DLB - Earnings call transcript Q1 2022 | Dolby Laboratories, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Dolby Laboratories Conference Call discussing Fiscal First Quarter Results.

During the presentation, all participants will be listening-mode only. Afterwards, you will be invited to participate in a question-and-answer session. [Operator Instructions].

call recorded, this XXXX. February reminder, a will Thursday, be X, As would you Relations Manager, transfer like for to Laboratories. I to Senior over now Ashley Schwenoha, Dolby Investor ahead, go Ashley. Please

Ashley Schwenoha

earnings Dolby first to Welcome afternoon. quarter Good XXXX conference Laboratories call.

me and Park, CEO; CFO. Dolby Robert today are Joining Yeaman, Laboratories’ Kevin

statements obligation quarter underlying risks As a that statements results press made continuing subject the in most any call today not and to release result including, of A that can Report assumes does to or second outlook. things, differ uncertainties future intend uncertainties of on will this during Factors XXXX extent and we section that actual outlook statements, including COVID-XX and well as business. Forward-Looking include made These earnings events. reminder, under the fiscal the Statements update no the from forward-looking cause other today, as to and materially Risk our and as Quarterly additional risks new these may our statements section today’s among be our discussion and information found of recent our impact assumptions Dolby discussion XX-Q. the of Form are captioned a the issued of forward-looking in on

and on sheet our call, release data and press Relations earnings financial today’s Dolby the discuss measures. Investor available Investor GAAP Relations website. we our in two section non-GAAP in During will A is reconciliation between the Laboratories’ of the

a second fiscal Dolby’s results for outlook. with follow business. will Robert a of start content discussion financial call, with the today’s our And XXXX quarter Kevin provide As of will and and the of recap

will behind to introduction the us, that turn over now with So I call Kevin.

Kevin Yeaman

afternoon, good be It and a dynamic Ashley, to environment. you, continues Thank everyone.

both by unit than were foundational While EPS $X guidance, in negative true-up range lower shipments technologies. finished within a estimated for million impacted revenue our of and our audio

foundational tough we of market for the and year-over-year ability last But off audio the with At demand the supply Dolby in portfolio audio issues a confident track consumer devices strength we we in same chain. foundational are line patents Atmos coming comps, serve. roughly XX% across discussed grow Vision, quarter, remain we and seeing to rate our we over expect declines and these now imaging As for long-term, revenues this our see the Dolby over to of year. at we time, with

also see We sides positive Dolby.io. momentum of with

start of Dolby their Dolby Samsung PC for have that the Atmos. mobile across Dolby audio decided they to you Atmos Dolby with products gives grow CES moment. ahead. Dolby the saw this with a All us will take we time. in details as some their first and stronger just into opportunity been I Robert Atmos by adoption their the of will the confidence time. our TVs the month, through most announced showcasing Atmos. covering our Samsung experience progress TV partnership the financials last we in customers has immersive for At in And soundbar, excited and they of Vision offer are

making points. supporting TVs all Dolby available widely the Panasonic market important Also all Hisense soundbar include first Dolby first their LG Hisense and and Sony, more highlighted throw they Vision featuring Best Buy’s Samsung retailer step experience. toward Dolby Walmart’s experiences the XK at support new TVs, Dolby laser Vision short Dolby During saw Dolby brands OLED pioneer TCL from CES from consumer Keynote, began products And TVs debuted XXX supporting Atmos at the price experience. the addressing latest projectors their at hertz. Atmos an gaming combined – Vision, in XK to Onn Dolby We and and to latest mass quarter, the during the and and

marking announced announced living Atmos. the that expanding Vision of now the Atmos. with newly their Gaming progress they Vision include their at Alienware gaming and combined device across communications And launched Atmos, more with will their Vision, X-in-X feature we lineup latest quarter Dolby latest launch Dolby designed the CES Dolby combined Dell and gaming. adopted recently, our laptops Dolby PC, also experience. previewed experience Dolby include ASUS that technology. room, Alienware first of models made Dolby feature new PC, which this In gaming will in they that also their laptops, their the November, headset PC new number they and ThinkPad mobile and to Voice, Dolby support a Beyond the Dolby Lenovo

tablets new smartphones highlighting Lenovo ASUS, Dolby brought technologies. Xiaomi also quarter Motorola and from and This from and

sports strides content. We’re also in making

of week, available in coverage Tencent made this Finals available in Billy Winter Cup Comcast broadcasting adds be Dolby and Kings announced the Just This will the world the major sports they was growing Atmos. Esports, Vision Olympics Challenger event Billy. the Dolby that and in Dolby And Atmos list Video honor to XXXX of on of in Dolby.

enable Dolby our we Atmos proposition add and sports, new and Vision experiences value As for gaming Dolby and devices and across more music, markets. we deeper to then across Dolby adoption of

our While CES automotive. far engagement normal remained from partners, what same and the particularly was year, the was this from strong in

alike Olivia Atmos artists Two-thirds billboard they be experience XX XX and describing of Dolby model The of Dolby music, they Top or Year, Dolby in the model, announced Neo Consumers sing AMA’s Atmos Of as to more with will adding their highlighted expanding quarter, beyond XXX tracks the available have magical. one the This continue artists previously. praises the now Artist Rodrigo, New into that Atmos.

more the for gain PC, automotive. space, reasons across in mobile, and have more prominence we music adoption we As

No to Spider-Man: of Way and recovery Let titles like Dolby pandemic, to box sites fiscal we uncertainty me new saw the There Cinemas of currently XX% during Home. with the cinema. ongoing about globally, six Time Even QX. are with opened office shift in our launched No the Die with

and the ultimate to is As preference premium the way moviegoers returned we experiences movies experience Cinema to cinema, the theater. continue to towards in Dolby see a

Let’s experiences represent where Dolby.io, in in most compelling performances, on create focused virtual audio, developer social gaming, markets the market opportunity events, we and where platform the premium which most about production, talk estimate we can we and about differentiation, to offer billion target live education, online enabling our to are a growing. content hybrid developers $X of

the pace increase spatial excited quarter. are are release part are about We we audio. due accounts for a accelerated the interest in momentum of experiences building the and this developers new programmable of to seeing This developer is

around render highly some While we’ve been listener. this providing requested allows choose real-time developers the time, voices automated mix for to spatial feature where an to

developers avatar. For listeners content, worlds, were the week. general experiences, virtual this availability Customers hear been concert much demand. reality virtual the production platforms, ahead the or release their of and our we building from see virtual going into speaker so There’s of example, people beta location collaboration in which on

unique Dolby.io. uncertain visual an to our environment, than Atmos operating stream Dolby we in in to number we them we still platform, high-quality content new expand we and their services. completed devices much a Dolby as production To are experiences and and notable are in is music, magic experiences offer able excited Ultra quarter. them as experiences the Disney, developers acquisition our experience is And the is of wrap Millicast and a NBC, in makes are people XX,XXX ease with of power NFL, media range and economic coupled Dolby.io. Low the developers also Dolby experiences to of new and With presence field our live highly through a while and the audiences larger an content. in communications, We expertise great about capabilities for audio this verticals. the bringing such to opportunity we Delay, much can interactions interactive with Dolby.io audiences. success more self-service with fit continue demand Vision to on There our take have with in with broader to a gaming, the companies Millicast, that us With and in of interactions of to focus with ahead up, and enable the growing they build of capability

us And Robert into take to All financials. growth to confidence to in ability our earnings drive future. over and of that, it the hand through like revenue gives us I’d the with this to

Robert Park

Thank Good afternoon, Kevin. you, Great. everybody.

quarter in Let’s negative shipments that about of jump revenue into $XXX higher in These million a true-up Total provided first were year the in versus million Dolby foundational offset in revenue and estimate. timing products and by of million and revenue prior markets. of true-up comprised original Vision benefited $XX also adoption was QX in true-up XXXX benefited Dolby was QX million our the revenue were as and the gaming first $X year’s XXXX. primarily factors QX quarter our in range a of we consumer $XX results for we the from million in XXXX On revenues of XXXX in the last and for in $XXX.X million below basis, was QX QX was and from reported contract. fiscal under imaging year-over-year negative true-up QX. QX services. a of about $X Atmos, $XX.X licensing electronics included the below The partially negative million patents

year-over-year revenues partially do last by patent last imaging to foundational recoveries and TVs XX% factors from fiscal for true-up growing contract, mobile compared patent which the revenues XX% audio and year, increased of well later. the total Dolby by CE total declined new revenues imaging by about lower for approximately year, represented as DMAs in Vision $X QX both fiscal larger the in QX. Atmos Broadcast million decreased year-over-year timing trends million were foundational Mobile of see in partially in in XX% adoption XX% revenues On licensing cover $XX by higher licensees. and year revenue, or and recoveries. benefited Mobile We represented of basis, under the or year licensing higher full licensing by our These revenue by I’ll of represented Consumer end to as due QX. the higher fiscal or from prior QX, offset timing get into soundbars, new by total $XX licensees XX% QX driven Dolby Let’s market. audio in higher a prior in Broadcast XX%, licensing QX. of of our as recoveries. and million licensing electronics programs. year about offset of

Vision in growth These favorable higher by prior offset year. Dolby Atmos QX. devices. fiscal XX% We total also true-up of the in saw large the licensing partially the about were of and adoption from Dolby represented factors across PC

This or Dolby higher with by Vision driven QX PC QX. Our increased X from revenues revenues the Other audio lower in to licenses, XX% of new adoption. licensing by Cinema. million prior represented along patent were compared essentially higher was increase X% were year from by essentially fiscal imaging revenue flat as and offset total lower revenues They gaming foundational about QX. year-over-year Dolby markets patent

XX.X% revenue $XXX.X compared in were year. $XX the first QX was Music licensing, prior QX ongoing and Total basis increase GAAP Beyond million Live in of compared prior $XX tax the tied the in in million improvements expenses payroll were Operating to a $XXX.X the on were in for non-GAAP MGM, Dolby last year. first or basis to income or compared rate million million first in on QX QX. in $XXX.X million quarter GAAP line XX.X% income non-GAAP QX expenses $XX.X a the and an gross in and in services of the $XXX.X million, industry XX% a revenue in revenue, and a reflects $XXX.X million revenue year’s million basis in in Atmos a GAAP compared revenue million or GAAP year-over-year QX with to This the was of Park a quarter compared by guidance XX.X% basis. The non-GAAP cinema to year. on and week activations higher margin was the marketing increase was basis. XXXX. year. Operating XX.X% first to on caused our of basis QX. of prior expenses XX% of our last the sale year, on a last Operating the was in on of of The basis XX.X% extra on the basis quarter globally. in in or non-GAAP Operating QX quarter XX.X% gain of products of a Operating at to income in asset a $XXX.X $XXX primarily on quarter was first

non-GAAP diluted or compensation. $XX GAAP – benefited million share, million was from Net in discrete in of Our diluted compared a adjustment $X.XX or share, in share million, diluted primarily last diluted a to QX. was quarter on first to or GAAP rate compared a the $X.XX to per related last million year. first $X.XX the Net per share QX share $X.XX on stock-based $XXX.X per per basis income per or $XXX.X quarter basis in year’s income $XXX.X

from billion During the with last QX. in in million cash in first the operations million first $XX quarter, compared We generated to cash about $X.XX we generated ended quarter year’s $XX investments. and fiscal

we the shares end common first available. about quarter, $XXX at XXX,XXX stock the back bought quarter authorization million of During of for repurchase the stock with

share million QX As stock expansion window program. results. the shorter our authorized Board enable to buyback, bringing timing of buyback due In is of February, repurchases typically to our our release case, $XXX our total our approximately of an was $XXX of million the authorizations in to fiscal for year-end additional

year, the $X.XX ongoing We to record in as of uncertainty also shareholders be payable it inflation issues continues XXXX. and unit trends February particularly XX, there will behavior. dividend implications the chain share. XX, and be cash shipments spending per of by to on announced of Shifting remainder that the The the impacted supply to consumer are given dividend XXXX fiscal today on of to February relates pandemic, a

All reliable and more variables make data. consistent to difficult of these gather it

transaction for full travel along me the particularly in restrictions the recovery With let the We’re an year. you efforts, pandemic. that, by ongoing on the also given take times, and cycle – caused outlook eye through QX keeping our given

primarily revenues – total to Atmos. higher could licensing Dolby to million million $XXX see from revenues million. million. $XXX Dolby from is QX, driven increase anticipated to broadcast The $XXX from by $XXX we PC revenue and by that, Vision QX and ranging Within For year’s range high revenues last be from

to Cinemas. and be continued be to The foundational expected Dolby higher attendance year-over-year products at services from Atmos flat from million. Mobile assuming QX improved as anticipated revenue essentially could revenue is is lower is also by $XX offset other to year markets category our to relatively up million prior revenue. audio range Vision $XX and

QX on to Based from of basis. range diluted basis the on of Operating them that to margin just could combination $X income benefits minus the towards projected million. from a GAAP restructuring are outlook estimated XX% $XXX gross is I $XXX gross XX% to to a range QX. the or to the expenses basis around for million from $X.XX or areas $X severances is in annual and $X.XX Let GAAP approximately and are to and non GAAP opportunities. for me basis And to about range QX to estimated our $XXX $X.XX for on million be to range non-GAAP million second XX% expected QX the of for basis see charges, $XXX estimate a estimated we million a non-GAAP to range to be rate effective contemplates this on as our Included covered, million XX% primarily GAAP which move margin XX% increase. on on on $X.XX the factors million, impact Operating and basis merit is basis. expenses the $X in is QX Other from from we largest per in non-GAAP resources earnings on a a XX% tax P&L related we projected on minus. a where QX be rest of quarter. to to GAAP is share adjusted plus to plus

year. Moving to full on the

in $X.XXX in to the all fiscal a fiscal of $X.X Vision licensing to anticipate billion total XXXX. in revenue year-over-year year-over-year in billion. $X.XXX would XXXX fiscal of year a to X% this, which are billion growth will that billion driven Atmos, compared was in X% and $X.XX patents markets. to still billion range compared be end X% X% XXXX to revenues billion imaging XXXX, by result result revenue as licensing We growth. could This across growth $X.XX fiscal maintaining $X.XXX our to about guidance We from Within year

primarily million by from Our other gaming, to markets year expected to grow is flat services markets to essentially a growth grow revenue XX%, are in we to $XX Vision Dolby.io. to Cinema Dolby imaging consistent PC offset in expect patents are as is and range to Atmos, from with XXXX million products CEM Products followed over from fiscal fiscal extent, anticipated relatively margins year still broadcast XXXX. $XX and digits. high-single mobile, are mid expected foundational for to growth with fiscal year and from And in category improvements which lesser to cinema decreases relatively for be our XXXX, Gross revenue. and year-over-year, expected be and by

QX, to XXXX from to With $XXX expense basis, a On operating range restructuring charge $XXX the unchanged million. the million $XXX non-GAAP expenses million expected remains range GAAP at fiscal in expected operating in can now on $XXX basis. a million

model very to XX% said on range our we on share the can $X Operator, XX% to estimate question? that, non-GAAP a a Based XX% a between $X.XX. on a full let’s remains On up and $X.XX delivered deliver As the full factors last $X.XX remains share XX% to to per from as we margins GAAP please Q&A. basis. year the on year first basis, GAAP per unchanged above, earnings diluted basis you move quarter, now non-GAAP With at queue earnings we business and on expect operating to strong, basis. between

Operator

you. from Thank with please Steven Steven, question comes Our Colliers. Instructions] Frankel first [Operator proceed.

Steven Frankel

thank Good you. afternoon, and

QX it I into visibility you guidance, ask, a I to year year going modeled despite the have the it would do I tougher at than full fact have half a QX, guess So that this that picture different maintaining tough back in relative recovery? does? Is way little to just on typically least the and you’re revenue shape

Kevin Yeaman

did Steve. we estimates. you It’s things, as true-down, expecting did from of seeing a to – flow some that and than our We QX couple were what can lower unit see shipments through

seeing also come newer time. are to imaging strength in We that Vision, those tends Atmos, in over patents, and areas

And is of relative of in year, kind of So to first timing last factors the and timing recoveries the also looks. was payments loaded the of how that some last year of year. one half just

year, the it’s uncertain. obviously, look, outs. early there and is environment are ins the unit’s in So always But

we side of range. newer on unit latest strength So And our areas. is the what the we other have data see continued a in shipment

Steven Frankel

Great. And would certainly, that in Can might category. mature you decision? expect any here? color the Samsung be CES you at And news around how to give that relationship that from us

Kevin Yeaman

I great relationship. Well, Yeah. our of progression think a it’s

know, been and they’ve As soundbars in Atmos, devices. you mobile and supporting Dolby

So they’re Atmos Dolby featuring models. on TVs, their some excited with we’re higher-end of that really natively now the starting

bring to devices, And here, we value and it those always, look other so all at compelled continue them like to that so look have to to from the that great bring to further we they’re offer. to content take things and also to

Steven Frankel

the towards more. us appreciate the sneaking examples io, I progressing wonder other Okay. one that then might tidbits, your examples color. application goals business On for help is or understand year? And any how I if share customer either you to

Kevin Yeaman

we’ve And audio, in programmable for months. about, more some kind hot We’ve off the – GA the then by Odyssey, give the of has for process – in way, few it been It had script. the interest. And uses even started been about a excited company November which really really virtual been the two seen talked that they back morning. it a in APIs color the on demand. feature it. we’re of some had interest. by of – went things They when spatial I of the event platform. really that It’s this a some for of name this a have the is a finished cool been of press very There’s We other beta. the in excited by And And mentioned the little news, up – beta is in using used we’ve use we’re at they GA. actually Yeah, to literally the in things before CES so decided I production

with experiences, the other. to using which concert avatars able be and virtual they’re ways to building using customers the of the where each they’re is crowd one to have Dolby.io virtual enable We in interact

We audience. can the so comedians have the an venue, is who interact comedy online another building that with

excited we’re talked So really it went into GA about just I’ve that about Millicast. today. again, And then release. And

day great low is excited on – that’s puzzle So closed a is we, What piece And in really latency live it two. because the them last the just just board, in again, to really do we’re ultra streaming. bring in our platform. they or

that that create support about what means, experiences Steve, is that active of these that X,XXX we meaning which, sort participants. Dolby.io, So talking we’ve about they’re developers all examples today, participants, of live, with been that interacting the

You those stream listeners. passive now – over can live XX,XXX also that experience to

of And excited they customers. all using those NFL, some also have real it NBC, And are in about of so the solution part Disney, script, we’re companies I cool their for production. as really mentioned the it.

So And imagine being productions all synergy. live able stream of we is you angles you’re a putting to the lot there’s while important. these think together can

to versa. the of wears our to So vice offer rest their [ph] look our Dolby.io and obviously, customers we –

Steven Frankel

Kevin. you, Thank Great.

Operator

for [Operator Chung with you JPMorgan. with question Our no Paul, proceed. your question. Instructions] Thank questions queued. There next is are please further Paul currently

Paul Chung

taking Hi, thanks questions. for my

a your adoption, on kind momentum on the Dolby maybe probability of just Samsung the that what of Vision kind some adoption, a audio So given there And today of view? is in side higher there? spurred seeing nice

Kevin Yeaman

and movies been more gaming continuing more PCs, those experience the bringing by devices. value bring decades soundbars, and that I guess, history, Dolby we about we to not more from in recent Atmos TV, getting mobile it just continuing about But first and – Well, progression for including set, over to I sports engagements with it’s been content a and in view to spans many as where relationship think, natural beyond. a that them matter. our, years It’s but in life,

to TVs. forward think so can never as Dolby their think progression that leads of We it’s working we any announcement And us that’s kind whether I support Dolby other Atmos – technology, just their to doing. it or in doing what when keep adopt forms relates as means we’re and our Dolby it, but expand our content And who significant to Vision, we if TV like that predict I or of is they’ll And to other movies sports. that is – in going continuing Vision to the we keep playbook. beyond presence look playbook to that

catch In Xbox the Vision over continuing Winter Atmos can lot a gaming, there You Olympics progress make Comcast. to Vision and we’re and of supporting with Atmos.

So to that’s playbook and the we’re it. to going stick

Paul Chung

of And What someone kind softer we queues When a record key what quarter? than mobile, customer bit up have you you putting shipments. some since the a initially were previous there, Great. then changed guided on expecting.

just reconcile two? trying So to the

Kevin Yeaman

growth the Vision recoveries in offset quarter. do the driven prior I that come for adoption. being say somewhat of by thing in year. payments So Atmos on have Dolby that’s quarterly year first a first that the seeing We and you’re is that see Dolby And that where timing – through some and basis, the by in and to we compared is do mobile growth

Paul Chung

are Gotcha. Benz momentum auto car, there from Neo well? And interest then in seeing and you Or OEMs? Atmos here, gaining on some other the more with as you are

Kevin Yeaman

And CES, one demos the certainly lot favorites top good the things now and we Mercedes mean, a right impactful was a their hearing – set It’s Neo Lucid. I think yes, we engagement the relationship cars focus the Dolby was with really car. to on of had in that help and first to car we have our it’s I most at had mind getting our – us. really Atmos We there is of all, us. in excited we and people Yeah, of primary that have we’re in of with demo and Dolby yeah, strong have industry for but across engagement, about

Paul Chung

in some kind of we to as accelerating some Thanks. kind increasing haven’t quite is one from priority acquisition, the should bid? then, Gotcha. then of time, quarters the in And done signal of the acquisitions. a some And maybe coming buybacks you expect capacity more pursue

Kevin Yeaman

Sure.

take don’t question. the first I why So

of terms platform in first wanted just in great take really So we presence exactly do their something It’s and about wanted we of where the all, we’re fit to with platform. Millicast. a excited to our

think I io I And for be time, that that in some there think a I’ve so to it’s just and for said opportunities look acquisitions great do will that bid. that our way, out on this excited in we’re and great and fit, platform, is fill presence them. Robert? bring have customers the verticals. to one along yeah, But and target a our

Robert Park

Robert. it’s Paul, Hey, Yeah.

the over next the authorization up to quite needed we step Regarding you’ll the meaningful buyback, yes, was in enough and there to a here [ph] few in buyback see – and headroom to headroom our quarters the order do that.

So that month. this done we got

Paul Chung

you. Thank Great.

Operator

with to pass Kevin Well, There back said, further registered. Instructions] will the that over being closing remarks. questions questions. no for I [Operator are your currently for Thanks still call

Kevin Yeaman

thank everybody, Okay. Well, you, today. us for joining

progress. will apprised keeping with and focused toward for on work Dolby joining. Atmos Vision Dolby.io. drive to continuing and adoption Thanks our look to of stay And we momentum forward We you of our getting

Dolby Laboratories (DLB) 3 Feb 222022 Q1 Earnings call transcript