Dolby Laboratories Raises Full-Year Guidance on Strong Start

Dolby Laboratories US25659T1079

Dolby Laboratories has kicked off its 2026 fiscal year by surpassing market expectations, prompting the company to adopt a more optimistic outlook for the full year. A robust performance in mobile licensing and the accelerating adoption of its technologies in the automotive sector are fueling this confidence. The sustainability of this momentum in newer market segments remains a key focus for investors.

The company recently released its first-quarter results, delivering figures that exceeded analyst consensus. Revenue reached $347 million, coming in above forecasts. On a non-GAAP basis, earnings per share (EPS) stood at $1.06, outperforming the expected $0.99.

Bolstered by this strong start, management has raised its guidance for the entirety of fiscal 2026. The full-year revenue forecast is now set between $1.40 billion and $1.45 billion. More notably, the projected EPS range has been significantly increased to $4.30 - $4.45, a substantial upward revision from a prior estimate of $3.79. For the ongoing second quarter, the company anticipates revenue of up to $405 million.

Automotive Emerges as Key Growth Driver

Strategic portfolio expansion is central to the current success. Revenue from mobile licenses demonstrated impressive year-over-year growth exceeding 20%. A particularly notable development is the rapid expansion within the automotive industry. Dolby has increased its number of original equipment manufacturer (OEM) partnerships from approximately 20 to over 35 within a single year, establishing the auto sector as a major new growth engine.

Core technologies Dolby Vision and Dolby Atmos continue to be the primary pillars of expansion, with management projecting annual growth rates of 15% to 20% in this domain. A significant partnership with streaming platform Roku for the video patent pool was also secured. Further hardware collaborations expected in the latter half of 2026 are predicted to accelerate the proliferation of Dolby Vision.

Shareholder Returns and Market Reaction

Shareholders are receiving a direct benefit from the firm’s stable earnings. The board of directors has approved a 9% increase in the quarterly cash dividend, raising it to $0.36 per share. This dividend will be payable on February 18 to shareholders of record as of February 10.

The revised guidance has elicited a largely positive response from the analyst community. Rosenblatt Securities reaffirmed its Buy rating with an $85 price target, while Barrington Research maintains its target at $90. In contrast, Wall Street Zen downgraded the stock to a Hold rating despite the earnings beat. Dolby concludes the quarter with a strong financial foundation, holding approximately $730 million in liquid assets to support its growth strategy through 2026.