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Dolby (DLB) Q3 Earnings Beat Estimates, Revenues Up Y/Y

Dolby Laboratories, Inc. DLB reported third-quarter fiscal 2022 results, with only the bottom line surpassing the Zacks Consensus Estimate.

Non-GAAP earnings per share were 68 cents compared with 71 cents reported in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 13.3%.

Total revenues in the third quarter were $289.6 million, up from $286.8 million in the year-ago quarter. The uptick was caused by increased adoption of Dolby Atmos and Dolby Vision, new licensees and imaging patents, along with improved results for the Dolby Cinemas and Cinemas product businesses. The top line missed the Zacks Consensus Estimate by 1.9%.

Dolby Laboratories Price, Consensus and EPS Surprise

Dolby Laboratories Price, Consensus and EPS Surprise
Dolby Laboratories Price, Consensus and EPS Surprise

Dolby Laboratories price-consensus-eps-surprise-chart | Dolby Laboratories Quote

Segmental Performance

Revenues from Licensing were $269.3 million, down year over year from $271.6 million

Broadcast Licensing contributed 37% to the total licensing revenues in the fiscal third quarter. Mobile licensing accounted for 23%, consumer electronics 14%, PC licensing 10% and licensing from other markets contributed 16% to licensing revenues.

Products and services revenues were $20.3 million, up year over year from $15.2 million.

Notably, Dolby Atmos and Dolby Vision was utilized to broadcast the UEFA Champions League Final on Canal+.

Other Details

Gross profit in the fiscal third quarter was $253.6 million compared with $255.2 million in the year-earlier quarter. Total operating expenses increased to $208.1 million from $199.1 million. Operating income was $45.6 million compared with $56.1 million in the year-ago quarter.

In the third quarter, the company repurchased 2.5 million of its common shares and ended the quarter with $230 million of stock repurchase authorization available.

Also, the company has increased the existing share repurchase authorization by $350 million. The total authorization now amounts to nearly $581 million.

Cash Flow and Liquidity

Dolby generated $172.6 million of net cash from operating activities compared with $172.4 million a year ago. As of Jul 1, 2022, the company had $858.9 million in cash and cash equivalents, with $460.4 million in total liabilities.

The company has announced a dividend of 25 cents per share, payable on Aug 31, 2022, to shareholders of record on Aug 23, 2022.

Guidance

Dolby provided guidance for fourth-quarter fiscal 2022.

For the fiscal fourth quarter, the company expects GAAP earnings of 40-55 cents per share and non-GAAP earnings of 68-83 cents per share on revenues of $295-$325 million. On a GAAP basis, operating expenses are expected to be $210-$220 million, whereas, on a non-GAAP basis, operating expenses are anticipated to be $180-$190 million.

For fiscal 2022, the company expects GAAP earnings of $1.91-$2.06 per share and non-GAAP earnings of $3.22-$3.37 per share on revenues of $1.27-$1.30 billion. On a GAAP basis, operating expenses are expected to be $901-$911 million, whereas, on a non-GAAP basis, operating expenses are anticipated to be $740-$750 million.

Zacks Rank & Stocks to Consider

Dolby currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader technology space are Cadence Design Systems CDNS, Badger Meter BMI and Arista Networks ANET. Cadence Design Systems, Badger Meter and Arista Networks (ANET) each sport a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CDNS 2022 earnings is pegged at $4.11 per share, rising 5.7% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.7%.

Cadence’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 9.8%. Shares of CDNS have jumped 23.9% in the past year.

The Zacks Consensus Estimate for BMI’s 2022 earnings is pegged at $2.30 per share, up 7% in the past 60 days.

Badger Meter’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters, with the average being 12.6%. Shares of BMI have lost 4.7% of their value in the past year.

The Zacks Consensus Estimate for Arista Network’s 2022 earnings is pegged at $3.99 per share, increasing 8.4% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.6%.

Arista Network’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.1%. Shares of ANET have increased 30.1% in the past year.


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