Dolby Laboratories 2025 Q4 Earnings Mixed Results as Net Income Falls 15.6%

Dolby Laboratories (DLB) reported Q4 2025 revenue of $307 million, up 0.7% year-over-year, with non-GAAP EPS of $0.99, exceeding the $0.70 consensus estimate. The company raised fiscal 2026 revenue guidance to $1.39 billion–$1.44 billion, reflecting confidence in its licensing and innovation strategies.

Revenue

Licensing revenue totaled $281.63 million, slightly below the previous year's figure, while products and services revenue surged 14.9% to $25.4 million. Broadcast licensing grew 11.9% year-over-year, driven by sports and cinema content, but mobile licensing dipped 4% due to market saturation.

Earnings/Net Income

GAAP net income declined 15.6% to $49.65 million, or $0.52 per share, while non-GAAP net income reached $96 million, or $0.99 per share. The $0.28 discrete tax benefit boosted non-GAAP results, but GAAP EPS underperformance highlighted operational challenges. While GAAP EPS declined, non-GAAP results exceeded expectations, highlighting mixed performance.

Post-Earnings Price Action Review

The strategy of purchasing shares post-revenue decline and holding for 30 days underperformed significantly, with a cumulative return of -25.1% over three years, lagging the S&P 500’s 31.4% benchmark. This highlights the event-driven strategy’s challenging risk-return profile.

CEO Commentary

Kevin Yeaman emphasized growth in Dolby Atmos and Vision, with imaging patents rising 14% in FY25. Strategic priorities include expanding consumption-based models via the Video Distribution Program and Dolby OptiView, alongside automotive partnerships with Maruti Suzuki and VinFast.

Guidance

Dolby projected Q1 2026 revenue of $315 million–$345 million and full-year revenue of $1.39 billion–$1.44 billion. Non-GAAP EPS guidance for FY26 is $4.19–$4.34, above the $3.96 consensus.

Additional News

Dolby’s acquisition of GE Licensing bolstered FY25 revenue growth. Strategic partnerships with automotive brands like Maruti Suzuki and VinFast expanded Dolby Atmos integration into vehicles. The company also increased its dividend by 10% and repurchased $40 million in stock, reflecting confidence in long-term value.

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