Ladies and gentlemen, welcome to the Dolby Laboratories Conference Call discussing Fourth Quarter Fiscal Year 2025 Results. During the presentation, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question and answer session. If you would like to ask a question at that time, please press star then the number one on your phone. Simply press star one again. As a reminder, this call is being recorded Tuesday, November 18, 2025. I would now like to turn the conference over to Mr. Peter Goldmacher, Vice President of Investor Relations. Peter, please go ahead.

Good afternoon. Welcome to Dolby Laboratories' Fourth Quarter 2025 earnings conference call. Joining me today are Kevin Yeaman, Dolby Laboratories' CEO, and Robert Park, our CFO. As a reminder, today's discussion will include forward-looking statements, including our fiscal 2026 first quarter and full-year outlook, management's expectations for our future performance, and other statements regarding our plans, opportunities, and expectations. These statements are subject to risks and uncertainties that may cause actual results to differ materially from the statements made today, including, among other things, changes in customer demand, in law and regulation, and the impact of macroeconomic events on our business. A discussion of these and additional risks and uncertainties can be found in our earnings press release as well as in the Risk Factors section of our Forms 10-K and 10-Q. Dolby assumes no obligation to update any forward-looking statements. During today's call, we will discuss non-GAAP financial measures. These measures should be considered in addition to and not as a substitute for GAAP measures. A reconciliation between GAAP and non-GAAP financial measures is available in our earnings press release and in the Interactive Analyst Center on the Investor Relations section of our website. With that, I'd like to turn the call over to Kevin.

Thank you, Peter, and thanks to everyone for joining the call today. I'd like to share a brief overview of our financial results and a few highlights for the quarter, and then I'd like to talk about our unique position in the market and our opportunities heading into FY 2026 and beyond. After that, I'll turn the call over to Robert to cover the financials before we get to Q&A. We wrapped up Q4 and the full year in line with the expectations we provided on the last earnings call. In FY 2025, we grew revenue by 6%, aided by the acquisition of GE Licensing, and we expanded our operating margins by 1.8 percentage points. Robert will walk through the results in more detail in just a moment. I'll start by walking through some of the Q4 highlights as it relates to Dolby Atmos, Dolby Vision, and imaging patents. For Dolby Atmos and Dolby Vision, we continue to see strong engagement from our ecosystem of content creators, content distributors, and device OEMs, as they increasingly embrace the value of content created in Dolby Atmos and Dolby Vision across sports, music, TV, and movies. In September, we announced Dolby Vision 2, which will dramatically improve picture quality and unleash the full capabilities of modern TVs, from mainstream sets to the top-of-the-line models. Some of the benefits of Dolby Vision 2 include automatically adjusting contrast via ambient light detection, motion control to optimize sports and gaming content, and features that enable creators to take full advantage of the latest advancements in higher-end TV displays. By bringing two distinct offerings to market, Dolby Vision II will allow TV OEMs to bring Dolby Vision deeper into their lineups by improving their mid-range offerings, while Dolby Vision 2 Max will offer important differentiation at the…

Thank you, Kevin. Revenue for the quarter came in at $307 million, above the midpoint of guidance we shared last quarter. Non-GAAP earnings per share of $0.99 was above the high-end guidance due to a $0.28 discrete tax benefit this quarter. Excluding this discrete tax item, non-GAAP earnings per share came in at $0.71, which was above the midpoint of guidance primarily due to higher revenue and better gross margins, partially offset by higher operating expenses. Licensing revenue was $282 million, and products and services revenue was $25 million. We generated approximately $123 million in operating cash flow, repurchased $35 million of common stock, and have approximately $277 million remaining on our share repurchase authorization. We declared a $0.36 dividend, up 9% from a dividend a year ago, and ended the quarter with cash and investments of approximately $783 million. We recorded a $6 million restructuring charge in the quarter as we continue to streamline operations and adjust resources towards the most impactful areas. For the full fiscal 2025, we reported revenues of $1.35 billion, which was above the midpoint of guidance and up 6% year over year, and non-GAAP earnings per share of $4.24, or $3.97 excluding the previously mentioned discrete tax benefit, within the range of our annual earnings guidance. As Kevin mentioned, we expanded our full-year non-GAAP operating margins by 180 basis points. For the year, Dolby Atmos, Dolby Vision, and Imaging Patents grew just over 14%, in line with our expectations of roughly 15% growth, and represented 45% of licensing revenue. Foundational Audio Technology revenue came in just under negative 1%, again close to our expectations of roughly flat growth. Detailed licensing performance by end market and other components are on the IR portion of our website. And as we share with you every quarter, while…

Thanks, Robert. Before I turn the call back to the operator to open up the lines for Q&A, I'd like to announce that we're going to have a casual event for investors at CES on Wednesday, January 7, from 8 AM to 9 AM at the Dolby Live Theater in the Park MGM. We will be in a quiet period, so there won't be any formal remarks or commentary on the business, but we always appreciate the opportunity to show off our technology. If you'd like to join us, please reach out to me for details or send a note to ir@dolby.com. With that, operator, can we please open up the call for Q&A?

Thank you. We will now begin the question and answer session. Press 1 again. Thank you. Your first question comes from the line of Ralph Schackart with William Blair. Your line is open.

Kevin, maybe you can provide a little bit more color on what seems like a pretty interesting opportunity to expand the TAM on the new consumption models you talked about.

I think you talked about video distribution for streamers. I think that came primarily from the GE patents. If you could sort of confirm that and sort of provide an update there? And then OptiView, and maybe just kind of taking a step back, give us a sense of the contribution in the 2026 guidance. And will this be something that will build throughout the year? Or just sort of you can sort of frame that opportunity? And then I have a follow-up.

Yeah. Thanks, Ralph. So if you put this in the context of Dolby's journey for sixty years, we've been leading the way in the quality and efficiency of experience, and we've been doing that by providing the services, technologies, the know-how to not just our paying customers, the device licensees, but also to content creators and to distributors of content. And so as we look to where that future is going, we believe that we have significant opportunities to begin to add new value to the content streamers, to bring that future to life. It's a future where streaming services are more aware of what engages audiences. They're able to respond to that in the form of not just which content they show them, but actually having the content itself be personalized to that audience. And to introduce interactive features. That's, of course, what we are doing with Dolby OptiView for sports betting and iGaming. We talked about I talked about on the call just a moment ago about how the NFL is now utilizing Dolby OptiView for its Red Zone service. And I think we've been in the market for about two years with Dolby OptiView. And over that time, we brought on a fantastic roster of customers, and many of them are still in the early stages of scaling. For some of them, these are new offerings. For others, they're testing the offerings on a percentage of the user base before they go bigger. So we think that as we look forward, scaling the customers we've won is a big opportunity to increase revenue. And also Dolby OptiView is becoming known in these circles compared to a year ago. So that is healthy for our pipeline. And then more recently, you asked about the video distribution video patent distribution program. So as you know, imaging patent licensing has always been driven by licensing per device. And what's new is that the pool has now established a pool for content streamers. That's a combination, Ralph, of the patents we've always had in the imaging patent pools and the GE licensing patents. The significance is that it significantly expands the addressable market by opening up the world of these content streamers. And that's one of the things that gives us confidence in sustaining growth in our Dolby Atmos, Dolby Vision imaging patents because that's still part of patent licensing revenue. Dolby OptiView is a part of product and services. Yes, we're continuing to look to drive growth, but we're optimistic about the midterm. And we think that between those two programs, in three years, we could have probably 10% of our revenue coming from service provider customers as opposed to device customers. And we'll be looking for opportunities to introduce new offerings and do everything we can to accelerate that.

Great. And maybe just double click on the energy patents. I think you had mentioned there's four new content streamers, if I heard that correctly. Is that you, sort of approaching the market with the patents in combination with GE and looking for opportunities to work with the streamers? Or are there are you bringing sort of, I guess, revenue-enhancing opportunities to them versus, I guess, IP you know, in terms of monetization? Thanks.

Yeah. Thank you. So, so we most of our past licensing revenue, we license through patent pools. So the patent pools are a structure where many licensors contribute their patents for a particular purpose. In this case, the content streaming industry has obviously grown, and there's also a growing recognition of the critical nature of this imaging patent technology to what they do. And so it is we participate in those pools. It's via the pool that the decisions are made to establish new programs. And that's what led to the opening of this pool. There's five licensees have signed up. We didn't have any that was all in 2025. So it'll first start generating revenues in FY 2026. And going forward, one of the natures of these pools is that it in a sense licensors to innovate into those pools. And so we would expect to see opportunities to innovate into those pools to meet the future needs of content streamers at any markets that those pools decide to focus on in the future.

Great. Just one last one, if I could, Kevin. I think you had mentioned that in the second half of 2025 fiscal year that the licensee signed that you'll generate revenue in 2026. Can you just sort of bridge the gap and know, from signing to monetization? And that time period and sort of what's taking place in between? Thanks a lot.

Well, the patent like the patent pool side of the business still operates somewhat like what you're used to in the early Dolby days where we recognize that revenue when we get the reports from the pools. And so that is the that's the probably the most important thing to understand as it relates to patent licensing is when we sign someone up, we are then waiting for that first royalty report.

Okay, understood. Thank you.

Your next question comes from the line of Steven Frankel with Rosenblatt. Your line is open.

I want to follow-up on Ralph's questions around this new model. And I'm just trying to fundamentally understand whether the pool is selling new capabilities to the stream the streamers, or are we enforcing patents from the pool on activities and technologies that they're already deploying?

So, on day one, Steve, it's essentially the same patents that were in the pool that was established for device licensees. That is the pool for content streamers. As I said, going forward, the purpose of these pools is to establish a mechanism to incent licensors to continue to collaborate and innovate into the future needs of the licensees. So the second part of your question, was oh, why now? It really is just that industry has grown significantly, and there is a recognition that these imaging patent technologies are essential to the way they generate value.

Let me ask it a different way. So were they using these at with the understanding that at some point, they would have to pay for what they're using? Or are you approaching them saying, you should be using this now? Going forward. That's what I'm basically trying to understand what your what your go-to-market motion is. Enforcement or upselling?

Yeah, got you. So, again, it's the pool that we participate in, which is approaching the customers. We sometimes approach bilaterally or participate in that. Generally speaking, these are technologies that have been being used. And I would say it's a combination. I mean, first and foremost, we look to the pool looks to bring licensees on board. And it also, like I said, provides value going forward. You have the certainty of having the ability to operate against this growing number of patents from innovation across a growing number of licensors. And sometimes there is enforcement. That's a last resort, but it's always when it's used, it's to ensure a level playing field across all licensees.

Okay. Thank you. And you know, we've had some past discussion on Atmos music and automobiles kind of approaching a level where it might have to be broken out. At about subsegment, like you break out these other markets. Where did you exit the year? And do you think that's something that could happen in fiscal 2026?

I don't anticipate doing it in fiscal 2026, but I do anticipate that automotive will become a separate end market. We're still in the early days. It's still one of the fastest growers. And we continue to make great progress bringing Dolby Atmos music to cars. And we're even earlier days bringing Dolby Vision to cars. So automotive continues to be one of the areas that gives us confidence in our ability to continue to grow Dolby Atmos, Dolby Vision, and imaging patents.

Okay. And we want to leave Robert out. So, what were true-ups in the quarter?

Okay. Steve, for not leaving me out. Appreciate that. True-ups for the quarter was really not a factor. It's minus $1 million for the quarter.

Okay. Great. And then maybe one more time back on auto. Kevin, how do you feel in your progress of going deeper into some of the brands that you've already been with? And what's your visibility into maybe going in the North American brands getting into some lower price points and more aggressively priced cars? Than in a lot of the high-end vehicles so far.

Yes. We continue to make progress getting deeper into lineups. You're aware of what we've done with Mercedes. Obviously a higher-end brand, but getting deeper in lineups. Cadillac in the tire EV lineup. Across our portfolio, we see a number of our partners bringing Dolby Atmos to additional models. We also feel very good about the pipeline activity around bringing it even deeper. And so we still believe that Dolby Atmos is an experience that should be the standard way to listen to music in the car, just as stereo has been for a very, very long time.

Your next question comes from Patrick Scholl with Barrington Research. Your line is open.

Hi. Thank you. Just another follow-up on your the new model that you're rolling out with the content distributors. I was just wondering, just in terms of the imaging patent licensing, is any of their is there any, like, overlap between the technologies that you're licensing there and the services being able to distribute content in, like, in Dolby Vision and Dolby Atmos?

Separate things. The Dolby Vision actually, is not dependent on video codec. We implement Dolby Vision across a range of video codecs. Dolby Atmos is implemented with the branded Dolby audio codec.

Oh, okay. And then with the Dolby Vision 2, is there I guess, in any when you when you produce an update, to to Dolby Vision, is there any sort of process to updating the content pipeline or the service distribution pipeline in order to get adoption from device manufacturers? Is that more accelerated from other you know, technology rollouts, or is it similar in that area?

Yes. So, yes, good question. I mean, first of all, we're always introducing new features and functionality as it relates to our core offerings. But significant about Dolby Vision 2 is this is a significant upgrade. So it really I hope you can join us at CES. It's a noticeable difference across all TV entire TV range. And that's why we think we've gotten such good engagement, and Hisense and TCL announced right along with us on announcing Dolby Vision 2 that they plan to adopt it. And yes, this does include providing new tools to creators to take advantage of the full range of capabilities. And we expect that the first TVs will be in the market by 2026. We expect to have content we're working the content pipeline at the same time. And I would say compared if your question is compared to when we first brought Dolby Vision to life, I would say it can go it's faster than that because of the general the broad adoption of Dolby Vision and because like I said, this makes a significant difference. We have good engagement across the ecosystem.

Okay. And then just on the three-year growth outlook for Atmos and Vision and the ImagePat and Thing, I think if I heard you correctly, like, the top end of that, you know, kind of three-year CAGR is brought down a little bit from what it had been. Is that just sort of a law of large numbers or just the kind of just the macro kind of view of just how things are been trending more recently is the and, like, the potential macro impacts from trade issues and things like that.

Yes, I would say law of numbers. We were when we first started providing this construct, we were at about just over 20% of our revenue was 50%. And I would say today we've on the Q&A we've talked about auto. We just talked about Dolby Vision 2. We talked about the video distribution program. All of those are things that are in the early stages of growth and can contribute to this growth rate going forward. And we haven't yet talked about the fact that Instagram is now including Dolby support for Dolby Vision for iOS, which is a partnership we're also very excited about. We're on the with Dolby Atmos and Dolby Vision. Now we're on Instagram. And, that's important because social media is the most prominent use case on mobile devices. And so we've seen in China how when we get included on social media and video distribution sites. We mentioned I mentioned on the call that Douyin has now adopted us. That drives demand for Dolby Vision and Dolby Vision playback on mobile devices. And so we think this is also a good driver. So what we're seeing is quite a few important wins that are early growth drivers for us to keep driving that forward. And now that it's approaching 50%, it has a much greater impact on the overall top-line growth.

Okay. Thank you. Your next question comes from Vikram Kasavabhotla with Baird. Your line is open.

Yes. Hey, thanks for taking the question. Maybe just a follow-up on some of the comments you made on the last response. Just could you talk more about your observations around the macro environment right now? What is your latest thinking in terms of the potential impacts from the tariffs as well as just the state of the consumer and how have you gone about incorporating that into the outlook for '26?

Yeah. Thanks for the question, Vikram. So first, I would say that over this last year, we haven't seen any specific identifiable impact of the tariffs. If anything, I think what we're seeing is that our device partners have been dealing with supply chain issues for quite some time beginning with the pandemic, and they've invested a lot in resiliency. And I think they've proven to be quite resilient. At the same time, I would say the overall device market is flattish, sluggish. And so as it relates to foundational, Robert said, we're planning for low single digits. But we are seeing a big improvement from 2022 to 2024 when one of the biggest reasons for our larger declines was because we were coming off those really strong purchasing years in 2021 where everybody went out to buy a TV and a PC. So in that respect, we see it stabilizing relative to that period of time. Don't think it will be sluggish forever. We think our partners are hard at work doing exciting things. But and I guess I would also add that we have been able to grow Dolby Atmos 20% a year through all of that. So we're really focusing on what we can control, and that is all the things we just talked about that we think will drive continued growth in Dolby Atmos, Dolby Vision imaging patents. And we are of course excited that we see new paths to expanding our addressable market by adding value to new customers, some of whom are already partners.

Okay, great. And then maybe a follow-up on the 2026 outlook. I think you called out a couple of drivers that are affecting the first quarter year-over-year trend here. Curious if there's anything else to call out as we think about the cadence throughout the rest of the year?

Yes. Hi, Vikram. This is Robert. Yeah. Our quarterly results can fluctuate widely due to timing of true-ups, minimum volume commitments, and recoveries. And Q1 is no different than the previous past where we've had Q1 is depressed due to a Q1 true-up of last year and then timing of some minimum volume commitments. And I think this year we expect our revenue to be more evenly distributed between the first half and second half versus what it was last year.

Okay. Great. And then maybe just the last one for me. It'd be great to get your latest thoughts around allocation here. It looks like you saw some share repurchase authorization left. Looks like it's in good shape. What is your latest thinking on how you plan to approach repurchase activity going forward?

Yes, we do have just over $70 million of repurchase authorization remaining. Our policy, of course, is to, as I'm sure you know, is we do dilution on a regular basis from equity comp. We have a regular dividend that we announced an increase today. We've increased that every year except for one during the pandemic. And then we do look closely at this with our board each quarter, and over time we have sometimes done more buybacks than is necessary to offset dilution. So we continue to look at it closely.

Okay. Thank you for the comments.

And with no further questions in queue, this will conclude our conference call today. You may now disconnect.