Dolby Laboratories (DLB) Baird 2024 Global Consumer, Technology, & Services Conference summary

Business overview and strategy

• Operates as a $1.3 billion IP licensing business, with 90% of revenue from licensing and 10% from cinema equipment and branding.

• Maintains relevance through innovation and strong relationships with the creative community, ensuring adoption of new standards.

• Provides creative tools for free to artists, charging device manufacturers for playback technology.

• Aims to make Dolby Atmos and Dolby Vision the next industry standards, following the path of stereo and surround sound.

• Focuses on expanding technology adoption in consumer devices, automotive, and mobile sectors.

Revenue mix and growth drivers

• Foundational licensing, comprising two-thirds of revenue, is deeply penetrated and tied to device sales, resulting in high margins but limited growth.

• Dolby Atmos and Dolby Vision represent the main growth opportunity, with increasing adoption among content creators and device manufacturers.

• Cinema business is low margin and tied to box office performance, but valuable for brand exposure.

• FY2024 revenue is expected to be flat versus FY2023, with foundational revenue down mid-single digits and Dolby Atmos/Vision up high single digits.

• Operating margins are expected to improve, with earnings growth outpacing revenue growth.

Market adoption and competitive landscape

• 92 of the top 100 Billboard artists record in Dolby; most top movies in recent years use Dolby Atmos and Vision.

• Present in 25% of high-end 4K TVs, with plans to expand to mid- and low-end segments.

• Automotive is a major growth area, with direct relationships established with 15-16 OEMs, including Mercedes and Cadillac.

• Mobile opportunity is strong with Apple, while Android and global markets present further potential.

• Competitive landscape is limited, as most non-adopters use traditional technologies rather than direct competitors.