Dolby Laboratories Inc (NYSE:DLB) stock rose 1.45% (As on November 19, 11:59:01 AM UTC-4, Source: Google Finance) after the company reported better-than-expected fourth quarter earnings, but shares fell as investors showed concern about aspects of the company’s outlook despite raised guidance. The company finished FY25 strong, growing Dolby Atmos, Dolby Vision and imaging patents, and expanding the addressable market with momentum in Dolby OptiView and the introduction of a new imaging patent pool for content streamers. The company highlighted several business wins during the quarter, including Peacock streaming NFL Sunday Night Football and NBA games in Dolby Atmos, and Instagram for iOS becoming the first Meta app to support Dolby Vision.
Moreover, in September the company announced Dolby Vision 2, which expands the benefits of Dolby Vision beyond HDR, unlocking the full capabilities of modern displays and introducing new tools for artists. This quarter, TCL, Samsung, Hisense, Xiaomi, and Amazon launched TVs that feature Dolby Atmos and/or Dolby Vision. This past quarter, the company signed agreements with automakers Maruti Suzuki in India, Deepal in China, and VinFast in Vietnam.
DLB in the fourth quarter of FY25 has reported the adjusted earnings per share of 99 cents, beating the analysts’ estimates for the adjusted earnings per share of 70 cents. Fourth quarter results included a benefit from discrete tax items of $0.28 per diluted share on a non-GAAP basis, which contributed to the earnings beat. The company had reported the adjusted revenue of $307 million in the fourth quarter of FY25, beating the analysts’ estimates for revenue of $305.76 million.
Additionally, Dolby repurchased approximately 479,000 shares of its common stock for approximately $35 million, and ended the quarter with approximately $277 million of stock repurchase authorization available going forward. Dolby also announced a cash dividend of $0.36 per share of Class A and Class B common stock, payable on December 10, 2025, to stockholders of record as of the close of business on December 2, 2025.
Looking ahead, Dolby provided an upbeat outlook for fiscal 2026, projecting adjusted earnings of $4.19 to $4.34 per share, above the analyst consensus of $3.96. Revenue is expected to range from $1.39 billion to $1.44 billion, exceeding the consensus estimate of $1.35 billion.
For the first quarter of fiscal 2026, the company expects revenue between $315 million and $345 million, with adjusted earnings per share of $0.79 to $0.94. Q1 FY26 Licensing revenue is estimated to range from $290 million to $320 million and Gross margins are anticipated to be approximately 90% on a non-GAAP basis.