Dolby Laboratories reported total revenue of $347 million for the quarter ended December 31, 2025, down 2.8% from $357 million a year earlier. GAAP net income was $53 million, or $0.55 per diluted share, versus $68 million, or $0.70 per diluted share, in the prior year period. On a non-GAAP basis, Dolby earned $103 million, or $1.06 per share, compared with $111 million, or $1.14 per share, in Q1 2025. The company’s licensing business, which represents the vast majority of its top line, held steady despite broader consumer electronics headwinds, while service and other revenues saw modest sequential growth driven by new imaging patent agreements.

During the quarter, Dolby repurchased approximately one million shares of common stock for about $70 million, bringing its remaining buyback authorization to roughly $207 million. The board also declared a cash dividend of $0.36 per share, payable February 18, 2026, to holders of record as of February 10, 2026. These capital allocation actions underscore management’s confidence in free-cash-flow generation and long-term margin expansion opportunities in its core licensing business.

For Q2 fiscal 2026, Dolby projects total revenue of $375 million to $405 million, with licensing revenue accounting for $350 million to $380 million of that amount. GAAP gross margin is expected near 90%, non-GAAP margin around 91%, and GAAP operating expenses of $230 million to $240 million. On a non-GAAP basis, operating expenses are forecast at $195 million to $205 million. Diluted EPS guidance ranges from $0.94 to $1.09 on a GAAP basis and $1.29 to $1.44 non-GAAP. For the full fiscal year, the company anticipates revenue between $1.40 billion and $1.45 billion, non-GAAP EPS of $4.30 to $4.45, and non-GAAP operating margin of approximately 34%. Management cited supply-chain stability and accelerating auto OEM integrations as key drivers of upside potential.