Posts Tagged ‘Dolby Vision’

Dolby Announces 2016 Results; Continued Dolby Vision Progress

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Nov 03 2016

Dolby announced fiscal fourth quarter and full year revenue for the twelve months ending September 30, 2016.  2016 fiscal year revenue was $1,025.7 million, a 5.68% increase versus the 2015 fiscal year.  Dolby_logo.svg

Full year revenue was within the guidance provided at the end of fiscal 2015 for total revenue between $1 billion and $1.03 billion.

2016 FY GAAP net income was $185.9 million or $1.81 earnings per share (diluted).  This represents a 2.5% increase over the net income for the 2015 fiscal year of $181.4 million ($1.75 earnings per share).

GAAP gross margins were 89.4% for the year, a slight decrease versus the gross margins of 90.2% from the year earlier period.  Operating margins were 23%, an increase of 100 basis points over the operating margins from fiscal 2015.

2016 Fiscal Year Revenue by Type:

Dolby reports revenue across licensing, product, and service activities.  Product revenues consists primarily of sales of Digital Cinema Servers and Dolby Cinema Audio Products.

  • Licensing revenue for fiscal year 2016 was $917.0 million, an increase of 5.6% versus fiscal year 2015.
  • Product revenue was $90.5 million for the year, an increase of 7.9% compared to the 2015 fiscal year.
  • Services revenue were $18.2 million during fiscal year 2016, a decrease of 2.5% against 2015.

Product gross margins for 2016 were 28%, a substantial increase over the 16% gross margins from 2015.

2016 Fiscal Year Licensing Revenue by Customer Vertical:

Licensing revenue in the Broadcast vertical for televisions and set-top box sales was 46% of total licensing revenue or $421.8 million during fiscal 2016.  On an aggregate basis, broadcast licensing grew 10.4% versus the 2015 fiscal year.

As part of management’s prepared comments on the Dolby’s earnings call, President and CEO Kevin Yeaman drew attention to the strong performance in the broadcast sector.  “We had another strong year in broadcast. Dolby Audio is an established format in developed markets like North America and Western Europe, and we are well positioned in areas like Africa, India and China, when the transition to digital broadcast is underway. Future growth in broadcast will come from the continued migration of emerging markets to digital televisions and the rollout of high-definition and 4K set-top boxes with Dolby Audio in both developed and emerging markets” said Mr. Yeaman (Sourced from Seeking Alpha transcript).

Fiscal Q4 2016 Results:

Fiscal fourth quarter revenue was $233 million, flat against the year earlier period, and a decrease of 16.1% versus the preceding quarter, FQ3 2016. Management attributed the sequential drop in revenue to the higher timing of licensing payments in Q3 compared to Q4.

For the quarter, Dolby’s GAAP net income was $23.9 million or $0.23 earnings per share, a 48.6% decline when measured against the fiscal fourth quarter of 2015, and a 62.4% decline against the preceding quarter.

GAAP Gross Margins were 87% during the fourth quarter, a 210 basis point decline from the year earlier period and a 410 basis point decline versus FQ3 2016.  Operating margins were 16%, an increase over the 12% from FQ4 2015 and a decrease versus the 29% operating margins during the preceding quarter.

Management guidance at the end of third fiscal quarter was for revenue in the range of $220 million to $230 million for the fourth quarter with gross margins between 88% and 89%, and GAAP earnings per share of $0.16 and $0.22.  Dolby exceeded its guidance on both revenue and earnings per share, though underperformed on gross margins.

Update on Dolby Atmos, Doly Cinema, and Dolby Vision:

Among the revenue drivers cited by management were the growing adoption of Dolby Atmos (next-generation immersive audio technology), Dolby Vision (next-generation imaging technology), and Dolby Cinema (premium cinema experience combining multiple Dolby technologies).

  • Dolby Atmos is now installed or committed in over 2,400 cinematic screens worldwide. 550 feature films using Dolby Atmos have been announced or released.
  • The first televisions incorporating Dolby Vision become available in the past year. LG is including Dolby Vision in their OLED and Super UHD LCD TVs; VIZIO is including Dolby Vision in their R, P, and M Series; and TCL and Skyworth are also shipping TVs with Dolby Vision.  Content incorporating Dolby Vision is now available from Warner Bros., Sony Pictures, MGM, Universal, Lionsgate, Netflix and Amazon Studios.
  • Over 30 Dolby Cinema locations were added during 2016, bringing the total to over 40.

“We are well on our way to establishing that Dolby Vision is the best way to experience HDR content” stated Mr. Yeaman on Dolby’s earning call with analysts.  “Our job this year is to accelerate the deployment of Dolby Vision” continued Mr. Yeaman.

Financial Guidance

Dolby’s guidance for the fiscal year 2017 is for revenue between $1.06 billion and $1.09 billion.  Broadcast licensing revenue is expected to remain relatively flat in 2017.

Guidance for the first quarter of fiscal 2017 is revenue in the range of $250 million to $260 million, gross margins between 88% and 89%, and earnings per share between $0.34 and $0.40.

 

 

Related Content:

Press Release: Dolby Fiscal Fourth Quarter and Full Year 2016 Earnings Release

Earnings Transcript: Dolby Fiscal Fourth Quarter Results (SeekingAlpha)

 

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

 

Dolby Q2 Results Offer Updates on Atmos, Vision Adoption

Analysis, Broadcast technology vendor financials | Posted by Josh Stinehour
May 02 2016

Dolby announced revenue for its second fiscal quarter (ending April 1, 2016) of $274.3 million, up 1% versus the year earlier period, and an increase of 14% versus the preceding quarter, Q1 2016.

GAAP net income for the quarter was $67.4 million or $0.66 earnings per share.  This represents a 16% increase over the net income for Q2 2015 of $57.9 million ($0.56 earnings per share).

GAAP Gross Margins were 91.1% for the quarter, an increase over the gross margins of 90.8% from the year earlier period and the 87.6% gross margins recorded during Q1 2016.  Operating margins were 30%, an increase over the 29% from Q2 2015 and the 16% operating margins during the preceding quarter.

Management’s guidance at the end of first quarter had been for revenue in the range of $255 million to $270 million for the second quarter with gross margins between 89% and 90%, and GAAP earnings per share of $0.42 and $0.48.  On each measure, Dolby outperformed guidance.  Dolby’s shares were trading approximately 13% higher after the earnings release.

Revenue by Type:

Dolby reports revenue across licensing, product, and service activities.  Product revenues consists primarily of sales of Digital Cinema Servers and Dolby Cinema Audio Products.

  • Licensing revenue for Q2 2016 was $249.3 million, an increase of 2% versus Q2 2015 and an 18% increase versus Q1 2016.
  • Product revenue was $20.0 million, a decline of 12.6% compared to the year earlier period, and a decrease of 19% versus Q1 2016 results. The Q1 2016 results had been especially strong given cinema updates related to holiday movie releases, including Star Wars episode seven.  Year-over-year declines are consistent with the broader cinema equipment market, which has been impacted by the recent completion of the conversion from film to digital.
  • Services revenue were $4.9 million during the second quarter, a decrease of 12.5% against Q2 2015, and a slight increase of 2% versus the first quarter’s results.

Product gross margins for Q2 2016 were 30.3%, a substantial increase over the 20.7% gross margins from Q2 2015 and 23.3% gross margins in Q1 2016.

As part of the earning release, Dolby disclosed several data points on developments in its growth initiatives within its cinema business.

There are now nearly 1,800 screens worldwide where Dolby Atmos is installed or committed.  Over 450 Dolby Atmos titles have been announced or released.

There are also more than 20 Dolby Cinema locations open and another 200 Dolby Cinema locations are planned for roll out around the world.  Dolby Cinema is a partnership with cinema exhibitors (including AMC in the US) to create a branded premium cinema featuring Dolby Vision laser projection and Dolby Atmos audio technology.  Nearly 40 Dolby Vision theatrical titles have been announced or released since its launch in May 2015.

Licensing Revenue by Customer Vertical:

Licensing revenue in the Broadcast vertical (primarily televisions and set-top boxes) was 45% of total licensing revenue or $112.2 million.  On an aggregate basis, Broadcast licensing grew 9.8% versus Q2 2015 and 10.7% versus the preceding quarter, Q1 2016.  As a percentage of total licensing revenue, Broadcast contributed 42% in Q2 2015 and 48% during the first quarter of 2016.

The remainder of Dolby’s licensing revenue is attributable to PC, Mobile, Consumer Electronics, and Other (Video game consoles, automobile entertainment, and audio conferencing).

Management attributed the growth in Broadcast licensing to higher back payments and higher volume in set-top boxes. During its earnings call, management noted Dolby is well-positioned to benefit from further growth in the Broadcast market as emerging markets transition to digital broadcast.

Also on the earnings call, Management highlighted several developments with Dolby Vision and Dolby’s growing technology presence in online content delivery.

LG, the 2nd largest TV manufacturer in the world, is set to begin shipping OLED and UHD LED TV’s featuring Dolby Vision.  Dolby Vision is now included in three of the five television lines from Vizio, the 2nd largest TV manufacturer in the US.

Over 40 streaming services now deliver Dolby Audio including Google Play, Netflix, Microsoft, Amazon, and iTV.  Management is anticipating up to 100 Dolby Vision titles available for home entertainment delivery by the end of 2016.  Netflix and VUDU are now streaming content in Dolby Vision, and Amazon has announced a commitment to Dolby Vision.

Financial Guidance

Management guidance for the third fiscal quarter is revenue in the range of $260 million to $275 million, gross margins between 89% and 90%, and earnings per share between $0.47 and $0.53.

Commenting on the quarter’s results, Kevin Yeaman, President and CEO, Dolby Laboratories stated, “It was a solid quarter and we gained momentum in mobile with the inclusion of Dolby Audio in iOS.  We’ve also expanded the number of Dolby Vision TVs in market and the amount of Dolby Vision content, while continuing to roll out Dolby Cinema locations around the world.”

 

Related Content:

Press Release: Dolby Fiscal Q2 2016 Earnings Release

 

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

 

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