Dolby Laboratories, Inc DLB reported third-quarter fiscal 2024 non-GAAP earnings per share (EPS) of 71 cents compared with 55 in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 20.3%. Lower operating costs and higher operating income were primary growth drivers.
Revenues for the quarter declined 3% year over year to $288.8 million. However, the top line beat the Zacks Consensus Estimate by 0.9%.
The top line was adversely impacted by lower unit shipments of audio devices amid a steady momentum across Dolby Atmos, imaging patents and Dolby Vision. Owing to uncertain market environment, management now anticipates full-year revenues to be down 1-2%, which is at the lower end of its full-year guidance range.
Dolby Laboratories Price, Consensus and EPS Surprise 
Dolby Laboratories price-consensus-eps-surprise-chart | Dolby Laboratories Quote
Segmental Performance
Revenues from Licensing were $267 million, down 2% year over year. Products and Services’ revenues fell 14% year over year to $21.7 million. The downtick was due to slackening trends at the box office end coupled with weak device sales.
Our estimates were pegged at $260 million and $26.3 million for the Licensing and Products and Services revenues, respectively.
Broadcast Licensing contributed 36% to total licensing revenues in the quarter under review. Mobile Licensing, Consumer Electronics, PC Licensing and Licensing from Other Markets accounted for 11%, 10%, 15%, and 19% of licensing revenues, respectively. Management anticipates continued downward trends across Mobile, Consumer Electronics and Broadcasting for the full year.
Other Details
Gross profit was $253.1 million compared with $256.8 million in the year-ago quarter. Total operating expenses decreased to $216.3 million from $240.9 million.
Operating income was $36.7 million compared with $15.9 million in the year-earlier quarter.
Cash Flow and Liquidity
For the six months that ended on Jun 30, Dolby generated $211.1 million of net cash from operating activities compared with $282.1 million in the prior-year period.
As of Jun 30, 2024, the company had $741.6 million in cash and cash equivalents, with $526.2 million in total liabilities. It had $709.5 million in cash and cash equivalents, with $607 million in total liabilities, as of Mar 29, 2024.
The company announced a cash dividend of 30 cents per share for Class A and Class B common stock, payable on Aug 27, 2024, to stockholders on record as of Aug 19, 2024.
Dolby also repurchased nearly 423,000 shares of its common stock during the quarter, with $72 million remaining in its stock repurchase authorization. In addition, Dolby's board of directors has approved an increase of $350 million to its stock repurchase program, taking the total amount available for future repurchases to roughly $422 million.
Outlook
For the fourth quarter of fiscal 2024, DLB expects GAAP EPS in the band of 31-46 cents. Non-GAAP EPS is forecast to be between 61 cents and 76 cents on revenues of $300-$320 million.
The Zacks Consensus Estimate for fiscal fourth quarter non-GAAP EPS and revenues is pegged at 86 cents and $325 million, respectively.
For the quarter, Licensing revenue is expected to be between $275 million and $295 million.
On a GAAP basis, operating expenses are estimated in the range of $225-$235 million, whereas, on a non-GAAP basis, the metric is anticipated to be between $190 million and $200 million.
For fiscal 2024, revenues are estimated in the band of $1.27-$1.29 billion, changed from the prior view of $1.3 billion. Lower-than-anticipated shipments and lower revenue from cinemas led to the downward revision.
DLB projects GAAP operating margin to be 20%, while non-GAAP operating margin is estimated to be nearly 31%. It continues to project non-GAAP EPS within the $3.60-$3.75 range.
On a GAAP basis, operating expenses are now anticipated to be between $875 million and $885 million, whereas, on a non-GAAP basis, the metric is estimated in the range of $735-$745 million.
Zacks Rank
Dolby currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Companies
BlackBerry’s BB first-quarter fiscal 2025 adjusted loss per share of 3 cents was narrower than the company’s estimate of a loss of 4-6 cents. In the year-ago quarter, it reported non-GAAP earnings of 6 cents per share. The Zacks Consensus Estimate was pegged at a loss of 4 cents per share.
Shares of BB have lost 54.5% in the past year.
Badger Meter, Inc BMI reported earnings per share (EPS) of $1.12 for second-quarter 2024, beating the Zacks Consensus Estimate by 14.3%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 76 cents.
Shares of BMI have gained 15.4% in the past year.
SAP SE SAP reported second-quarter 2024 non-IFRS earnings of €1.10 ($1.18) per share, climbing 59% from the year-ago quarter’s levels. The Zacks Consensus Estimate was pegged at $1.01.
In the past year, shares of SAP have gained 49.7%.
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