Sign in

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

DL

Dolby Laboratories, Inc. (DLB)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 2025 revenue was $307.0M, slightly above consensus and the company’s Q3 guidance range; non-GAAP EPS of $0.99 beat consensus due to a $0.28 discrete tax benefit; GAAP EPS was $0.51 . EPS consensus was $0.705*, revenue consensus $305.8M*; both were exceeded. Values retrieved from S&P Global.
  • Management issued new FY 2026 guidance: revenue $1.39–$1.44B, non-GAAP operating margin ~34%, non-GAAP EPS $4.19–$4.34; Q1 2026 revenue $315–$345M and non-GAAP EPS $0.79–$0.94 .
  • Strategic momentum: Dolby Vision 2 announced in September and adopted by leading OEMs; social platforms Instagram (iOS) and Douyin added Dolby Vision; automotive wins broadened (Maruti Suzuki, Deepal, VinFast) .
  • Capital returns: dividend raised to $0.36; buybacks of ~$35M this quarter; $277M authorization remaining; Q4 operating cash flow was approximately $123M .

What Went Well and What Went Wrong

What Went Well

  • Broad-based ecosystem adoption: Peacock streaming NFL and NBA in Dolby Atmos; multiple TV launches from TCL, Samsung, Hisense, Xiaomi, Amazon; Instagram and Douyin support Dolby Vision—“strong reception” for Dolby Vision 2 .
  • Imaging Patents expansion to content streamers: new video distribution program signed first licensees in H2 FY25; revenue recognition begins in FY26; confidence in 15–20% growth for Atmos/Vision/Imaging over 3–5 years .
  • Non-GAAP EPS beat driven by discrete tax benefit and stronger gross margins; non-GAAP EPS $0.99 vs guidance high-end, with $0.71 excluding discrete tax, above guidance midpoint .

What Went Wrong

  • GAAP EPS down year-over-year on higher operating expenses and restructuring; GAAP diluted EPS fell to $0.51 from $0.61 in Q4 FY24 .
  • Foundational audio revenue flattish to slightly down; CE end-market expected down high single digits in FY26 due to lower unit shipments in PC/CE and timing of mobile deals .
  • True-ups not a material positive in Q4 (approx. -$1M) and quarterly volatility persists due to recoveries, minimum volume commitments, and true-ups .

Financial Results

Quarterly performance vs consensus and prior periods

MetricQ2 2025 (Actual)Q2 2025 (Consensus)*Q3 2025 (Actual)Q3 2025 (Consensus)*Q4 2025 (Actual)Q4 2025 (Consensus)*
Revenue ($USD Millions)$369.6 $376.4*$315.5 $305.2*$307.0 $305.8*
Non-GAAP EPS ($)$1.34 $1.267*$0.78 $0.713*$0.99 $0.705*

Values retrieved from S&P Global for consensus (*)

Quarterly GAAP vs Non-GAAP

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$369.6 $315.5 $307.0
GAAP Diluted EPS ($)$0.94 $0.48 $0.51
Non-GAAP Diluted EPS ($)$1.34 $0.78 $0.99
Licensing Revenue ($USD Millions)$346.0 $289.9 $281.6
Products & Services Revenue ($USD Millions)$23.6 $25.6 $25.4

Year-over-year by quarter

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$364.5 $288.8 $304.8
GAAP Diluted EPS ($)$1.01 $0.40 $0.61
Non-GAAP Diluted EPS ($)$1.27 $0.71 $0.81

Segment (Licensing by Market) – Q4 2025 vs Q4 2024

MarketQ4 2024 ($USD ‘000)Q4 2024 (%)Q4 2025 ($USD ‘000)Q4 2025 (%)
Broadcast$95,779 34% $107,174 38%
Mobile$48,701 17% $50,626 18%
CE$42,024 15% $35,036 12%
PC$34,077 12% $28,647 10%
Other$62,124 22% $60,144 22%
Total Licensing$282,705 100% $281,627 100%

KPIs

KPIQ2 2025Q3 2025Q4 2025
Operating Cash Flow ($USD Millions)$175 $68 ~$123
Shares Repurchased (#, $USD Millions)429,000; $35 526,000; $40 479,000; $35
Dividend per Share ($)$0.33 $0.33 $0.36
Buyback Authorization Remaining ($USD Millions)~$352 ~$312 ~$277
Cash & Investments (approx., quarter-end) ($USD Millions)—~$777 ~$783

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Millions)Q4 2025$288–$318 Actual $307.0 Met range; above midpoint
Licensing Revenue ($USD Millions)Q4 2025$263–$293 Actual $281.6 Within range
Non-GAAP EPS ($)Q4 2025$0.61–$0.76 $0.99 Strong beat (discrete tax +$0.28)
Dividend ($)Q4 2025$0.33 (Q3 declared) $0.36 Raised
Total Revenue ($USD Millions)Q1 2026—$315–$345 New
Licensing Revenue ($USD Millions)Q1 2026—$290–$320 New
GAAP/Non-GAAP Gross Margin (%)Q1 2026—~88 / ~90 New
GAAP/Non-GAAP OpEx ($USD Millions)Q1 2026—$235–$245 / $195–$205 New
GAAP/Non-GAAP EPS ($)Q1 2026—$0.39–$0.54 / $0.79–$0.94 New
Total Revenue ($USD Billions)FY 2026—$1.390–$1.440 New
Licensing Revenue ($USD Billions)FY 2026—$1.285–$1.335 New
GAAP/Non-GAAP Gross Margin (%)FY 2026—~88 / ~90 New
GAAP/Non-GAAP OpEx ($USD Millions)FY 2026—$930–$950 / $780–$800 New
GAAP/Non-GAAP Operating Margin (%)FY 2026—~21 / ~34 New
GAAP/Non-GAAP EPS ($)FY 2026—$2.61–$2.76 / $4.19–$4.34 New
GAAP/Non-GAAP Effective Tax Rate (%)FY 2026—~23 / ~21 New

Earnings Call Themes & Trends

TopicQ2 2025 (Previous Mentions)Q3 2025 (Previous Mentions)Q4 2025 (Current)Trend
AI/Technology initiativesAdvanced Technology Group retooled; ecosystem apps expanding Dolby Vision; cinema expansion Ecosystem momentum across devices; Chromebook Atmos; sports in Dolby Explicit focus on AI-powered innovations in ATG to enhance offerings Increasing strategic emphasis
Dolby Vision 2Not yet announced (pre-September)Not discussedAnnounced; strong OEM reception (Hisense, TCL); content pipeline; first TVs expected by end of 2026 New product cycle catalyst
Consumption-based models (OptiView, VDP)OptiView use cases; broad ecosystem strategy; revising full-year outlook amid macro Timing factors and volatility highlighted; negative true-up in broadcast/set-top VDP launched for streamers; first licensees signed in H2’25; revenue begins FY26; OptiView scaling (NFL RedZone) Scaling from pilot to monetization
Supply chain & tariffs/macroLimited visibility; mobile less sensitive; ~25% of licensing rev tied to U.S. devices CE softness; negative true-up; guidance maintained with slight headwinds No specific tariff impact seen; device market flattish/sluggish; even 1H/2H revenue distribution Stabilizing; cautious
AutomotiveEarly Vision wins in Chinese EVs; growing Atmos music; EV screen proliferation Audi added; pipeline deepening; CE/PC mix impacts New agreements (Maruti Suzuki, Deepal, VinFast); vision for auto as future end-market Broadening OEM and model coverage
Regional trends/socialChina social platforms drive mobile demand (RedNote, Kuaishou, Bilibili) Broadcast strong; PC up; CE down; HBO Max expansion Instagram (iOS) supports Dolby Vision; Douyin adds Dolby Vision in China Social platforms expanding globally

Management Commentary

  • “We finished FY25 strong, growing Dolby Atmos, Dolby Vision and imaging patents, and expanding our addressable market with momentum in Dolby OptiView and the introduction of a new imaging patent pool for content streamers.” — Kevin Yeaman, CEO .
  • “Revenue for the quarter came in at $307 million… non-GAAP earnings per share of $0.99 was above the high-end guidance due to a $0.28 discrete tax benefit.” — Robert Park, CFO .
  • “Dolby Vision 2 will allow TV OEMs to bring Dolby Vision deeper into their lineups… Hisense and TCL are the first TV makers to announce support.” — Kevin Yeaman .
  • “The video distribution program significantly expands the TAM… first licensees signed in the second half of fiscal 2025; we will start recognizing revenue in fiscal 2026.” — Kevin Yeaman .
  • “Our quarterly results can fluctuate widely due to timing of true-ups, minimum volume commitments, and recoveries… Q1 revenue is expected to be down ~8% YoY due to tough comps and timing.” — Robert Park .

Q&A Highlights

  • Imaging Patents VDP mechanics: Five initial content streamer licensees signed; monetization begins upon first royalty reports; pools may use enforcement as last resort to ensure a level playing field .
  • OptiView scaling: NFL RedZone using OptiView; customers in early scaling stages; expectation to grow service-provider revenue share to ~10% in three years .
  • Automotive trajectory: Broader lineup penetration (Cadillac EV lineup; deeper into models); potential for auto to become a separate end-market as adoption grows .
  • True-ups: Q4 true-ups ~(-$1M); quarterly volatility persists, stressing the need to view trends annually .
  • Capital allocation: ~$277M buyback authorization remaining; dividend increased; buybacks may exceed dilution depending on conditions .

Estimates Context

  • Q4 2025: Revenue $307.0M beat consensus $305.8M*; Non-GAAP EPS $0.99 beat consensus $0.705* (boosted by $0.28 discrete tax) . Values retrieved from S&P Global.
  • Q3 2025: Revenue $315.5M beat $305.2M*; Non-GAAP EPS $0.78 beat $0.713* . Values retrieved from S&P Global.
  • Q2 2025: Revenue $369.6M missed $376.4M*; Non-GAAP EPS $1.34 beat $1.267* . Values retrieved from S&P Global.
  • Implications: Street likely to raise FY 2026 non-GAAP EPS assumptions toward the $4.19–$4.34 guide and incorporate VDP revenue cadence (beginning in FY26) and OptiView scaling; near-term Q1’26 consensus should reflect CFO’s ~8% YoY revenue decline signal at midpoint due to tough comps and timing .

Key Takeaways for Investors

  • Q4 delivered a clean revenue beat and a strong non-GAAP EPS beat on discrete tax, with durable high gross margin structure and healthy cash generation supporting dividend growth and buybacks .
  • FY26 guide introduces new consumption-based growth drivers (VDP, OptiView) alongside continued 15% growth in Atmos/Vision/Imaging; monitor early monetization evidence and pacing of streamer royalty reports .
  • Device-market softness (CE/PC) remains a headwind; management signals more even revenue distribution across halves and no identifiable tariff impacts—reduces risk of unexpected macro shocks in near term .
  • Dolby Vision 2 is a multi-year product cycle catalyst with OEM and content momentum; expect narrative support at CES investor event and subsequent product launches .
  • Automotive adoption broadening across regions and price points; watch for further OEM announcements and deeper lineup penetration to validate auto as a standalone end-market .
  • Quarterly volatility from true-ups and recoveries persists; anchor analysis on annual trends and license-pool reporting cycles to avoid overinterpreting single-quarter deltas .
  • Near-term trading: Potential support from beat-and-raise setup into FY26, but Q1 guide implies tougher YoY comp; medium-term thesis centers on scaling service-provider monetization (VDP/OptiView) and Vision 2 adoption .
Note: Consensus estimates marked with an asterisk (*) are values retrieved from S&P Global.