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Dolby Laboratories (NYSE:DLB) just gave investors a reason to smile. The stock shot up 14.5% today after a surprising Q4 earnings beat. Analysts were betting on $0.70 per share in non-GAAP earnings, but Dolby flexed with $0.81 instead. GAAP earnings? A hefty $0.61 per shareup from a meager $0.09 last year. Revenue for the quarter hit $305 million, up 5% year-over-year, though it narrowly missed estimates. CEO Kevin Yeaman sounded optimistic, calling out momentum in Dolby Atmos and Dolby Vision, plus big moves like the GE Licensing acquisition that beefed up its imaging patents.
Zooming out to fiscal 2024, Dolby's full-year revenue landed at $1.27 billiondown slightly from $1.30 billion in 2023. But here's the kicker: GAAP earnings soared 31% to $2.69 per share. Dolby's tech is landing in everything from Apple's iPhones to Meta's VR headsets, cementing its place in the consumer tech landscape. But 2025 is looking trickier. While sales are expected to tick up in the mid-single digits, profits could dip 7%, because of rising costs and some macroeconomic turbulence.
Investors are loving the now, but they'll need to watch for what's next. Dolby's valuationat 26 times earningslooks steep if profits don't keep pace. The company's bets on Dolby.io and streaming tech need to deliver big wins to keep the momentum alive. Today's rally might be thrilling, but the road ahead is where Dolby has to prove it's not just playing for the short term.
This article first appeared on GuruFocus.