third quarter of fiscal 2026
Filed Jul 30, 2026Dolby reports lower third-quarter fiscal 2026 revenue and earnings, while guiding to higher fourth-quarter revenue.
Third-quarter total revenue, GAAP net income, non-GAAP net income, and both GAAP and non-GAAP diluted earnings per share were below their third-quarter fiscal 2025 comparisons. The company maintained a fourth-quarter and full-year fiscal 2026 outlook and expanded its repurchase authorization.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenueother | $305 million | – | – |
| Net incomeGAAP | $29 million | – | – |
| Diluted earnings per shareGAAP | $0.30 per diluted share | – | – |
| Net incomenon-GAAP | $65 million | – | – |
| Diluted earnings per sharenon-GAAP | $0.69 per diluted share | – | – |
fourth quarter and full year of fiscal 2026 outlook
- RevenueFourth quarter of fiscal 2026: $362 million to $392 million. Full year of fiscal 2026: $1.41 billion to $1.44 billion.
- Gross marginFourth quarter of fiscal 2026: approximately 88% on a GAAP basis and approximately 90% on a non-GAAP basis. Full year of fiscal 2026: approximately 88% on a GAAP basis and approximately 90% on a non-GAAP basis.
- Operating expensesFourth quarter of fiscal 2026: $227 million to $237 million on a GAAP basis and $195 million to $205 million on a non-GAAP basis. Full year of fiscal 2026: $937 million to $947 million on a GAAP basis and $785 million to $795 million on a non-GAAP basis.
- Tax rateFourth quarter of fiscal 2026: around 23% on a GAAP basis and around 21% on a non-GAAP basis. Full year of fiscal 2026: around 24% on a GAAP basis and around 21% on a non-GAAP basis.
- NoteFourth quarter of fiscal 2026 licensing revenue: $335 million to $365 million.
- NoteFourth quarter of fiscal 2026 diluted earnings per share: $0.78 to $0.93 on a GAAP basis and $1.13 to $1.28 on a non-GAAP basis.
- NoteFull year of fiscal 2026 licensing revenue: $1.31 billion to $1.34 billion.
- NoteFull year of fiscal 2026 operating margins: approximately 21% on a GAAP basis and approximately 34% on a non-GAAP basis.
- NoteFull year of fiscal 2026 diluted earnings per share: $2.62 to $2.77 on a GAAP basis and $4.25 to $4.40 on a non-GAAP basis.
Capital returns
- Repurchased 1.2 million shares of common stock for approximately $65 million.
- Cash dividend of $0.36 per share of Class A and Class B common stock, payable on August 19, 2026, to stockholders of record as of the close of business on August 11, 2026.
- Board approved increasing the stock repurchase program by $350 million, bringing the amount available for future repurchases to approximately $427 million.
What drove it
- The 2026 FIFA World Cup was shown in Dolby Atmos and/or Dolby Vision across broadcast, streaming, and pay TV.
- Dolby Vision 2 is in market with some Hisense TVs, and TCL and Philips are expected to ship TVs with Dolby Vision 2 by the end of the calendar year.
- RayNeo launched the RayNeo GT Max, described as the first AR smart glasses supporting Dolby Vision.
- Insta360 launched the Luna Ultra, which supports Dolby Vision capture.
- Google announced support for Dolby Atmos through Android Auto with partners including BMW, Genesis, Mahindra, Mercedes, Renault, and Skoda.
- Roberts Communications Network is using Dolby OptiView for ultra-low latency video streaming for horse racing.
- Access Advance announced that Meta Platforms, Inc. joined the VDP program as a licensee.
Concerns
- Financial outlook relies in part on estimates of royalty-based revenue and is subject to uncertainty including consumer demand for electronic products.
- The company cited trade restrictions, changes in trade or diplomatic relationships, supply chain constraints, international conflicts, geopolitical instability, and fluctuations in inflation and interest rates.
- Dolby stated that these factors have greatly reduced visibility into its future outlook.
What to watch
- Execution against fourth-quarter total revenue guidance of $362 million to $392 million and licensing revenue guidance of $335 million to $365 million.
- Progress toward full-year total revenue guidance of $1.41 billion to $1.44 billion and licensing revenue guidance of $1.31 billion to $1.34 billion.
- Delivery of anticipated fourth-quarter gross margins of approximately 88% on a GAAP basis and approximately 90% on a non-GAAP basis.
- Adoption and monetization of the Video Distribution Program, Dolby OptiView, Dolby Atmos, and Dolby Vision across the announced device, automotive, broadcast, streaming, and content partnerships.
- The effect of consumer demand for electronic products and the macroeconomic and geopolitical factors identified in the outlook.
Analysis
Dolby reported third-quarter fiscal 2026 total revenue of $305 million, compared to $316 million for the third quarter of fiscal 2025. GAAP net income was $29 million, compared to $46 million, while non-GAAP net income was $65 million, compared to $76 million. GAAP diluted earnings per share was $0.30 per diluted share versus $0.48 per diluted share, and non-GAAP diluted earnings per share was $0.69 per diluted share versus $0.78 per diluted share.
The release did not provide reported segment revenue, licensing revenue, gross margin, operating expenses, operating income, operating margin, cash flow, cash, or debt for the third quarter. As a result, the filing does not quantify the contributions of the company’s individual licensing or other activities to the reported revenue and earnings comparisons.
Management highlighted expansion initiatives across broadcast, streaming, television, augmented-reality glasses, cameras, automotive audio, and ultra-low-latency video streaming. The announced developments include the Video Distribution Program, Dolby OptiView, Dolby Vision 2 television availability, Dolby Atmos support through Android Auto, and Meta Platforms, Inc. joining the VDP program as a licensee.
For the fourth quarter of fiscal 2026, Dolby expects total revenue of $362 million to $392 million and licensing revenue of $335 million to $365 million. The company anticipates gross margins of approximately 88% on a GAAP basis and approximately 90% on a non-GAAP basis, with GAAP diluted earnings per share of $0.78 to $0.93 and non-GAAP diluted earnings per share of $1.13 to $1.28. The outlook explicitly depends in part on royalty-based revenue estimates and consumer demand for electronic products.
Capital allocation included repurchases of 1.2 million shares for approximately $65 million, a cash dividend of $0.36 per share, and a $350 million increase in the repurchase authorization. The increased authorization brought the amount available for future repurchases to approximately $427 million. Dolby also warned that trade, supply-chain, geopolitical, inflation, and interest-rate conditions have greatly reduced visibility into its future outlook.
Management, verbatim
We continue to execute against our full-year objectives, and we are building momentum across several of our key growth areas.
Kevin Yeaman, President and CEO, Dolby Laboratories
We are expanding our total addressable market and creating new opportunities with content partners through the Video Distribution Program and Dolby OptiView, and we continue to bring Dolby Atmos and Dolby Vision to more experiences from live sports, to music in the car, to user-generated content on mobile devices and more.
Kevin Yeaman, President and CEO, Dolby Laboratories
Not in the filing
stated, not guessed- Period-end date.
- Third-quarter fiscal 2026 segment revenue, segment comparisons, and segment drivers quantified by segment.
- Third-quarter fiscal 2026 licensing revenue.
- Third-quarter fiscal 2026 gross profit, gross margin, operating expenses, operating income, and operating margin on GAAP and non-GAAP bases.
- Third-quarter fiscal 2026 cash flow from operations and free cash flow.
- Cash, cash equivalents, investments, total debt, and other balance-sheet figures.
- Prior-quarter comparisons for revenue, net income, and diluted earnings per share.
- Printed year-over-year and sequential percentage changes for reported metrics.
- Prior outlook needed to assess reported results versus prior guidance.
- Third-quarter fiscal 2026 reconciliation tables for non-GAAP measures.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.