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Dolby Laboratories Reports Third Quarter Fiscal 2023 Financial Results

SAN FRANCISCO, Aug. 03, 2023 (GLOBE NEWSWIRE) -- Dolby Laboratories, Inc. (NYSE:DLB) today announced the company's financial results for the third quarter of fiscal 2023.

"We continue to transform the way people enjoy their content," said Kevin Yeaman, President and CEO, Dolby Laboratories. "We remain focused on growing Dolby Atmos and Dolby Vision across our movies and TV, music and user-generated content ecosystems."

Third Quarter Fiscal 2023 Financial Highlights

  • Total revenue was $298.4 million, compared to $289.6 million for the third quarter of fiscal 2022.
  • GAAP net income was $16.4 million, or $0.17 per diluted share, compared to GAAP net income of $39.6 million, or $0.39 per diluted share, for the third quarter of fiscal 2022. On a non-GAAP basis, third quarter net income was $54.1 million, or $0.55 per diluted share, compared to $68.7 million, or $0.68 per diluted share, for the third quarter of fiscal 2022.
  • Cash flow from operations was $121.1 million, compared to $172.6 million for the third quarter of fiscal 2022.
  • Dolby repurchased 0.3 million shares of its common stock and ended the quarter with approximately $237 million of stock repurchase authorization available going forward.

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

  • Dolby Atmos Music is now available on WYNK Music in India.
  • Max launched their top-tier service with Dolby Atmos and Dolby Vision.
  • Moj, a large social media platform in India, adopted Dolby Vision.
  • NIO and Lotus launched car models that support Dolby Atmos in Europe.
  • Sony Interactive Entertainment announced that the PS5 will unlock support for compatible Dolby Atmos-enabled living room devices.
  • TCL announced they are expanding Dolby Vision and Dolby Atmos on their regional TV models in India.
  • Viddsee, a short-film video platform based in Singapore, adopted Dolby Vision and Dolby Atmos.


Today, Dolby announced a cash dividend of $0.27 per share of Class A and Class B common stock, payable on August 22, 2023, to stockholders of record as of the close of business on August 14, 2023.

Financial Outlook

Dolby’s financial outlook relies on estimates of royalty-based revenue that take into consideration the macroeconomic effect of certain events, including supply chain constraints, international conflicts, and consumer demand for electronic products. In addition, actual results could differ materially from the estimates Dolby is 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 elevated interest rates. The uncertainty resulting from these factors has greatly reduced its visibility into its future outlook. To the extent possible, the estimates Dolby is 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 Dolby faces, and the section captioned "Risk Factors" in its Quarterly Report on Form 10-Q for the third quarter of fiscal 2023, to be filed on or around the date hereof.

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

  • Total revenue is expected to range from $1.285 billion to $1.315 billion.
  • Gross margins are anticipated to be roughly 87.5% on a GAAP basis and roughly 88.0% on a non-GAAP basis.
  • Operating expenses are anticipated to range from $900 million to $910 million on a GAAP basis and from $760 million to $770 million on a non-GAAP basis.
  • Dolby expects operating margins on a GAAP basis to be roughly 18% and on a non-GAAP basis to be roughly 30%.
  • Diluted earnings per share is anticipated to range from $2.10 to $2.30 on a GAAP basis and from $3.30 to $3.50 on a non-GAAP basis.

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

  • Total revenue is estimated to range from $275 million to $305 million.
  • Gross margins are anticipated to be roughly 86.5% on a GAAP basis and roughly 87.5% on a non-GAAP basis.
  • Operating expenses are anticipated to range from $227 million to $237 million on a GAAP basis and from $195 million to $205 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 $0.10 to $0.30 on a GAAP basis and from $0.40 to $0.60 on a non-GAAP basis.

Conference Call Information

Members of Dolby management will lead a conference call open to all interested parties to discuss third quarter fiscal 2023 financial results for Dolby Laboratories at 2:00 p.m. PT (5:00 p.m. ET) on Thursday, August 3, 2023. Access to the teleconference will be available at or by dialing 1-888-210-2212 (+1-646-960-0390 for international callers) and entering confirmation code 5587811.

A replay of the call will be available from 5:00 p.m. PT (8:00 p.m. ET) on Thursday, August 3, 2023, until 8:59 p.m. PT (11:59 p.m. ET) on Thursday, August 10, 2023 by dialing 1-800-770-2030 (+1-647-362-9199 for international callers) and entering the confirmation code 5587811. An archived version of the teleconference will also be available on the Dolby website,

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, Dolby excludes the following as adjustments from one or more of its 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 Dolby grants. These assumptions may differ from those used by other companies. To facilitate more meaningful comparisons between its underlying operating results and those of other companies, Dolby excludes stock-based compensation expense.

Amortization of acquisition-related intangibles: Dolby amortizes intangible assets acquired in connection with acquisitions. These intangible assets consist of patents and technology, customer relationships, and other intangibles. Dolby records amortization charges relating to these intangible assets in its GAAP financial statements, and Dolby views these charges as items arising from pre-acquisition activities that are determined by the timing and valuation of its acquisitions. As these amortization charges do not directly correlate to its operations during any particular period, Dolby excludes these charges to facilitate an evaluation of its current operating performance and comparisons to its 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. Dolby excludes restructuring costs, including any adjustments to charges recorded in prior periods (which may be credits), as Dolby believes that these costs are not representative of its normal operating activities and therefore, excluding these amounts enables a more effective comparison of its past operating performance and to that of other companies.

Income tax adjustments: The income tax effects of the aforementioned non-GAAP adjustments do not directly correlate to its operating performance so Dolby believes that excluding such income tax effects provides a more meaningful view of its 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, expected financial results for the fourth quarter of fiscal 2023 and full year fiscal 2023, Dolby's ability to expand existing business, navigate challenging periods, pursue its long-term growth opportunities, and advance its other long-term objectives 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 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; the level at which Dolby technologies are incorporated into products and the consumer demand for such products; 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 adverse impact to Dolby’s revenue recognized on box-office sales and demand for cinema products and services; 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 content is distributed and consumed; risks relating to conducting business internationally, including trade restrictions and changes in diplomatic or trade relationships; risks relating to maintaining patent coverage; 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; 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 and cinema industries generally, including the potential impacts of the strikes by the WGA and SAG-AFTRA; 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 its Quarterly Report on Form 10-Q filed on or around the date hereof. Dolby may not actually achieve the plans, intentions, or expectations disclosed in its forward-looking statements. Forward-looking statements are based upon information available to us as of the date of this press release, and while Dolby believes 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. Except as required by law, 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. Dolby partners 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 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-To-Date Ended
 June 30,
July 1,
 June 30,
July 1,
Licensing$273,108 $269,289  $932,727 $915,406 
Products and services 25,262  20,296   76,455  60,183 
Total revenue 298,370  289,585   1,009,182  975,589 
Cost of revenue:     
Cost of licensing 15,610  13,756   50,334  45,363 
Cost of products and services 25,905  22,201   66,680  58,818 
Total cost of revenue 41,515  35,957   117,014  104,181 
Gross profit 256,855  253,628   892,168  871,408 
Operating expenses:     
Research and development 68,696  62,859   201,097  199,104 
Sales and marketing 85,594  87,114   263,494  268,514 
General and administrative 69,954  57,113   191,865  218,250 
Restructuring charges 16,676  976   16,465  6,043 
Total operating expenses 240,920  208,062   672,921  691,911 
Operating income 15,935  45,566   219,247  179,497 
Other income/(expense):     
Interest income 7,316  1,416   18,967  3,230 
Interest expense (114) (84)  (161) (255)
Other income, net 620  2,514   2,967  1,833 
Total other income 7,822  3,846   21,773  4,808 
Income before income taxes 23,757  49,412   241,020  184,305 
Provision for income taxes (7,352) (9,802)  (49,284) (28,166)
Net income including noncontrolling interest 16,405  39,610   191,736  156,139 
Less: net (income)/loss attributable to noncontrolling interest (6) (13)  (266) 192 
Net income attributable to Dolby Laboratories, Inc.$16,399 $39,597  $191,470 $156,331 
Net income per share:     
Basic$0.17 $0.40  $2.00 $1.55 
Diluted$0.17 $0.39  $1.96 $1.52 
Weighted-average shares outstanding:     
Basic 95,658  100,213   95,794  100,936 
Diluted 97,459  101,474   97,588  102,993 

(in thousands; unaudited)
 June 30,
September 30,
Current assets:  
Cash and cash equivalents$765,079 $620,127 
Restricted cash 34,080  8,244 
Short-term investments 124,210  189,213 
Accounts receivable, net 266,865  243,593 
Contract assets, net 192,585  176,093 
Inventories, net 32,398  23,549 
Prepaid expenses and other current assets 54,148  50,075 
Total current assets 1,469,365  1,310,894 
Long-term investments 98,103  102,514 
Property, plant, and equipment, net 501,666  513,481 
Operating lease right-of-use assets 39,273  46,530 
Goodwill and intangible assets, net 603,641  477,412 
Deferred taxes 209,681  183,568 
Other non-current assets 86,209  55,149 
Total assets$3,007,938 $2,689,548 
Current liabilities:  
Accounts payable$15,395 $14,171 
Accrued liabilities 346,525  230,237 
Income taxes payable 11,018  1,265 
Contract liabilities 36,586  18,588 
Operating lease liabilities 13,512  13,257 
Total current liabilities 423,036  277,518 
Non-current contract liabilities 41,624  23,203 
Non-current operating lease liabilities 36,552  37,685 
Other non-current liabilities 124,003  100,122 
Total liabilities 625,215  438,528 
Stockholders’ equity:  
Class A common stock 53  53 
Class B common stock 41  41 
Retained earnings 2,397,307  2,297,730 
Accumulated other comprehensive loss (31,163) (51,641)
Total stockholders’ equity – Dolby Laboratories, Inc. 2,366,238  2,246,183 
Noncontrolling interest 16,485  4,837 
Total stockholders’ equity 2,382,723  2,251,020 
Total liabilities and stockholders’ equity$3,007,938 $2,689,548 

(in thousands; unaudited)
 Fiscal Year-To-Date Ended
 June 30,
July 1,
Operating activities:  
Net income including noncontrolling interest$191,736 $156,139 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization 61,428  69,382 
Stock-based compensation 90,291  87,963 
Amortization of operating lease right-of-use assets 9,829  11,658 
Amortization of premium on investments (179) 1,109 
Provision for/(benefit from) credit losses (348) 2,166 
Deferred income taxes (21,653) (29,143)
Other non-cash items affecting net income (1,751) (2,388)
Changes in operating assets and liabilities:  
Accounts receivable, net 43,546  (5,395)
Contract assets, net (10,105) 11,999 
Inventories (2,425) (12,231)
Operating lease right-of-use assets (3,799) (941)
Prepaid expenses and other assets 775  (1,169)
Accounts payable and accrued liabilities (83,737) (29,782)
Income taxes, net 14,975  17,023 
Contract liabilities (1,686) 3,314 
Operating lease liabilities (7,452) (10,539)
Other non-current liabilities 2,621  (1,898)
Net cash provided by operating activities 282,066  267,267 
Investing activities:  
Purchases of marketable securities (123,075) (248,156)
Proceeds from sales of marketable securities 54,020  8,970 
Proceeds from maturities of marketable securities 139,423  75,890 
Purchases of property, plant, and equipment (22,154) (37,218)
Business combinations, net of cash and restricted cash acquired 25,703  (38,171)
Purchases of intangible assets   (11,528)
Purchases of other investments   (5,000)
Net cash provided by/(used in) investing activities 73,917  (255,213)
Financing activities:  
Proceeds from issuance of common stock 37,231  53,600 
Repurchase of common stock (124,276) (310,486)
Payment of cash dividend (77,584) (75,816)
Distribution to noncontrolling interest (266) (1,435)
Shares repurchased for tax withholdings on vesting of restricted stock (28,619) (33,994)
Payment of deferred consideration for prior business combinations (500)  
Net cash used in financing activities (194,014) (368,131)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash 8,819  (9,698)
Net increase/(decrease) in cash, cash equivalents, and restricted cash 170,788  (365,775)
Cash, cash equivalents, and restricted cash at beginning of period 628,371  1,233,032 
Cash, cash equivalents, and restricted cash at end of period$799,159 $867,257 

GAAP to Non-GAAP Reconciliations
The following tables present Dolby's GAAP financial measures reconciled to the non-GAAP financial measures included in this release for the third quarters of fiscal 2023 and fiscal 2022:
Net income:    Fiscal Quarter Ended
(in thousands)    June 30,
July 1,
GAAP net income    $16,399 $39,597 
Stock-based compensation(1)     29,224  27,608 
Amortization of acquisition-related intangibles(2)     3,031  1,749 
Restructuring charges     16,676  976 
Income tax adjustments     (11,255) (1,260)
Non-GAAP net income    $54,075 $68,670 
(1) Stock-based compensation included in above line items:      
Cost of products and services    $375 $414 
Research and development     9,681  9,171 
Sales and marketing     9,756  9,718 
General and administrative     9,412  8,305 
(2) Amortization of acquisition-related intangibles included in above line items:      
Cost of licensing    $62 $61 
Cost of products and services     866  780 
Research and development       124 
Sales and marketing     806  784 
General and administrative     1,297   
Diluted earnings per share:    Fiscal Quarter Ended
     June 30,
July 1,
GAAP diluted earnings per share    $0.17 $0.39 
Stock-based compensation     0.30  0.27 
Amortization of acquisition-related intangibles     0.03  0.02 
Restructuring charges     0.17  0.01 
Income tax adjustments     (0.12) (0.01)
Non-GAAP diluted earnings per share    $0.55 $0.68 
Weighted-average shares outstanding - diluted(in thousands)     97,459  101,474 
The following tables present a reconciliation between GAAP and non-GAAP versions of the estimated financial measures for the fourth quarter of fiscal 2023 and full year fiscal 2023 included in this release:
Gross margin:  Q4 2023  Fiscal 2023
GAAP gross margin  86.5% +/-  87.5% +/-
Stock-based compensation   0.4%   0.2%
Amortization of acquisition-related intangibles   0.6%   0.3%
Non-GAAP gross margin  87.5% +/-  88.0% +/-
Operating expenses (in millions):  Q4 2023  Fiscal 2023
GAAP operating expenses (low - high end of range)  $227 - $237  $900 - $910
Stock-based compensation   (31)   (119)
Amortization of acquisition-related intangibles   (1)   (5)
Restructuring charges, net       (16)
Non-GAAP operating expenses (low - high end of range)  $195 - $205  $760 - $770
Operating margin:    Fiscal 2023
GAAP operating margin     18% +/-
Stock-based compensation      10%
Amortization of acquisition-related intangibles      1%
Restructuring charges, net      1%
Non-GAAP operating margin     30% +/-
Effective tax rate:     Q4 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%
Non-GAAP effective tax rate (low - high end of range)     19% - 21%
Diluted earnings per share: Q4 2023 Fiscal 2023
  LowHigh LowHigh
GAAP diluted earnings per share $0.10 $0.30  $2.10 $2.30 
Stock-based compensation  0.33  0.33   1.24  1.24 
Amortization of acquisition-related intangibles  0.03  0.03   0.08  0.08 
Restructuring charges, net       0.17  0.17 
Income tax adjustments  (0.06) (0.06)  (0.29) (0.29)
Non-GAAP diluted earnings per share $0.40 $0.60  $3.30 $3.50 
Weighted-average shares outstanding - diluted (in millions)  97  97   98  98 

Investor Contact:
Lana Adair

Media Contact:
Rachel Lowery
Dolby Laboratories

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