Dolby Rolls Out API Update to Help Developers Reach More Participants

Dolby’s licensing, products and services revenue continues to be affected by COVID-19 and implications on future operations results “remain uncertain,” said the company’s Thursday fiscal Q3 2021 earnings release. “The volume of shipments, aggregated across various end markets and devices, continues to be impacted and difficult to predict because of economic uncertainty due to COVID-19.”

Q3 revenue grew 16% year on year to $286.8 million at the higher end of guidance for the quarter ended June 25. The fiscal Q4 outlook is $280 million-$310 million. Fiscal year total is estimated at $1.28 billion-$1.31 billion.

The company has begun to roll out a “significant update” to its Dolby.io audio, video and voice application programming interface platform that will enable larger scale interactions with more participants, CEO Kevin Yeaman said on a Thursday earnings call. Dolby started out a year ago with Dolby.io with features that improve capture qualities, said the executive. It has begun engaging with customers with a need to reach more participants, and the latest release will help the company engage with more developers for larger events, he said.

In its Cinema business, 95% of Dolby's screens are open globally, following closures during the pandemic, said Yeaman. With more content returning to the big screen, Dolby has seen positive box office performance and moviegoers skewing toward premium experiences vs. the pre-pandemic period, he said. It's uncertain when and where cinemas will resume operating at full capacity, said the company.

On how Dolby can leverage the visibility and experience it has gained at the Summer Olympics with NBC’s broadcast in Dolby Atmos and Vision for Comcast Xfinity customers, Yeaman said such events are a step toward making the technologies more commonplace. “They're getting the right equipment and software in place,” which will lead to more future events. There's “a certain amount of work that goes along with people doing it for the first time, but high-profile events like this are a really big step forward,” he said.

Commenting on the significance of Dolby Atmos Music, Yeaman said music has broad appeal that expands the addressable market of high-end mobile devices and PCs as manufacturers look to build value into premium products. It also added Naver Vibe in South Korea.

Dolby is hoping Dolby Atmos Music helps the company expand in the automotive space, Yeaman said. Automotive is an area seen by artists and streaming services as an important segment to reach listeners, and Yeaman believes Dolby Atmos Music “gives us an opportunity to make headway among car OEMs.” He noted automotive lead times have condensed from three to five years ago, especially with electric vehicle makers, he said. A lot of what Dolby would be doing in the automotive space is in software, he said. Lucid Motors' Lucid Air will have Dolby Atmos (see 2105050030), the company said in May.

By segment, broadcast licensing revenues grew 40%, representing 46% of total licensing in Q3, said Chief Financial Officer Lewis Chew. Mobile, 18% of licensing revenue, declined by about 36% year over year; CE was 14% of total licensing and grew 86% vs. Q3 2020; PC, at 9%, grew 6% year on year. Other markets were 13% of total licensing revenue, up 42% year on year, driven partially by higher revenue in the cinema and gaming businesses.