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Dolby Laboratories Reports Fourth Quarter and Fiscal Year 2022 Financial Results

SAN FRANCISCO, Nov. 17, 2022 (GLOBE NEWSWIRE) -- Dolby Laboratories, Inc. (NYSE:DLB) today announced the company's financial results for the fourth quarter and full year of fiscal 2022.

"We continue to make progress in bringing the Dolby experience to all the ways people enjoy their content," said Kevin Yeaman, President and CEO, Dolby Laboratories. "While results came in below our expectations, we grew our presence across movies and TV, music, and user-generated content and we are confident in our long-term growth opportunities."

Fourth Quarter Fiscal 2022 Financial Highlights

  • Total revenue was $278.2 million, compared to $285.0 million for the fourth quarter of fiscal 2021.
  • GAAP net income was $27.8 million, or $0.28 per diluted share, compared to GAAP net income of $44.2 million, or $0.42 per diluted share, for the fourth quarter of fiscal 2021. On a non-GAAP basis, fourth quarter net income was $52.8 million, or $0.54 per diluted share, compared to $60.4 million, or $0.58 per diluted share, for the fourth quarter of fiscal 2021.
  • Cash flows from operations were $51.3 million, compared to $109.8 million for the fourth quarter of fiscal 2021.
  • We repurchased 2.9 million shares of our common stock and ended the quarter with about $361 million of stock repurchase authorization available going forward.

Full Year Fiscal 2022 Financial Highlights

  • Total revenue was $1.25 billion, compared to $1.28 billion for the full year of fiscal 2021.
  • GAAP net income was $184.1 million, or $1.81 per diluted share, compared to GAAP net income of $310.2 million, or $2.97 per diluted share, for the full year of fiscal 2021. On a non-GAAP basis, full year net income was $319.9 million, or $3.14 per diluted share, compared to $383.3 million, or $3.66 per diluted share, for the full year of fiscal 2021.
  • Cash flows from operations were $318.6 million, compared to $447.8 million for the full year of fiscal 2021.
  • We held cash, cash equivalents, and investments of $911.9 million as of September 30, 2022.

A complete listing of Dolby's non-GAAP measures are described and reconciled to the corresponding GAAP measures at the end of this release.

Recent Business Highlights

  • Volvo, Polestar, Lotus, and XPENG all announced their first vehicles to support Dolby Atmos.
  •, a leading music streaming service in India, launched the support of Dolby Atmos.
  • The German Super Cup final match was broadcast for the first time in Dolby Atmos.
  • Moong Labs announced the launch of its popular mobile game "Epic Cricket – Big League" in Dolby Atmos.
  • Xiaomi introduced the MIX Fold 2, their second smartphone to support Dolby Vision Capture.
  • Microsoft announced three new Surface computers, all with Dolby Atmos and Dolby Vision.


Today, Dolby announced a cash dividend of $0.27 per share of Class A and Class B common stock, payable on December 8, 2022, to stockholders of record as of the close of business on November 30, 2022.

Financial Outlook

Dolby’s financial outlook relies on estimates of royalty-based revenue that take into consideration the macroeconomic effect of certain events, including COVID-19, supply chain constraints, and consumer demand for electronic products. In addition, our actual results could differ materially from the estimates we are providing below due in part to the increased uncertainty resulting from these items as well as the geopolitical instability and continuing concerns around inflation and rising interest rates. The uncertainty resulting from these factors has greatly reduced our visibility into our future outlook. To the extent possible, the estimates we are providing for future periods reflect certain assumptions about the potential impact of certain of these items, based upon a consideration of currently available external and internal data and information. These assumptions are subject to risks and uncertainties. For more information, see "Forward-Looking Statements" in this press release for a description of certain risks that we face, and the section captioned "Risk Factors" in our Annual Report on Form 10-K for fiscal 2022, to be filed on or around the date hereof.

Dolby is providing the following high-level estimates for the full year of fiscal 2023:

  • Total revenue is expected to grow low single digits year-over-year.
  • GAAP operating expenses are expected to decline roughly 2% year-over-year. Non-GAAP operating expenses are expected to grow roughly 2% year-over-year.
  • We expect operating margins on a GAAP basis to be roughly 19% and on a non-GAAP basis to be roughly 30%.

Dolby is providing the following estimates for its first quarter of fiscal 2023:

  • Total revenue is estimated to range from $300 million to $330 million.
  • Operating expenses are anticipated to range from $214 million to $224 million on a GAAP basis and from $180 million to $190 million on a non-GAAP basis.
  • Effective tax rate is anticipated to range from 22% to 24% on a GAAP basis and 19% to 21% on a non-GAAP basis.
  • Diluted earnings per share is anticipated to range from $0.46 to $0.61 on a GAAP basis and from $0.76 to $0.91 on a non-GAAP basis.

Conference Call Information

Members of Dolby management will lead a conference call open to all interested parties to discuss fourth quarter fiscal 2022 financial results for Dolby Laboratories at 2:00 p.m. PT (5:00 p.m. ET) on Thursday, November 17, 2022. Access to the teleconference will be available at or by dialing 1-844-200-6205 (or dialing 1-929-526-1599 for international callers) and entering confirmation code 357413.

A replay of the call will be available from 5:00 p.m. PT (8:00 p.m. ET) on Thursday, November 17, 2022, until 11:00 p.m. PT on Thursday, November 24, 2022 (2:00 a.m. ET on Friday, November 25, 2022), by dialing 1-866-813-9403 (international callers can access the replay by dialing +44-204-525-0658) and entering the confirmation code 258585. An archived version of the teleconference will also be available on the Dolby website,

Financial Results

The financial results for the fourth quarter and fiscal year ended September 30, 2022 discussed in this release are subject to the completion of the audit of our year-end financial statements and to adjustment, pursuant to our revenue recognition policies under ASC 606. In accordance with ASC 606, we may be required to recognize revenue between the date of this release and the time at which we issue our audited consolidated financial statements. Any changes to the estimated financial results discussed above as a result of our revenue recognition policies under ASC 606 will be included in our Annual Report on Form 10-K for fiscal 2022.

Non-GAAP Financial Information

To supplement Dolby's financial statements presented on a GAAP basis, Dolby management uses, and Dolby provides to investors, certain non-GAAP financial measures as an additional tool to evaluate Dolby's operating results in a manner that focuses on what Dolby's management believes to be its ongoing business operations and performance. Specifically, we exclude the following as adjustments from one or more of our non-GAAP financial measures:

Stock-based compensation expense: Stock-based compensation, unlike cash-based compensation, utilizes subjective assumptions in the methodologies used to value the various stock-based award types that we grant. These assumptions may differ from those used by other companies. To facilitate more meaningful comparisons between our underlying operating results and those of other companies, we exclude stock-based compensation expense.

Amortization of acquisition-related intangibles: We amortize intangible assets acquired in connection with acquisitions. These intangible assets consist of patents and technology, customer relationships, and other intangibles. We record amortization charges relating to these intangible assets in our GAAP financial statements, and we view these charges as items arising from pre-acquisition activities that are determined by the timing and valuation of our acquisitions. As these amortization charges do not directly correlate to our operations during any particular period, we exclude these charges to facilitate an evaluation of our current operating performance and comparisons to our past operating results.

Restructuring charges: Restructuring charges are costs associated with restructuring plans and primarily relate to costs associated with exit or disposal activities, employee severance benefits, and asset impairments. We exclude restructuring costs, including any adjustments to charges recorded in prior periods, as we believe that these costs are not representative of our normal operating activities and therefore, excluding these amounts enables a more effective comparison to our past operating performance.

Other operating income adjustments: In the second quarter of fiscal 2022, we recorded an expense of $34.4 million related to a one-time settlement and accrual in connection with indemnification requests under commercial agreements that we assumed as part of an acquisition in 2014 related to our cinema products business. We expect this settlement and related accrual to fully resolve this matter. Also, in the first quarter of fiscal 2021, we recorded a one-time gain on the sale of property, which was previously classified as held for sale. The property was 51% owned by the controlling interest, therefore 51% of the gain recognized has been attributed to the controlling interest. We have excluded both of these items as they are unusual, non-recurring events that are not representative of our normal operating activities and therefore, excluding these amounts enables a more effective comparison to our past operating performance.

Income tax adjustments: We believe that excluding the income tax effect of the aforementioned non-GAAP adjustments provides a more accurate view of our underlying operating results to management and investors.

Using the aforementioned adjustments, Dolby provides various non-GAAP financial measures including, but not limited to: non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating margin, and non-GAAP effective tax rate. Dolby's management believes it is useful for itself and investors to review both GAAP and non-GAAP measures to assess the performance of Dolby's business, including as a means to evaluate period-to-period comparisons. Dolby's management does not itself, nor does it suggest that investors should, consider non-GAAP financial measures in isolation from, superior to, or as a substitute for, financial information prepared in accordance with GAAP. Whenever Dolby uses non-GAAP financial measures, it provides a reconciliation of the non-GAAP financial measures to the most closely applicable GAAP financial measures. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures as detailed above and below. Investors are also encouraged to review Dolby's GAAP financial statements as reported in its US Securities and Exchange Commission (SEC) filings. A reconciliation between GAAP and non-GAAP financial measures is provided at the end of this press release and on the Dolby investor relations website,

Forward-Looking Statements

Certain statements in this press release, including, but not limited to, statements relating to Dolby's financial results for the fourth quarter and full year of fiscal 2022, expected financial results for the first quarter of fiscal 2023 and full year fiscal 2023, our ability to expand existing business, navigating challenging periods, pursue our long-term growth opportunities, and advance our other long-term objectives, and future dividend payments are "forward-looking statements" that inherently involve substantial risks and uncertainties. These forward-looking statements are based on management's current expectations, and as a result of certain risks and uncertainties, actual results may differ materially from those provided. The following important factors, without limitation, could cause actual results to differ materially from those in the forward-looking statements: the potential impacts of COVID-19 and economic conditions on Dolby’s business operations, financial results, and financial position (including the impact to Dolby partners and disruption of the supply chain and delays in shipments of consumer products; consumer demand for products that incorporate Dolby technologies; delays in the development and release of new products or services that contain Dolby technologies; delays in royalty reporting or delinquent payment by partners or licensees; lengthening sales cycles; the impact to the overall cinema market, including closures or limitations of cinema capacity and resulting adverse impact to Dolby’s revenue recognized on box-office sales and demand for cinema products and services; temporary Dolby office closures and other actions to protect Dolby’s workforce; and macroeconomic conditions that affect discretionary spending and access to products that contain Dolby technologies); risks associated with geopolitical issues, such as the conflict between Russia and Ukraine; risks associated with trends in the markets in which Dolby operates, including the broadcast, mobile, consumer electronics, PC, and other markets; the loss of, or reduction in sales by, a key customer, partner, or licensee; pricing pressures; risks relating to changing trends in the way that media is distributed and consumed; risks relating to conducting business internationally, including trade restrictions and changes in diplomatic or trade relationships; risks relating to the expiration of patents; the timing of Dolby's receipt of royalty reports and payments from its licensees, including recoveries; changes in tax regulations; timing of revenue recognition under licensing agreements and other contractual arrangements; the completion of the audit of our year-end financial statements, final adjustments and other developments that may arise between now and the time our audited consolidated financial statements are issued; Dolby's ability to develop, maintain, and strengthen relationships with industry participants; Dolby's ability to develop and deliver innovative products and technologies in response to new and growing markets; competitive risks; risks associated with conducting business in China and other countries that have historically limited recognition and enforcement of intellectual property and contractual rights; risks associated with the health of the motion picture industry generally; Dolby's ability to increase its revenue streams and to expand its business generally, and to continue to expand its business beyond its current technology offerings; risks associated with acquiring and successfully integrating businesses or technologies; and other risks detailed in Dolby's SEC filings and reports, including the risks identified under the section captioned "Risk Factors" in our Annual Report on Form 10-K filed on or around the date hereof. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements. Forward-looking statements are based upon information available to us as of the date of this press release, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Dolby disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.

About Dolby Laboratories

Dolby Laboratories (NYSE: DLB) is based in San Francisco, California with offices around the globe. From movies and TV shows, to apps, music, sports and gaming, Dolby transforms the science of sight and sound into spectacular experiences for billions of people worldwide. We partner with artists, storytellers, developers, and businesses to revolutionize entertainment and communications with Dolby Atmos, Dolby Vision, Dolby Cinema, and

Dolby, Dolby Atmos, Dolby Vision, Dolby Cinema,, and the double-D symbol are among the registered and unregistered trademarks of Dolby Laboratories, Inc. in the United States and/or other countries. Other trademarks remain the property of their respective owners.

(in thousands, except per share amounts; unaudited)

 Fiscal Quarter Ended Fiscal Year Ended
 September 30,
September 24,
 September 30,
September 24,
Licensing$249,127 $265,988  $1,164,533 $1,214,147 
Products and services 29,077  19,037   89,260  67,109 
Total revenue 278,204  285,025   1,253,793  1,281,256 
Cost of revenue:     
Cost of licensing 16,234  13,935   61,597  55,421 
Cost of products and services 20,945  16,764   79,763  74,604 
Total cost of revenue 37,179  30,699   141,360  130,025 
Gross margin 241,025  254,326   1,112,433  1,151,231 
Operating expenses:     
Research and development 62,070  61,966   261,174  253,640 
Sales and marketing 90,202  98,466   358,716  332,671 
General and administrative 57,065  54,193   275,315  224,161 
Gain on sale of assets        (13,871)
Restructuring charges 4,580  (664)  10,623  10,240 
Total operating expenses 213,917  213,961   905,828  806,841 
Operating income 27,108  40,365   206,605  344,390 
Other income/(expense):     
Interest income 3,338  816   6,568  3,493 
Interest expense (139) (119)  (394) (479)
Other income, net 667  1,996   2,500  7,108 
Total other income 3,866  2,693   8,674  10,122 
Income before income taxes 30,974  43,058   215,279  354,512 
(Provision for)/benefit from income taxes (3,215) 1,170   (31,381) (36,689)
Net income including controlling interest 27,759  44,228   183,898  317,823 
Less: net (income)/loss attributable to controlling interest (3) (37)  189  (7,596)
Net income attributable to Dolby Laboratories, Inc.$27,756 $44,191  $184,087 $310,227 
Net income per share:     
Basic$0.29 $0.44  $1.84 $3.07 
Diluted$0.28 $0.42  $1.81 $2.97 
Weighted-average shares outstanding:     
Basic 97,077  101,227   99,990  101,190 
Diluted 98,461  104,369   101,983  104,622 

(in thousands; unaudited)

 September 30,
September 24,
Current assets:  
Cash and cash equivalents$620,127 $1,225,380 
Restricted cash 8,244  7,652 
Short-term investments 189,213  38,839 
Accounts receivable, net 243,593  232,609 
Contract assets, net 176,093  182,316 
Inventories, net 23,549  10,965 
Prepaid expenses and other current assets 50,075  62,737 
Total current assets 1,310,894  1,760,498 
Long-term investments 102,514  62,819 
Property, plant and equipment, net 513,481  534,381 
Operating lease right-of-use assets 46,530  67,128 
Goodwill and intangible assets, net 477,412  463,584 
Deferred taxes 183,568  156,020 
Other non-current assets 55,149  61,257 
Total assets$2,689,548 $3,105,687 
Current liabilities:  
Accounts payable$14,171 $17,779 
Accrued liabilities 230,237  262,728 
Income taxes payable 1,265  1,334 
Contract liabilities 18,588  18,473 
Operating lease liabilities 13,257  15,403 
Total current liabilities 277,518  315,717 
Non-current contract liabilities 23,203  23,713 
Non-current operating lease liabilities 37,685  56,715 
Other non-current liabilities 100,122  105,310 
Total liabilities 438,528  501,455 
Stockholders’ equity:  
Class A common stock 53  59 
Class B common stock 41  41 
Retained earnings 2,297,730  2,607,909 
Accumulated other comprehensive loss (51,641) (10,030)
Total stockholders’ equity – Dolby Laboratories, Inc. 2,246,183  2,597,979 
Controlling interest 4,837  6,253 
Total stockholders’ equity 2,251,020  2,604,232 
Total liabilities and stockholders’ equity$2,689,548 $3,105,687 

(in thousands; unaudited)

 Fiscal Year Ended
 September 30,
September 24,
Operating activities:  
Net income including controlling interest$183,898 $317,823 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization 88,461  95,860 
Stock-based compensation 114,925  99,698 
Amortization of operating lease right-of-use assets 15,148  16,897 
Amortization of premium on investments 1,440  1,373 
Provision for/(benefit from) credit losses 5,460  (2,889)
Deferred income taxes (29,465) (37,048)
Gain on sale of assets   (13,871)
Other non-cash items affecting net income (5,037) (5,452)
Changes in operating assets and liabilities:  
Accounts receivable, net (14,314) (49,034)
Contract assets, net 6,300  (21,154)
Inventories (11,759) 17,154 
Operating lease right-of-use assets 266  (5,199)
Prepaid expenses and other assets 8,760  17,165 
Accounts payable and accrued liabilities (33,542) 44,230 
Income taxes, net 8,446  (2,975)
Contract liabilities (413) 2,361 
Operating lease liabilities (15,399) (11,369)
Other non-current liabilities (4,599) (15,817)
Net cash provided by operating activities 318,576  447,753 
Investing activities:  
Purchases of marketable securities (311,313) (67,101)
Proceeds from sales of marketable securities 9,459  10,892 
Proceeds from maturities of marketable securities 108,546  53,893 
Purchases of property, plant, and equipment (47,928) (54,454)
Proceeds from sale of assets   16,365 
Payments for business combinations, net of cash acquired (38,171) (4,500)
Purchases of intangible assets (11,528)  
Purchases of other investments (5,000)  
Net cash used in investing activities (295,935) (44,905)
Financing activities:  
Proceeds from issuance of common stock 57,848  122,088 
Repurchase of common stock (530,486) (245,864)
Payment of cash dividend (100,067) (89,172)
Distribution to controlling interest (1,435) (7,362)
Shares repurchased for tax withholdings on vesting of restricted stock (36,418) (32,205)
Net cash used in financing activities (610,558) (252,515)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash (16,744) 2,720 
Net increase/(decrease) in cash, cash equivalents, and restricted cash (604,661) 153,053 
Cash, cash equivalents, and restricted cash at beginning of period 1,233,032  1,079,979 
Cash, cash equivalents, and restricted cash at end of period$628,371 $1,233,032 

GAAP to Non-GAAP Reconciliations
(in millions, except per share data; unaudited)
The following tables present Dolby's GAAP financial measures reconciled to the non-GAAP financial measures included in this release for the fourth quarter and fiscal year ended September 30, 2022 and September 24, 2021:
Net income: Fiscal Quarter Ended Fiscal Year Ended
  September 30,
 September 24,
 September 30,
 September 24,
GAAP net income $27.8  $44.2  $184.1  $310.2 
Stock-based compensation(1)  27.0   24.1   114.9   99.7 
Amortization of acquisition-related intangibles(2)  1.8   2.7   9.1   10.2 
Other operating income adjustments        34.4   (6.8)
Restructuring charges  4.6   (0.7)  10.6   10.2 
Income tax adjustments  (8.4)  (9.9)  (33.2)  (40.2)
Non-GAAP net income $52.8  $60.4  $319.9  $383.3 
(1) Stock-based compensation included in above line items:                
Cost of products and services $0.4  $0.5  $1.7  $2.1 
Research and development  8.6   7.3   37.1   29.7 
Sales and marketing  9.6   8.2   41.3   36.4 
General and administrative  8.4   8.1   34.8   31.5 
(2) Amortization of acquisition-related intangibles included in above line items:                
Cost of licensing $  $0.7  $1.5  $2.8 
Cost of products and services  0.9   0.9   3.1   3.6 
Research and development  0.1   0.1   0.5   0.4 
Sales and marketing  0.8   1.0   3.7   3.4 
General and administrative        0.3    
Diluted earnings per share:  Fiscal Quarter Ended   Fiscal Year Ended 
   September 30,
   September 24,
   September 30,
   September 24,
GAAP diluted earnings per share $0.28  $0.42  $1.81  $2.97 
Stock-based compensation  0.27   0.22   1.13   0.95 
Amortization of acquisition-related intangibles  0.02   0.04   0.09   0.10 
Other operating income adjustments        0.34   (0.08)
Restructuring charges  0.05   (0.01)  0.10   0.10 
Income tax adjustments  (0.08)  (0.09)  (0.33)  (0.38)
Non-GAAP diluted earnings per share $0.54  $0.58  $3.14  $3.66 
Weighted-average shares outstanding - diluted  98   104   102   105 

The following tables present a reconciliation between GAAP and non-GAAP versions of the estimated financial amounts for the first quarter of fiscal 2023 and fiscal 2023 included in this release:
Operating expenses:  Q1 2023   Fiscal 2023 
GAAP operating expenses (low - high end of range)  $214 - $224   (2%) +/- year-over-year 
Stock-based compensation  (33)  (124)
Amortization of acquisition-related intangibles  (1)  (4)
Non-GAAP operating expenses (low - high end of range)  $180 - $190   +2% +/- year-over-year 

Operating margin: Fiscal 2023
GAAP operating margin (low - high end of range) 19% +/- 
Stock-based compensation 10 % 
Amortization of acquisition-related intangibles 1 % 
Non-GAAP operating margin (low - high end of range) 30% +/- 

Effective tax rate:  Q1 2023 
GAAP effective tax rate (low - high end of range)  22% - 24% 
Stock-based compensation (low - high end of range)  (2%) - (1%) 
Amortization of acquisition-related intangibles (low - high end of range)  (1%) - 0% 
Other (low - high end of range)  (1%) - 0% 
Non-GAAP effective tax rate (low - high end of range)  19% - 21% 

Diluted earnings per share: Q1 2023
  Low High
GAAP diluted earnings per share $0.46  $0.61 
Stock-based compensation  0.34   0.34 
Amortization of acquisition-related intangibles  0.02   0.02 
Income tax adjustments  (0.06)  (0.06)
Non-GAAP diluted earnings per share $0.76  $0.91 
Weighted-average shares outstanding - diluted  99   99 

Investor Contact:
Maggie O’Donnell
Dolby Laboratories

Media Contact:
Karen Hartquist
Dolby Laboratories, Inc.

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