Dolby Shares Hit 52-Week Low After What CEO Calls 'Tough Comps'

Revenue fell to $351.6 million for the quarter, from $389.9 million in the year-ago quarter, said the company. For Q2 FY ’22, Dolby projects a revenue range of $315 million-$345 million, citing uncertainties associated with the pandemic. Shares tumbled Friday, hitting a 52-week low at $75.36, before closing 11% lower at $75.85.

The company announced Thursday it bought Millicast, a startup that provides scalable low-latency video streaming, which will enable Dolby.io customers to create virtual environments and stream them to thousands of viewers. Events include conferences and music concerts, streaming from the presenter to audiences of more than 60,000 people “with delays of less than 500 milliseconds,” said Dolby.

"There is a growing demand to make online events as lifelike and compelling as being there in person," said Marie Huwe, senior vice president-Dolby.io. With the addition of Millicast technology, Dolby can enable global customers to build “virtualized, massive audience experiences that feel almost as if you were there,” said Millicast CEO Alexandrine Platonoff. The NFL, NBC and Disney use Millicast tech to manage remote production of live events.

Yeaman said Dolby is targeting markets where it can differentiate with virtual live performances, online and hybrid events, social audio, premium education, gaming and content production, a market opportunity he estimated at $5 billion “and growing.” Increased momentum is due to interest in a release of programmable spatial audio, he said. The technology allows developers to choose where to render real-time voices around the listener, he said.

Developers are building virtual content, concert experiences, VR collaboration platforms, and virtual worlds, in which listeners hear people from the location of the speaker or their avatar, Yeaman said. Customers were going into production on the beta before general availability of the release last week, he said. They're building virtual concert experiences, using Dolby.io “to enable the avatars and the virtual crowd to be able to interact with each other,” said Yeaman. One customer is building an online comedy venue so comedians can interact with the audience, he said.

Yeaman called Samsung’s news at CES that it was adopting Dolby Atmos on its TVs “a great progression of our relationship.” Samsung also licenses Atmos on sound bars and mobile devices, though it hasn’t adopted Dolby Vision as an HDR solution, opting instead for its homegrown HDR10+ format.

In the quarter, Walmart’s Onn and Best Buy’s Pioneer TVs began supporting Dolby Vision, which Yeaman said was “an important step toward addressing the mass market retailer brands and making Dolby experiences more widely available at all price points.” Asus adopted Vision on its new 2-in-1 PC and said recently its latest gaming laptops will have Atmos and Vision, Yeaman noted. Dell and Lenovo made similar announcements, he said.

Broadcast was 37% of total licensing in the quarter, declining 13% year on year, partially offset by higher adoption of Dolby Atmos and Dolby Vision in TVs and new licenses in imaging patent programs, said Park. Mobile was 23% of total licensing, he said. CE was 17% of total licensing in the quarter, up 11% on higher revenue for digital media adapters and soundbars, Park said. PC revenue grew 6%, led by new imaging patent licenses and higher Dolby Vision adoption.

Other markets, flat year on year, were 13% of December quarter revenue. Lower foundational audio patent revenue was offset by higher Dolby Cinema revenue. About 98% of Dolby Cinemas opened globally, with six new sites launched during fiscal Q1, Yeaman said. Q1 products and services revenue was $19.3 million, vs. 16.8 million in the prior-year quarter, reflecting “ongoing improvements” in the global cinema industry.