Dolby Laboratories Reports First Quarter Fiscal 2021 Financial Results

1/28/2021, 10:15 PM (Source: GlobeNewswire)

SAN FRANCISCO, Jan. 28, 2021 (GLOBE NEWSWIRE) -- Dolby Laboratories, Inc. (NYSE:DLB) today announced the company's financial results for the first quarter of fiscal 2021. For the first quarter, Dolby reported total revenue of $389.9 million, compared to $291.9 million for the first quarter of fiscal 2020.

"We had a good start to the fiscal year with solid financial results and ongoing progress across our growth initiatives," said Kevin Yeaman, President and CEO, Dolby Laboratories. "Dolby Vision and Dolby Atmos continue to grow across more devices and services, including new focus areas like music and gaming, and we are in the early days of enabling a broader range of applications and services as we increase our engagement with developers through"

First quarter GAAP net income was $135.2 million, or $1.30 per diluted share, compared to GAAP net income of $48.8 million, or $0.47 per diluted share, for the first quarter of fiscal 2020. On a non-GAAP basis, first quarter net income was $153.3 million, or $1.48 per diluted share, compared to $65.5 million, or $0.64 per diluted share for the first quarter of fiscal 2020. First quarter cash flows from operations was $82.2 million, compared to $31.2 million for the first quarter of fiscal 2020. First quarter GAAP results included a pre-tax gain of $13.9 million related to the sale of property previously classified as held for sale. A complete listing of Dolby's non-GAAP measures are described and reconciled to the corresponding GAAP measures at the end of this release.


Dolby continues to monitor the COVID-19 pandemic and its impact on our company. The safety and well-being of our employees and supporting our communities continue to be priorities. Since the initial outbreak of COVID-19, our revenue continues to be impacted across various markets within licensing and products and services. The implications of COVID-19 on our future results of operations remain uncertain.

We expect continued uncertainty in global financial markets. Dolby’s financial results for the first quarter of fiscal 2021 rely on estimates of royalty-based revenue that take into consideration the macroeconomic effect of global events, including COVID-19, which may impact supply chain activities and consumer demand for electronic products.


Today, Dolby announced a cash dividend of $0.22 per share of Class A and Class B common stock, payable on February 19, 2021, to stockholders of record as of the close of business on February 9, 2021.

Financial Outlook

The volume of shipments, aggregated across various end markets and devices, continues to be impacted and difficult to predict because of economic uncertainty due to COVID-19. The global cinema market has been adversely impacted by COVID-19, and we anticipate that cinema sites and the production of content could continue to be negatively affected through fiscal 2021 or longer.

Our actual results could differ materially from the estimates we are providing due in part to the challenging economic environment and highly uncertain effects of COVID-19. The estimates we are providing for future periods reflect certain assumptions about the potential impact of COVID-19, based upon a consideration of external and internal data and information. 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 Quarterly Report on Form 10-Q for the first quarter of fiscal 2021, filed on or around the date hereof.

Second Quarter Fiscal 2021

Dolby is providing the following estimates for its second quarter of fiscal 2021:

  • Total revenue is estimated to range from $280 million to $310 million
  • Gross margin percentages are anticipated to range from 88% to 89% on a GAAP basis and from 89% to 90% on a non-GAAP basis
  • Operating expenses are anticipated to range from $200 million to $210 million on a GAAP basis and from $175 million to $185 million on a non-GAAP basis
  • Effective tax rate is anticipated to range from 20% to 21% on both a GAAP and non-GAAP basis
  • Diluted earnings per share is anticipated to range from $0.36 to $0.51 on a GAAP basis and from $0.57 to $0.72 on a non-GAAP basis

Conference Call Information

Members of Dolby management will lead a conference call open to all interested parties to discuss first quarter fiscal 2021 financial results for Dolby Laboratories at 2:00 p.m. PT (5:00 p.m. ET) on Thursday, January 28, 2021. Access to the teleconference will be available over the Internet from or by dialing 1-866-548-4713. International callers can access the conference call at 1-323-794-2093.

A replay of the call will be available from 5:00 p.m. PT on Thursday, January 28, 2021, until 8:59 p.m. PT on Thursday, February 4, 2021, by dialing 1-844-512-2921 (international callers can access the replay by dialing 1-412-317-6671) and entering the confirmation code 1022195. 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 provides certain non-GAAP financial measures to provide investors with 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. 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, and often remain unchanged between reporting periods, we exclude these charges to facilitate an evaluation of our current operating results and comparisons to our past operating performance.

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.

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.

Other operating income adjustments: We are excluding a one-time gain on the sale of property, which was previously classified as held for sale, finalized during the first quarter of fiscal 2021. The property was 51% owned by our controlling interest, therefore 51% of the gain recognized has been attributed to our controlling interest.

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. Dolby's management does not itself, nor does it suggest that investors should, consider non-GAAP financial measures in isolation from, 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. 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 expected financial results for the second quarter of fiscal 2021, our ability to advance our long-term objectives, and future dividend payments are "forward-looking statements" that are subject to 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 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; 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 trends in the markets in which Dolby operates, including the Broadcast, Mobile, Consumer Electronics, PC, Cinema, and Other Markets; the loss of, or reduction in sales by, a key customer or licensee; pricing pressures; risks that the continued shift in content distribution from optical disc-based and other traditional media to online and streaming media content could result in fewer devices with Dolby technologies or less revenue from such devices; 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; Dolby's ability to develop, maintain, and strengthen relationships with industry participants; Dolby's ability to develop and deliver innovative 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 audio technologies to other technologies; 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 most recent quarterly report on Form 10-Q. 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. DLB-F

(in thousands, except per share amounts; unaudited)

 Fiscal Quarter Ended
 December 25,
December 27,
Licensing$373,005  $257,683 
Products and services16,869  34,194 
Total revenue389,874  291,877 
Cost of revenue:  
Cost of licensing12,946  12,342 
Cost of products and services22,358  24,973 
Total cost of revenue35,304  37,315 
Gross margin354,570  254,562 
Operating expenses:  
Research and development63,772  57,650 
Sales and marketing75,445  95,118 
General and administrative54,454  52,529 
Gain on sale of assets(13,871)  
Restructuring charges10,023  675 
Total operating expenses189,823  205,972 
Operating income164,747  48,590 
Other income/expense:  
Interest income974  4,932 
Interest expense(85) (72)
Other income, net1,326  1,004 
Total other income2,215  5,864 
Income before income taxes166,962  54,454 
Provision for income taxes(24,272) (5,863)
Net income including controlling interest142,690  48,591 
Less: net (income)/loss attributable to controlling interest(7,492) 162 
Net income attributable to Dolby Laboratories, Inc.$135,198  $48,753 
Net income per share:  
Basic$1.34  $0.49 
Diluted$1.30  $0.47 
Weighted-average shares outstanding:  
Basic100,716  100,336 
Diluted103,876  103,078 


(in thousands; unaudited)

 December 25,
September 25,
Current assets:  
Cash and cash equivalents$1,110,024  $1,071,876 
Restricted cash9,401  8,103 
Short-term investments52,261  46,948 
Accounts receivable, net293,948  180,340 
Contract assets, net187,539  161,357 
Inventories, net20,108  25,550 
Prepaid expenses and other current assets51,390  53,022 
Total current assets1,724,671  1,547,196 
Long-term investments49,337  52,149 
Property, plant, and equipment, net543,550  541,963 
Operating lease right-of-use assets75,460  76,515 
Goodwill and intangible assets, net483,401  489,376 
Deferred taxes133,610  118,881 
Other non-current assets86,825  91,245 
Total assets$3,096,854  $2,917,325 
Current liabilities:  
Accounts payable$13,631  $12,617 
Accrued liabilities250,253  219,974 
Income taxes payable15,516  3,260 
Contract liabilities21,202  15,436 
Operating lease liabilities15,817  15,822 
Total current liabilities316,419  267,109 
Non-current contract liabilities23,766  24,342 
Non-current operating lease liabilities64,256  65,315 
Other non-current liabilities121,196  122,154 
Total liabilities525,637  478,920 
Stockholders’ equity:  
Class A common stock59  58 
Class B common stock41  41 
Retained earnings2,565,670  2,443,138 
Accumulated other comprehensive (loss)(608) (10,594)
Total stockholders’ equity – Dolby Laboratories, Inc.2,565,162  2,432,643 
Controlling interest6,055  5,762 
Total stockholders’ equity2,571,217  2,438,405 
Total liabilities and stockholders’ equity$3,096,854  $2,917,325 


(in thousands; unaudited)

 Fiscal Quarter Ended
 December 25,
December 27,
Operating activities:  
Net income including controlling interest$142,690  $48,591 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization22,168  20,239 
Stock-based compensation26,313  22,614 
Amortization of premium on investments329  160 
Provision/(benefit) for credit losses(1,367) 575 
Deferred income taxes(15,439) (9,174)
Gain on sale of assets(13,871)  
Restructuring charges8,125  486 
Other non-cash items affecting net income1,276  (10)
Changes in operating assets and liabilities:  
Accounts receivable, net(111,902) (2,331)
Contract assets(26,384) (9,310)
Inventories4,424  767 
Operating lease right-of-use assets3,350  (8,644)
Prepaid expenses and other assets6,397  (13,245)
Accounts payable and accrued liabilities22,272  (30,785)
Income taxes, net13,984  945 
Contract liabilities5,153  (724)
Operating lease liabilities(3,481) 8,664 
Other non-current liabilities(1,877) 2,341 
Net cash provided by operating activities82,160  31,159 
Investing activities:  
Purchases of investment securities(13,726) (129,325)
Proceeds from sales of investment securities1,854  97,717 
Proceeds from maturities of investment securities9,535  17,876 
Purchases of property, plant, and equipment(15,527) (23,385)
Proceeds from sale of assets16,365   
Purchase of intangible assets  (290)
Net cash used in investing activities(1,499) (37,407)
Financing activities:  
Proceeds from issuance of common stock51,323  24,373 
Repurchase of common stock(39,985) (30,003)
Payment of cash dividend(22,231) (22,081)
Distribution to controlling interest(7,362) (283)
Shares repurchased for tax withholdings on vesting of restricted stock(28,085) (20,282)
Net cash used in financing activities(46,340) (48,276)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash5,125  2,086 
Net increase/(decrease) in cash, cash equivalents, and restricted cash39,446  (52,438)
Cash, cash equivalents, and restricted cash at beginning of period1,079,979  805,593 
Cash, cash equivalents, and restricted cash at end of period$1,119,425  $753,155 

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 first quarter of fiscal 2021 and 2020:
Net income:Fiscal Quarter Ended
 December 25,
December 27,
GAAP net income$135.2  $48.8 
Stock-based compensation (1)26.3  22.6 
Amortization of acquisition-related intangibles (2)2.5  2.2 
Restructuring charges10.0  0.7 
Income tax adjustments(13.9) (8.8)
Other operating income adjustments(6.8)  
Non-GAAP net income$153.3  $65.5 
(1) Stock-based compensation included in above line items:  
Cost of products and services$0.6  $0.5 
Research and development7.9  7.0 
Sales and marketing9.8  8.2 
General and administrative8.0  6.9 
(2) Amortization of acquisition-related intangibles included in above line items:  
Cost of licensing$0.7  $0.6 
Cost of products and services0.9  0.4 
Research and development0.1  0.1 
Sales and marketing0.8  0.8 
General and administrative  0.3 
Diluted earnings per share:Fiscal Quarter Ended
 December 25,
December 27,
GAAP diluted earnings per share$1.30  $0.47 
Stock-based compensation0.25  0.22 
Amortization of acquisition-related intangibles0.02  0.02 
Restructuring charges0.10  0.01 
Income tax adjustments(0.13) (0.08)
Other operating income adjustments(0.06)  
Non-GAAP diluted earnings per share1.48  0.64 
Shares used in computing diluted earnings per share104  103 
The following tables present a reconciliation between GAAP and non-GAAP versions of the estimated financial amounts for the second quarter of fiscal 2021 included in this release:
Gross margin: Q2 2021
GAAP gross margin (low - high end of range) 88% - 89
Stock-based compensation 0.4%
Amortization of acquisition-related intangibles 0.6%
Non-GAAP gross margin (low - high end of range) 89% - 90
Operating expenses: Q2 2021
GAAP operating expenses (low - high end of range) $200 - $210 
Stock-based compensation (24)
Amortization of acquisition-related intangibles (1)
Non-GAAP operating expenses (low - high end of range) $175 - $185 
Diluted earnings per share:Q2 2021
GAAP diluted earnings per share$0.36  $0.51 
Stock-based compensation0.24  0.24 
Amortization of acquisition-related intangibles0.03  0.03 
Income tax adjustments(0.06) (0.06)
Non-GAAP diluted earnings per share$0.57  $0.72 
Shares used in computing diluted earnings per share104  104 

Investor Contact:

Jason Dea
Dolby Laboratories, Inc.

Media Contact:
Karen Hartquist
Dolby Laboratories, Inc.

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