Dolby's (DLB) Q1 Earnings and Revenues Surpass Estimates
Dolby Laboratories, Inc DLB reported first-quarter fiscal 2023 results, with the top and bottom lines surpassing the Zacks Consensus Estimate.
Non-GAAP earnings per share were $1.11 compared with $1.01 reported in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 40.5%.
Total revenues were $334.9 million, down from $351.6 million in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate by 9.8%. The downtick was caused by lower shipments in PC, broadcast, consumer electronics and gaming. However, the company continued to witness increased adoption of Dolby Atmos and Dolby Vision.
Dolby Laboratories Price, Consensus and EPS Surprise
Dolby Laboratories price-consensus-eps-surprise-chart | Dolby Laboratories Quote
The company announced a dividend of 27 cents per share, payable on Feb 22, to shareholders of record on Feb 14.
Segmental Performance
Revenues from Licensing were $308 million, down from $332.3 million reported in the prior-year quarter. Products and Services’ revenues were $26.9 million compared with $19.3 million reported in the year-ago quarter.
Broadcast Licensing contributed 38% to the total licensing revenues in the first quarter. Mobile Licensing accounted for 21%, Consumer Electronics 18%, PC Licensing 8% and Licensing from Other Markets contributed 15% to licensing revenues.
Other Details
Gross profit in the first quarter was $300.4 million compared with $318.9 million in the year-earlier quarter. Total operating expenses marginally declined to $206.4 million from $228.3 million reported in the previous-year quarter. Operating income was $94 million compared with $90.5 million in the year-ago quarter.
In the fiscal first quarter, the company repurchased 0.7 million of its common shares and ended the quarter with $311 million of stock repurchase authorization available.
Cash Flow and Liquidity
In the fiscal first quarter, Dolby generated $56.4 million of net cash from operating activities compared with $31.6 million a year ago.
As of Dec 31, 2022, the company had $626.2 million in cash and cash equivalents, with $456 million in total liabilities.
Guidance
For the second quarter of fiscal 2023, the company expects GAAP earnings of 58-73 cents per share and non-GAAP earnings of 90 cents to $1.05 per share on revenues of $340-$370 million. On a GAAP basis, operating expenses are expected to be $227-$237 million, whereas, on a non-GAAP basis, operating expenses are anticipated to be $193-$203 million.
For fiscal 2023, the company expects revenues to grow in the range of low single digits year over year. GAAP operating margin is expected to be 19%, while the non-GAAP operating margin is expected to be nearly 30%. On a GAAP basis, operating expenses are expected to decline by 2%, whereas, on a non-GAAP basis, operating expenses are anticipated to increase by 2%.
Dolby Vision, Dolby Atmos and imaging patents business are likely to witness growth in the range of 15-25% in fiscal 2023, driven by continued momentum in broadcast, mobile and other markets.
Zacks Rank & Stocks to Consider
Dolby currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space are Arista Networks ANET, Jabil JBL and Super Micro Computer SMCI. Jabil sports a Zacks Rank #1 (Strong Buy), while Arista Networks and Super Micro Computer carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks 2022 earnings is pegged at $4.38 per share, rising 0.2 in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have increased 9.1% in the past year.
The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.37 per share, rising 2.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 8.8%. Shares of JBL have increased 32.8% in the past year.
The Zacks Consensus Estimate for Super Micro Computer’s fiscal 2023 earnings is pegged at $9.54 per share, up by 4.1% in the past 60 days.
Super Micro Computer’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 7.8%. Shares of SMCI have been up 108.3% in the past year.
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