M+E Connections

There was plenty to celebrate during the fiscal second quarter for Dolby, with both revenue and profits up, but there was one specific milestone for the company that CEO Kevin Yeaman wouldn’t stop talking about during a call with investors.

“The inclusion of Dolby audio in Apple’s iOS version 9.3 is a significant milestone,” he said. “Our partnership with Apple has developed over many years. We’ve been providing Dolby audio on Mac OS for some time. More recently, Apple has released Dolby audio in Safari, iTunes, and Apple TV. Having Dolby audio in iOS is a big step forward in bringing the Dolby audio experience to all of the ways in which consumer enjoys their entertainment content.”

While Google Play also launched Dolby audio in its service during the quarter — bringing the number of streaming services using Dolby’s audio technologies to more than 40 — and with LG, HTC, BQ, Lenovo and other mobile companies all announcing new devices with Dolby technology, it was the Apple deal that had Yeaman especially excited.

For the quarter, Dolby reported revenue of $274.3 million, up from $272 million a year ago, with a profit of $67.4 million, up from $58 million.

Licensing revenues made up the bulk of Dolby’s revenue, accounting for $249 million (up about $6 million year over year). Products and services made up the rest, about $25 million.

Broadcast represented roughly 45% of total licensing for the quarter, a 10% increase year over year, with Dolby seeing its technology used in a higher number of set-top boxes. PC revenues accounted for roughly 16% of licensing, up 26% year over year, while consumer electronics represented about 14% of the take. Mobile accounted for 11% of licensing revenue.

“It was a great quarter for Dolby,” Yeaman said. “We expanded the number of Dolby Vision televisions and the amount of Dolby Vision content, and we continue to broaden the footprint of the Dolby Cinema business.

Dolby Atmos — the company’s object-based sound technology — is either installed or will be in nearly 1,800 screens worldwide, with approximately 450 titles enabled with the technology. And Yeaman also noted that a growing number of consumer electronics devices and movie services are supporting Dolby Vision, the company’s high-dynamic range (HDR) video technology.

“Netflix began streaming content in Dolby Vision this quarter and announced that they will have 150 hours of original content available by the end of this year,” he noted. “Also this quarter, Amazon announced their commitment to stream in Dolby Vision. Vudu is already streaming in Dolby Vision. And to date, there are over 30 titles available and we expect to see as many as 100 Dolby Vision titles for the home by the end of 2016.”