($)$0.40 $0.70 $0.94 $0.48
Non-GAAP Diluted EPS ($)$0.71 $1.14 $1.34 $0.78
Gross Profit ($USD Millions)$253.2 $316.2 $333.7 $271.5
Operating Income ($USD Millions)$36.8 $79.9 $107.8 $47.6

Margins (Derived from reported financials)

MetricQ3 2024Q1 2025Q2 2025Q3 2025
GAAP Gross Margin (%)87.7% 88.5% 90.3% 86.0%
GAAP Operating Margin (%)12.7% 22.4% 29.2% 15.1%

Note: Margins computed from reported figures (Gross Profit/Revenue, Operating Income/Revenue); citations reference the underlying financial statements.

Reported vs Consensus (Q3 2025)

MetricConsensus*Actual
Revenue ($USD Millions)$305.2*$315.5
Non-GAAP Diluted EPS ($)$0.71*$0.78
# of EPS Estimates3*—
# of Revenue Estimates3*—

Values retrieved from S&P Global.
Result: Both revenue and non-GAAP EPS were beats vs consensus [*].

Segment Breakdown – Licensing Revenue by Market

MarketQ3 2024 ($M)Q3 2024 (%)Q3 2025 ($M)Q3 2025 (%)
Broadcast$95.4 36% $111.3 38%
Mobile$63.1 24% $56.3 19%
CE$28.4 11% $28.1 10%
PC$27.6 10% $33.6 12%
Other$52.6 19% $60.7 21%
Total Licensing$267.1 100% $289.9 100%

KPIs and Capital Returns

KPIQ3 2025
Shares Repurchased (#)~526,000
Share Repurchase ($)~$40M
Authorization Remaining ($)~$312M
Dividend per Share$0.33; payable Aug 20, 2025; record Aug 12, 2025
Operating Cash Flow (YTD)$349.4M
Cash, Cash Equivalents & Restricted Cash (End of Period)$756.6M
Cash & Investments (Mgmt view)~$777M

Guidance Changes

MetricPeriodPrevious Guidance (May 1)Current Guidance (Jul 31)Change
Total Revenue ($B)FY 2025$1.31–$1.38 $1.33–$1.36 Tightened; lower bound raised, upper bound lowered
Licensing Revenue ($B)FY 2025$1.21–$1.28 $1.23–$1.26 Tightened
GAAP Gross Margin (%)FY 2025~87% ~88% Raised
Non-GAAP Gross Margin (%)FY 2025~90% ~90% Maintained
GAAP OpEx ($M)FY 2025$905–$920 $910–$920 Slightly raised low end
Non-GAAP OpEx ($M)FY 2025$760–$775 $765–$775 Slightly raised low end
GAAP Operating Margin (%)FY 2025~20% ~20% Maintained
GAAP Effective Tax Rate (%)FY 2025~22.5% ~21.5% Lowered
Non-GAAP Effective Tax Rate (%)FY 2025~20% ~20% Maintained
GAAP Diluted EPS ($)FY 2025$2.31–$2.46 $2.40–$2.55 Raised
Non-GAAP Diluted EPS ($)FY 2025$3.88–$4.03 $3.88–$4.03 Maintained
Total Revenue ($M)Q4 2025N/A$288–$318 New
Licensing Revenue ($M)Q4 2025N/A$263–$293 New
GAAP Gross Margin (%)Q4 2025N/A~86% New
Non-GAAP Gross Margin (%)Q4 2025N/A~88% New
GAAP OpEx ($M)Q4 2025N/A$225–$235 New
Non-GAAP OpEx ($M)Q4 2025N/A$190–$200 New
GAAP Effective Tax Rate (%)Q4 2025N/A~24.5% New
Non-GAAP Effective Tax Rate (%)Q4 2025N/A~21.0% New
GAAP Diluted EPS ($)Q4 2025N/A$0.28–$0.43 New
Non-GAAP Diluted EPS ($)Q4 2025N/A$0.61–$0.76 New
Dividend per ShareQ3 2025$0.33 (declared) $0.33 (declared) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AutomotiveQ2: Wins with Porsche, Cadillac; several OEMs announced; AMC Dolby Cinema expansion . Q1: Li Auto demo; TI chips supporting Atmos; Pioneer aftermarket concept .Audi adds Atmos in Q7/Q8/A8/E Tron GT; Tata Harrier EV and Mahindra Thar ROXX with Atmos .Strengthening OEM adoption; broadening beyond China .
Mobile & UGCQ2: OPPO Find X8 devices with Vision capture . Q1: CES partner launches; RedNote supports Dolby Vision .Motorola’s first Vision Capture; Xiaomi launches; Chinese platforms (RedNote, Kuaishou, Bilibili) support Vision; Oppo X8 flagship with Vision capture .Growing capture and share in UGC; China leads, expanding globally .
TVs/SpeakersQ2: LG evo C5/G5 TVs; soundbars from Sonos/Vizio/Teufel . Q1: TVs across Hisense/TCL/Panasonic/Sharp/RCA; soundbars from Harman Kardon/Samsung/Amazon .New TVs/speakers from Samsung, Haier, TCL, LG, Marshall, JBL .Continued device proliferation .
PCs/ChromebookQ2: General PC momentum . Q1: ASUS/Dell/Lenovo/Samsung devices .First Chromebook with Atmos via Lenovo/Google partnership .New category entry (Chromebook) .
Broadcast & StandardsQ2: Waipu.tv supports Atmos/Vision; TOD STB launch .Management sees no impact from ATSC 3.0 transitions; Dolby tech sits atop codecs; value-based adoption .Stable; growth via content momentum .
Macro/Trade/TariffsQ1/Q2: Macro uncertainty impacting visibility .Some trade deal progress but uncertainty remains; guidance maintained with slight headwinds .Visibility constrained; risk managed .
Licensing Mix & True-upsQ1/Q2: Timing of recoveries/minimums can drive volatility .Q3 Broadcast +17% YoY; Mobile -11%; PC +22%; $4M negative true-up in set-top boxes .Volatility persists; broadcast strong, mobile soft .

Management Commentary

  • CEO: “Results for the third quarter were generally in line… Both licensing revenue and total revenue came in above the midpoint… and non-GAAP earnings came in just above the high end of the range.” .
  • CEO: “Over 90% of the Billboard 100 artists record in Dolby Atmos… Back catalogs being remixed… momentum across sports and cinema.” .
  • CEO: “The number of experiences in Dolby Atmos and Dolby Vision continues to grow… across mobile devices, TVs, PCs, cars and soundbars.” .
  • CFO: “Licensing revenue came in at the high end of the guidance range due to activity expected in the fourth quarter coming in early… timing of recoveries, minimum volume commitments and true-ups can drive volatility between quarters.” .
  • CFO: “We declared a $0.33 dividend, up 10% from our dividend a year ago.” .

Q&A Highlights

  • Broadcast/ATSC 3.0: Management does not anticipate impacts from codec/standard changes; Dolby Atmos sits atop codecs, adoption driven by value across devices .
  • CE shipments & true-ups: Q3 softness in set-top boxes and CE led to a $4M negative true-up; full-year guide still within prior range .
  • Macro/trade policy: Some progress on trade agreements but uncertainty persists; guidance kept unchanged, allowing for slight headwinds .
  • Automotive video (Dolby Vision): Significant opportunity as in-car entertainment expands; initial wins in China expected to broaden globally .
  • Growth trajectory: Management reiterated confidence in returning to high single/double-digit growth as foundational categories stabilize and Atmos/Vision/imaging patents drive mix shift .

Estimates Context

  • Q3 FY25 beat vs S&P Global consensus: Revenue $315.5M actual vs $305.2M consensus (beat), non-GAAP EPS $0.78 actual vs $0.71 consensus (beat); sample size was three estimates [*].
  • Implications: Consensus likely to adjust higher for segments reflecting stronger Broadcast and PC licensing. Volatility from recoveries/true-ups should temper extrapolation across quarters .

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Dolby posted a clean beat on both revenue and non-GAAP EPS with strong Broadcast and PC licensing; management cited early pull-forward of activity helping Q3 .
  • Mix shift toward Atmos/Vision/imaging patents continues to underpin long-term growth and margin resilience; device launches and automotive wins broaden installed base .
  • Guidance is effectively maintained but tightened: FY25 revenue range narrowed, GAAP gross margin and EPS raised, GAAP tax rate lowered—net constructive .
  • Near-term headwinds persist in CE/set-top boxes with a $4M negative true-up; expect quarter-to-quarter volatility from recoveries and minimums .
  • Capital returns remain robust: $40M buyback in Q3, ~$312M authorization remaining, $0.33 dividend—supportive for TSR .
  • For trading: Stock should react favorably to a beat-and-tighten print; watch CE shipment trends and Q4 delivery against a wide revenue guide ($288–$318M) .
  • Medium-term: As macro stabilizes and foundational licensing normalizes to low single-digit growth, Dolby targets high single to double-digit overall growth driven by premium audio/video adoption and automotive expansion .

Additional Relevant Press Releases (Q3 FY25 timeframe)

  • Dolby and Audi announce partnership to integrate Dolby Atmos (June 24, 2025) .
  • Dolby, Lenovo, and Google unveil the world’s first Chromebook with Dolby Atmos (June 23, 2025) .
  • Dolby Laboratories Reports Third Quarter 2025 Financial Results (press release version) .

Citations:

  • Q3 FY25 8-K and Exhibit 99.1 press release .
  • Q3 FY25 press release (PRNewswire) .
  • Q3 FY25 earnings call transcript .
  • Q2 FY25 8-K and Exhibit 99.1 .
  • Q1 FY25 8-K and Exhibit 99.1 .

S&P Global consensus used for estimates [*].