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Dolby Laboratories (DLB)
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Dolby Laboratories (DLB) AI Stock Analysis

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Dolby Laboratories

(NYSE:DLB)

Rating:78Outperform
Price Target:
$85.00
▲(13.32%Upside)
Dolby Laboratories' strong financial performance and solid balance sheet are significant strengths, contributing positively to the overall score. However, the mixed technical indicators and high valuation offset some of these strengths. The revised revenue guidance and macroeconomic concerns highlighted in the earnings call also dampen the outlook.
Positive Factors
Automotive Market Expansion
Dolby is monetizing in autos at an increasing rate with nearly 30 auto original equipment manufacturers implementing Dolby Atmos within automobiles across roughly 100 different vehicle models.
Revenue Growth
Dolby is expected to experience growth due to a significant portion of its revenue coming from newer initiatives like Atmos and Vision.
Negative Factors
Guidance and Forecasting Challenges
The company modestly lowered its guidance for fiscal 2025 due to uncertainties in consumer demand and device mix.
Revenue Performance
Second-quarter revenues were slightly below the Street due to the macro environment, and product and services revenue declined about 10.4% year-over-year.

Dolby Laboratories (DLB) vs. SPDR S&P 500 ETF (SPY)

Dolby Laboratories Business Overview & Revenue Model

Company DescriptionDolby Laboratories, Inc. creates audio and imaging technologies that transform entertainment and communications at the cinema, DTV, transmissions and devices, mobile devices, OTT video and music services, and home entertainment devices. The company develops and licenses its audio technologies, such as AAC & HE-AAC, a digital audio codec solution used for a range of media applications.; AVC, a digital video codec with high bandwidth efficiency used in various media devices; Dolby AC-4, an digital audio coding technology that delivers new audio experiences to a range of playback devices; and Dolby Atmos technology for cinema and a range of media devices. Its audio technologies also include Dolby Digital, a digital audio coding technology that provides multichannel sound to applications; Dolby Digital Plus, a digital audio coding technology that offers audio transmission for a range of media applications and devices; Dolby TrueHD, a digital audio coding technology providing encoding for media application; Dolby Vision, an imaging technology for cinema and media devices; Dolby Voice, an audio conferencing technology; and HEVC, a digital video codec with high bandwidth efficiency to support for media devices. In addition, the company designs and manufactures digital cinema servers, cinema processors, amplifiers, loudspeakers, hardware components, video conferencing solutions, and other products for the cinema, television, broadcast, communication, and entertainment industries. Further, it offers various services to support theatrical and television production for cinema exhibition, broadcast, and home entertainment. The company serves film studios, content creators, post-production facilities, cinema operators, broadcasters, and video game designers. It sells its products directly to the end users, as well as through dealers and distributors worldwide. Dolby Laboratories, Inc. was founded in 1965 and is headquartered in San Francisco, California.
How the Company Makes MoneyDolby Laboratories generates revenue primarily through licensing its technologies to various manufacturers and content creators in the entertainment industry. Companies that produce consumer electronics, such as TVs, smartphones, and personal computers, pay Dolby licensing fees to incorporate its audio and visual technologies into their devices. Additionally, Dolby earns revenue from cinema operators who utilize its advanced sound systems and cinemas like Dolby Cinema. The company also receives income from its own products and services, including Dolby.io, a platform offering media processing and real-time streaming solutions. Significant partnerships with leading electronics manufacturers, streaming services, and film studios further bolster Dolby's revenue, as these collaborations expand the reach and application of its technologies globally.

Dolby Laboratories Earnings Call Summary

Earnings Call Date:May 01, 2025
(Q2-2025)
|
% Change Since: -1.12%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed outlook. Dolby Laboratories showed strong performance in the automotive, mobile, and TV sectors, with important partnerships and new product launches. However, macroeconomic uncertainties have led to a revised revenue forecast, and product and services revenue showed a year-over-year decline.
Q2-2025 Updates
Positive Updates
Automotive Segment Expansion
Porsche, Cadillac, Volvo, Xiaomi, and Hyundai announced new models incorporating Dolby Atmos and Dolby Vision. Two additional manufacturers, NIO and Zeekr, integrated Dolby Vision, totaling three brands and nine car models.
Positive Revenue and Earnings Results
Q2 revenue was $370 million, aligning with guidance, and a 1% increase year-over-year, with licensing revenue up 2%. Non-GAAP earnings per share were $1.34, a 5% increase year-over-year.
Mobile and TV Ecosystem Growth
Continued expansion of Dolby Vision support in smartphones, with new partners in China and additional models from OPPO, Realme, and Xiaomi. In the TV sector, new models from LG, Sharp, and Hisense now support Dolby Vision.
Cinema and Content Distribution
New Dolby Atmos and Dolby Vision theaters announced in India and South Korea, with expansion in the U.S. through AMC partnership. Major events like the Super Bowl and March Madness were broadcast in Dolby Atmos and Vision.
Strong Financial Position
Dolby repurchased $35 million worth of common stock and declared a dividend increase of 10% to $0.33 per share.
Negative Updates
Revised Revenue Forecast
Revenue guidance for the full year was revised downwards to $1.31 billion - $1.38 billion from the previous $1.33 billion - $1.39 billion due to macroeconomic uncertainties.
Product and Services Revenue Decline
Products and services revenue decreased by 10% year-over-year, slightly below the midpoint of guidance.
Limited Forecast Visibility
The economic environment and consumer spending uncertainties have limited the ability to forecast with precision, affecting revenue projections.
Impact of Macroeconomic Environment
Potential impact of macroeconomic factors on consumer device shipments could reduce revenue by approximately $15 million to $25 million for the remainder of the year.
Company Guidance
In the recent Dolby Laboratories earnings call discussing the second quarter of fiscal year 2025, several key metrics and guidance updates were provided. The company reported Q2 revenue of $370 million, aligning with the midpoint of their guidance, and a 1% year-over-year increase. Licensing revenue was $346 million, up 2% from the previous year, while products and services revenue came in at $24 million, a 10% decline. Non-GAAP earnings per share reached $1.34, marking a 5% annual increase. For fiscal year 2025, Dolby revised its revenue guidance range from $1.33-$1.39 billion to $1.31-$1.38 billion, citing macroeconomic uncertainties. The company anticipates Q3 revenue between $290 million and $320 million, with licensing revenue expected to be $265 million to $295 million. Full-year non-GAAP EPS is projected to be between $3.88 and $4.03. The guidance reflects expected headwinds due to potential changes in consumer spending and device shipments, influenced by economic conditions and trade factors.

Dolby Laboratories Financial Statement Overview

Summary
Dolby Laboratories demonstrates strong financial performance with a solid balance sheet, low leverage, and high equity. The income statement reveals profitability and growth, although there are challenges in maintaining net income levels. Cash flow metrics highlight robust cash generation capabilities.
Income Statement
85
Very Positive
Dolby Laboratories showcases strong income statement metrics with a notable gross profit margin of approximately 88.9% for TTM, indicating efficient cost control. The net profit margin stands at a robust 19.4%, demonstrating profitability. Revenue growth is evident with a 3.6% increase from the previous year. However, the net income for TTM decreased compared to last year, suggesting some challenges in maintaining profit levels.
Balance Sheet
88
Very Positive
The balance sheet is solid with a low debt-to-equity ratio of 0.016, highlighting minimal leverage risk. The equity ratio is strong at 79.7%, indicating financial stability. Return on equity (ROE) is 10% in the TTM period, suggesting effective use of equity to generate profits. Overall, the company's balance sheet reflects a sound financial position with low debt levels and high equity.
Cash Flow
78
Positive
Dolby Laboratories presents a positive cash flow scenario with a significant free cash flow growth rate of 31.3% in the TTM period. The operating cash flow to net income ratio is 1.63, showing strong cash generation relative to income. The free cash flow to net income ratio is also favorable at 1.52. However, fluctuations in net income suggest potential variability in future cash flows.
BreakdownSep 2024Sep 2022Sep 2021Sep 2020Sep 2019
Income Statement
Total Revenue1.27B1.25B1.28B1.16B1.24B
Gross Profit1.13B1.11B1.15B1.02B1.08B
EBITDA258.33M329.90M464.12M332.60M404.16M
Net Income360.64M184.09M310.23M231.36M255.15M
Balance Sheet
Total Assets3.11B2.69B3.11B2.92B2.82B
Cash, Cash Equivalents and Short-Term Investments482.05M809.34M1.26B1.12B916.36M
Total Debt46.99M50.94M72.12M81.14M0.00
Total Liabilities623.03M438.53M501.45M478.92M508.72M
Stockholders Equity2.48B2.25B2.60B2.43B2.31B
Cash Flow
Free Cash Flow297.25M259.12M393.30M274.86M214.14M
Operating Cash Flow327.25M318.58M447.75M343.85M327.67M
Investing Cash Flow-286.29M-295.94M-44.91M134.37M-56.23M
Financing Cash Flow-287.81M-610.56M-252.51M-207.78M-385.28M

Dolby Laboratories Technical Analysis

Technical Analysis Sentiment
Negative
Last Price75.01
Price Trends
50DMA
75.09
Negative
100DMA
76.53
Negative
200DMA
76.87
Negative
Market Momentum
MACD
0.05
Negative
RSI
50.38
Neutral
STOCH
26.74
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DLB, the sentiment is Negative. The current price of 75.01 is above the 20-day moving average (MA) of 74.62, below the 50-day MA of 75.09, and below the 200-day MA of 76.87, indicating a neutral trend. The MACD of 0.05 indicates Negative momentum. The RSI at 50.38 is Neutral, neither overbought nor oversold. The STOCH value of 26.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DLB.

Dolby Laboratories Risk Analysis

Dolby Laboratories disclosed 13 risk factors in its most recent earnings report. Dolby Laboratories reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
Customers Q4, 2024

Dolby Laboratories Peers Comparison

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
DLDLB
78
Outperform
$7.21B28.6110.28%1.76%4.03%34.45%
GG
77
Outperform
$7.71B15.0022.21%1.51%7.31%-15.86%
76
Outperform
$10.44B22.3513.48%14.16%22.25%
74
Outperform
$9.24B23.3311.57%4.72%-3.06%
67
Neutral
$12.74B29.7922.49%1.31%6.04%13.36%
DXDXC
67
Neutral
$2.60B6.9112.88%-5.82%469.88%
67
Neutral
CHF6.70B27.0014.57%2.62%-2.23%-29.51%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
DLB
Dolby Laboratories
75.62
-1.99
-2.56%
CACI
Caci International
479.59
34.09
7.65%
EPAM
Epam Systems
164.48
-44.42
-21.26%
G
Genpact
45.46
12.67
38.64%
JKHY
Jack Henry & Associates
179.09
15.10
9.21%
DXC
DXC Technology
14.56
-5.11
-25.98%

Dolby Laboratories Corporate Events

Executive/Board Changes
Dolby Laboratories Unveils 2025 Executive Bonus Plan
Neutral
Nov 15, 2024

Dolby Laboratories has introduced the 2025 Executive Bonus Plan, offering cash bonuses to selected executives based on a percentage of their base salary and the achievement of specific financial goals. The CEO’s bonus is set at 100% of his base salary, while other eligible officers have a target of 65%. The actual payout can vary, influenced by the company’s performance and other discretionary factors, with funding capped at 150% of the target. This plan aligns with the Dolby 2020 Stock Plan, ensuring bonuses do not exceed established limits.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 12, 2025