Dolby Laboratories Reports Third Quarter Fiscal 2019 Financial Results

1 August 2019, 13:36 (PDT) Dolby Laboratories Reports Third Quarter Fiscal 2019 Financial Results

San Francisco, August 1, 2019--Dolby Laboratories, Inc. (NYSE:DLB) today announced the Companys financial results for the third quarter (Q3) of fiscal 2019. For the third quarter, Dolby reported total revenue of $302.2 million, compared to $214.8 million for the third quarter of fiscal 2018.

We continue to see Dolby experiences become increasingly available to more people around the world, said Kevin Yeaman, President and CEO, Dolby Laboratories. This quarter, Apple announced broader support for Dolby Vision and Dolby Atmos, and a number of our other partners expanded their adoption across TVs, sound bars, and PCs.

Third quarter GAAP net income was $39.6 million, or $0.38 per diluted share, compared to GAAP net income of $3.1 million, or $0.03 per diluted share, for the third quarter of fiscal 2018. On a non-GAAP basis, third quarter net income was $79.3 million, or $0.76per diluted share, compared to non-GAAP net income of $18.8 million, or $0.18 per diluted share, for the third quarter of fiscal 2018. A complete listing of Dolbys non-GAAP measures are described and reconciled to the corresponding GAAP measures at the end of this release.

As previously indicated, Dolby adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers(ASC 606) in the first quarter of fiscal 2019, and today's announced results and the financial outlook are presented in accordance with that new revenue standard. Dolby adopted ASC 606 using the full retrospective transition method, therefore all prior periods are also presented in accordance with the new revenue standard. Included at the end of this press release are financial results for fiscal 2017, fiscal 2018, and the four quarters of fiscal 2018, as adjusted in accordance with ASC 606.

Dividend

Today, Dolby announced a cash dividend of $0.19 per share of Class A and Class B common stock, payable on August 20, 2019, to stockholders of record as of the close of business on August 12, 2019.

Stock Repurchase Program

Today, Dolby also announced that its Board of Directors has approved increasing the size of its stock repurchase program by $350 million, bringing the amount available for future repurchases of the Companys Class A Common Stock to approximately $415 million. Stock repurchases under this program may be made through open market transactions, negotiated purchases, or otherwise, at time and in such amounts as the Company considers appropriate.

Financial Outlook

Q4 Fiscal 2019

Dolby is providing the following estimates for its fourth quarter (Q4) of fiscal 2019:

Total revenue will range from $288 million to $308 million

Gross margin percentages will be approximately 86 percent on a GAAP basis and approximately 87 percent on a non-GAAP basis

Operating expenses will be between $199 million and $203 million on a GAAP basis and between $178 million and $182 million on a non-GAAP basis

Diluted earnings per share will be between $0.45 and $0.51 on a GAAP basis and between $0.62 and $0.68 on a non-GAAP basis

Effective tax rate will be between 18 percent and 20 percent on both a GAAP and non-GAAP basis

Fiscal Year 2019

Dolby is providing the following estimates for its fiscal year 2019:

Total revenue will range from $1.23 billion to $1.25 billion

Gross margin percentages will be approximately 87 percent on a GAAP basis and approximately 88 percent on a non-GAAP basis

Operating expenses will range from $821 million to $825 million on a GAAP basis and from $708 million to $712 million on a non-GAAP basis

Effective tax rate for the year will be between 9 percent and 10 percent on a GAAP basis and between 17 and 18 percent on a non-GAAP basis

Conference Call Information

Members of Dolby management will lead a conference call open to all interested parties to discuss Q3 fiscal 2019 financial results for Dolby Laboratories at 2:00 p.m. PT (5:00 p.m. ET) on Thursday, August 1, 2019. Access to the teleconference will be available over the Internet from http://investor.dolby.com/event-calendaror by dialing 1-800-263-0877. International callers can access the conference call at 1-646-828-8143.

A replay of the call will be available from 5:00 p.m. PT on Thursday, August 1, 2019, until 9:00 p.m. PT on Thursday, August 8, 2019, by dialing 1-844-512-2921 (international callers can access the replay by dialing 1-412-317-6671) and entering the confirmation code 3638302. An archived version of the teleconference will also be available on the Dolby website, http://investor.dolby.com/event-calendar.

Non-GAAP Financial Information

To supplement Dolbys financial statements presented on a GAAP basis, Dolby provides certain non-GAAP financial measures to provide investors with an additional tool to evaluate Dolbys operating results in a manner that focuses on what Dolbys 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 and complex 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

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