Audio pioneer Dolby Laboratories (DLB) has made significant strides recently. The company has partnered with brands such as Harmon Kardon, Samsung (SMSN), and Amazon (AMZN) to incorporate Dolby technologies into their products. Dolby has made its mark in the automotive industry by working with Texas Instruments and doubling its auto manufacturer collaborations, thus introducing Dolby Atmos to more vehicles worldwide. At the recent CES (Consumer Electronics Show), the company showcased Dolby Visions thanks to a strategic partnership with Samsung Display.
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Financially, Dolby is off to a strong start for Fiscal year 2025, exceeding top-and-bottom-line expectations. Further, Dolby provided optimistic estimates for its second quarter and full year. The stock appears reasonably priced, making it a potentially attractive option for income-seeking investors.
Dolby Continues to Expand Its Lineup
Dolby Laboratories is a leading provider of hardware and software products for cinema, television, broadcast, and entertainment industries, including digital cinema servers, cinema processors, and loudspeakers.
The company’s offerings extend to immersive audio and video experiences with key technologies like Dolby Atmos and Dolby Vision. Dolby Laboratories has its footprint in the premium cinema space with Dolby Cinemas, which harmonize Dolby Vision, Dolby Atmos, and unique Dolby theater design. Dolby.io, its next-generation SaaS product, is aimed at interactive and immersive real-time engagement for live events, especially sports.
Dolby Technology for Everyone
Dolby Laboratories continues to expand its presence in the high-tech audio and visual market. Several top partners at the CES announced new products incorporating Dolby technology. Notably, brands such as Harmon Kardon, Samsung, Amazon, Hisense (HISEF), TCL (TCLHF), Panasonic (PCRFF), Sharp (SHCAY), RCA, ASUS (ASUUY), and Dell (DELL), all have integrated Dolby Vision and Dolby Atmos in their new array of products. Dolby is working with Samsung Display, Texas Instruments (TXN), and Pioneer in the automobile sector to bring innovative technologies to more vehicles. Similarly, the social media app Xiaohongshu, known as RedNote in the U.S., and Amazon’s Fire TV Omni Mini-LED now support Dolby technology.
Dolby confirms that it has doubled the number of auto manufacturers from 10 to more than 20, supporting Dolby Atmos in 2025. Partners include industry leaders such as Cadillac (CADIF), Li Auto, Mercedes-Benz (MBGAF), Polestar (PSNY), Rivian (RIVN), Volvo Cars (VLVLY), and Sony Honda (SONY) Mobility. These collaborations have resulted in new vehicles featuring Dolby Atmos, as seen in the 2025 Cadillac OPTIQ’s 19-speaker AKG audio system. Dolby also works with automotive SoC and DSP suppliers like Analog Devices, Inc. (ADI), MediaTek, NXP Semiconductors (NXPI), and Texas Instruments to expand its audio technologies into more cars.
Robust Financial Growth
Dolby Laboratories experienced robust growth in FY25’s first quarter, with total revenue reaching $357 million, a substantial increase from the prior year’s $316 million. The company reported GAAP net income of $68 million, or $0.70 per diluted share, representing a slight step up from FY24’s first quarter GAAP net income of $67 million, or $0.69 per diluted share. Non-GAAP net income measured at $111 million or $1.14 per diluted share, compared to the previous year’s $99 million, or $1.01 per diluted share.
Dolby announced a cash dividend of $0.33 per share to be paid on February 19, 2025, to stockholders on record as of February 11, 2025.
Looking ahead, Dolby forecasts second-quarter Fiscal 2025 revenues to range between $355 million and $385 million. GAAP gross margins are projected to be around 89%, while non-GAAP figures are estimated at roughly 91%. For the full fiscal year 2025, Dolby anticipates total revenue to land between $1.33 billion and $1.39 billion. GAAP and non-GAAP gross margins are projected at approximately 87% and 90%, respectively, with operating expenses expected to range from $915 million to $925 million on a GAAP basis and from $765 million to $775 million on a non-GAAP basis. Diluted earnings per share are anticipated to vary from $2.39 to $2.54 on a GAAP basis and from $3.99 to $4.14 on a non-GAAP basis.
Analysts Are Bullish
The stock has been upward, climbing over 14.50% in the past three months. It trades near the high end of its 52-week price range of $66.35 – $85.30 and shows ongoing positive price momentum as it trades above the major moving averages. It trades at a relatively reasonable price, based on its P/E ratio of 21.31x compared to the Information Technology sector average of 25.18x.
Analysts following the company have been bullish on the stock. Based on the recent recommendations of two analysts, Dolby Laboratories is rated a moderate buy overall. The average price target for DLB stock is $100.00, representing a potential upside of 18.85% from current levels.
Bottom Line on Dolby Laboratories
Dolby Laboratories has grown substantially, establishing strong partnerships with major brands and expanding its influence in the automotive industry. This progress has primarily been driven by successfully integrating its technologies into a wide range of products. With the company’s robust financial performance exceeding expectations for FY 2025’s first quarter and advantageous projections for the upcoming year, DLB stock appears a promising option for investors seeking income.
