DLB - Earnings call transcript Q4 2021 | Dolby Laboratories, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Dolby Laboratories conference call discussing fiscal fourth quarter 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. [Operator Instructions].

call recorded, this XXXX. November reminder, a is Tuesday, being XX, As Dolby would the Manager Schwenoha, for turn like of call Relations I to Ashley conference now over to Investor Laboratories. Senior go Ashley. Please ahead,

Ashley Schwenoha

to Dolby quarter conference Good afternoon. Laboratories Welcome XXXX fourth earnings call.

Yeaman, Kevin Park, Laboratories' CEO are CFO. today and me Dolby Joining Robert

As obligation uncertainties statements, statements are the impact from underlying release today, materially our and Statements uncertainties any call of not that These that result our discussion statements captioned the on assumes does differ or first that and to well future intend quarter today Form forward-looking this during as results today's our can Risk extent and continuing a outlook actual and Forward-Looking section other under among made assumptions most events. the be include business. these issued update no found the and to of made Factors to our and press risks subject as in things, may new risks reminder, earnings statements we will including the of cause fiscal information as XXXX Annual including, on additional Dolby A XX-K. section of Report of recent a discussion in COVID-XX forward-looking the outlook.

and on sheet our call, release data and press Relations earnings financial today's Dolby the discuss measures. Investor available Investor GAAP Relations website. we our in two section non-GAAP in During will A is reconciliation between the Laboratories' of the

a first fiscal Dolby's results for outlook. with follow business. will Robert a of start content discussion financial call, with the today's our And XXXX quarter Kevin provide As of will and and the of recap

will behind to introduction the us, that turn over now with So I call Kevin.

Kevin Yeaman

afternoon good and Ashley you Thank everyone.

our above QX midpoint came of towards came EPS in the range. low end while guidance in Our revenue

our many can Music experiences. in the for launch experience and latest Looking favorite Mercedes-Benz in created and people with Apple entertained And Xbox. enable growth with partners iPhone. music had will allow fiscal Dolby and who audience the momentum record, and across growth our more XXXX, full premium Dolby with significantly the revenue we XXXX in year, a to Vision share Music considerable margins now of a Consumers and their Dolby of XX% Apple now the the enjoyed first operating we initiatives their videos we Dolby larger of that Motors. fiscal Dolby Atmos the on car easily with being some play strong Dolby first their highest be since in at by is by have on Lucid Vision gamers can will the titles time Atmos edit

device Vision, XXXX, related by consumer During cinema- from our offset Dolby combined revenues. Atmos with of partially revenues FY adoption robust in increased and shipments benefited Dolby decrease a in increases

long-term macro FY the to slowdown a we the Robert through want I consumer and been walk device a in you about And through the to has think environment. growth. shipments. you It revenue licensing markets, on discussion as before dynamic some a our numbers important detail, including more of factors single and expecting anticipate we takes in most accelerating recovery in a As high offset growth with enter those Vision in by and cinema-related we Dolby XXXX, digits Dolby partial Atmos mid are of revenue factors revenues a growth we in shift as

our Dolby our Vision Dolby.io. Our like and to Atmos adoption initiatives and market opportunity addressable Dolby of increased foundational audio technologies, expand with

TV robust global volumes, end across FY Plus, grew particularly a our attach Digital Let's due which high technologies, and include diverse XXXX licensing higher our and about patent rates start XX% year-over-year, roughly our up America These largely have of set of AC-X and foundational audio licensing. In our made audio audio foundational in North with technologies technologies markets. Dolby in three-quarters of and to Europe. foundational devices and PCs business XXXX, FY shipments

benefited also from true-ups coming the than normal We into higher year.

not As we we analyst previous see noting level saw look the ahead that will reports supply uncertainties the and we growth of spending. FY XXXX, market to year, constraints industry around indicate global consumer

Of course, OEMs account, decrease this across multiple take across device each our audio and digits we categories in partner foundational expect of for we all single impacted differently. of a low all them is revenues. the with into geographies When we

of adoption reflect devices foundational presence driven the licensees. our of and approaching licensing strong adoption new trends by automotive. Over term, throughout Dolby Atmos, primarily set licensing portion strong in revenue imaging shipments, our of XX% the licensing quarter expect by growth growth a driven in and with growth increase see being year-over-year includes patent long by is generally markets our office new portion XXXX. XX% and consumer over is nearly revenue device FY our pandemic. in licensing we to like in grew certain market recovers this revenue revenue we where XXXX. total, our also where one The expect XXXX to to vision Dolby across this from FY our this and low attendance In driven We and wide Dolby box remainder accelerating mobile areas Cinema, opportunities FY includes technologies as

a progress here. Dolby And key driver with to would Dolby areas. to and minutes these Vision in continued take is like highlight Our a few momentum I Atmos our

new the The game and clear. you can like The world Atmos as where from immersive music. artists most enjoy an and Let of changing with feel Dolby continues Justin the detail. every experience and consumers world's with describing popular music build Music. to engagement Bieber response Atmos Dolby The me a artists Atmos Dolby whole Weeknd creates start music way to is some

attendees PC to music in they announced the their Dolby Atmos The enjoy Dolby recently launched speaker with to will are recently including ways Music Dolby the experiences We artists broadly Live MGM experience making concert available seek increases at Dolby products. be significantly subscribers. brings also then across a experience and able experience Dolby the in music. range where all enjoy and of more new favorite value that mobile, ultimate that venue, Amazon they music the their wide devices music a Atmos Park

presence last the experience growing yesterday, space. has music their new just that NIO two maker proposition of Atmos announced they are in top they in month electric music ETX cars, announced created S-Class. Dolby Mercedes-Benz a the automotive Atmos Mercedes-Benz including Dolby value model. car in are in luxury the for Our Chinese adopting And their Mercedes-Maybach and Dolby

this road in add now is started which the the that are that momentum our partnerships automotive with on within to U.S. early We these excited Air new earlier Lucid year,

the the at we just are significant We this see space. beginning of opportunity ahead in

enable iPhone, iPhone quarter, This of Dolby Vision for seeing content consumers range for the content of highlighted launch first through the enabling videos With to the a Vision line record the their Dolby the share and created a significant the time. Vision. capability Dolby being up to we in of support again increase amount XX now to are platforms

PC. becomes one across With all-in-one playback and Vision mobile the increased cases, recently, to quarter, of This more Dolby ecosystem. devices, broader platforms content. of to and of social drive largest look use Vision we to first sites, China's more and content Dolby support Bilibili, content Dolby audiences of Vimeo support More video began particularly for Vision generated sharing upload the supporting Vision in adoption capture the Apple Dolby user content and platform to playback

X continued impetus for Dolby combined Xiaomi, expanded the and drive LG select football see be quarter Fox highlight to in We from and of addressable live content Surface Vision Sonos like the of Thursday experiences market latest experience combined experience Vision. Dolby and through we are see Dolby.io, we on address and Vision Hulu on support Dolby room, confident devices. Dolby available playoff their ability Amazon, and NBC support in premium services streaming enable products experience. this Growing from gamers games Realme experiences, in greater Dolby and night broadly college more the in their will provide in partners Xiaomi Dolby's the and Dolby live a API the content our music with Microsoft TV now followings, living support in Dolby Dolby the movies, also delivered content MLB adding Dolby delivering technologies. events garner to with Atmos like time in Dolby in Samsung, first quarter. platform, from of increasing foundation an games Dolby more World Xbox Sports. to by Vision to can Dolby are Fox the in vision, Vision with With of and TCL In the be sound saw and dedicated developer number the experience from Vision S, this enjoy Atmos and Atmos. also and expand especially And on Dolby Android our our communications. in marking Vision TV adoption is that momentum building our media Vision focusing broadcast games Dolby. their Atmos. XXXX available new we growth. unique combined to use football adoption mobile, will benefit Sky able Comcast Series Dolby continue playing Gaming Dolby by With of cases solid series bar are and first world to and launches we and Dolby tablets newest and adding greatly showcased opportunity we phones for The

of can broad gaming performances, estimate about these our audio, opportunity the are live focusing and we verticals market we think of billion of of differentiation, platform and applicability growing. and production. offer be where and hybrid cases, addressable billions we content to has an we the minutes most of events, collectively, education, range social $X While virtual use annually premium represents online Each across a hundreds

our Last of making on address of enabling our our breadth are needs which playback update we support. us available in potential expertise, quality in by concurrent we quarter, number users what currently competitive platform the to of is APIs depth and capabilities more position market. and a released a With processing can customers' the major compared to capture, we puts more the higher

our APIs the and focus to developers needs experience. cases learn address introduce and that use developers, engagement target we features of improve we and new developer our overall As from continue the with

self-service increased in are leadership these activity see we increasing awareness to and recent pipeline. beginning we new on building the place, improvements, our are and with focused With

we to integrating their of create easily their and of MediaFlows music APIs improve recently videos. allowing our product API launched distribution integration Dolby.io's tracks. UnitedMasters music new services an Cloudinary saw of mastering their to This including quality number customers with audio Also enabling users music their quarter, a the audio enhances high-quality

still excited early about While we significant we ahead. the are are in of Dolby.io, the opportunity days

a spend of We reduced a and significantly strength to due our spending events, partial FY our week on on to improved time, we pre-pandemic me levels as let of well return anticipate and XXXX, same some while higher minute investing the by to improvements We like At margins, gross travel in these areas. COVID. including operating our as our Before items to operating growth combination up, margins I our operating levels gross in model, wrap of margins expenses our few XXrd a generate FY will specific a compared payroll. due in XXXX operating continue increased of the operating of model. margin as

as will Music, summary, the highlighted Vision events more range content of to a by across wins like adoption much seek significantly in see foundation strong Dolby first We gaming with wider fiscal and expand we XXXX was content addressable as enabling that and Apple opportunity of Atmos a Dolby we from content. drive significant we Atmos to market cars and more Dolby user-generated across have ahead even on support to devices broader Dolby.io. live our the So

drive confidence earnings us All to we revenue XXXX and gives of growth as FY ability long-term look this in to and beyond. our

Robert our of with has the So been record weeks guiding four while would to I on through Robert and is excellence a about board leader like before delivering now. for companies experienced operational Chief Financial Park. welcome new financials, accountability. growth track an Officer, Robert

to his to towards through work Robert are more as to have expertise us growth. will in take excited it And with detail. next financials that, We Dolby's phase we the I of hand over

Robert Park

all, in you join if that term here am at chance to Thank I Dolby person, you to I Good a the afternoon be hope excited I Great. everybody. very team. virtually. near get in and least the Kevin. not meet

$XXX revenue million, were QX in Revenue in generating then towards fiscal QX in is $X.XX Products in pushed million Dolby million a billion XX% the guidance a the timing and So of let's billion billion also favorable fourth was was take benefited and the included XXXX to through year XXXX total numbers and quarter Within we shipments adoption of for in above and Total results, QX low estimate. higher deal fiscal through services. as range revenue revenue year and for QX million licensing full quarter year-over-year which and our Atmos With about compared go offset of the QX On Dolby million. lower revenue original while from partially result full true-ups. was year year's our quarter year were to I was of and $X XXXX. $XX above we will fourth XXXX, to and products the year outlook about XXXX. of revenues, was million you due for our last end was true-up reported year-over-year within that, licensing revenue comprised provided Vision $XX basis, guidance $X.XX a cinema-related now $XXX that $X.XX in greater anticipated that fiscal the out services revenue revenue landed and $XX of range growth. by revenues

quarterly the the we XX% XXXX. factors fiscal and discuss Broadcast trends also will in fiscal licensing licensing as Let's look about of XXXX. to and year-over-year represented year full I ahead by the highlight revenue end key total market year in

Vision higher Atmos a Our TVs and in of or full on set-top by and grew driven revenues boxes. Dolby million basis, Dolby by adoption year $XX X% year-over-year

Atmos. higher TV Vision QX higher we year-over-year Dolby Europe a lower year's broadcast saw saw compared also by due prior saw from in basis, QX, North foundational on In decline shipments offset to foundational revenues We increased audio America for and partially true-ups to revenues and as from XXXX. fiscal Dolby we revenues revenues audio

driven TV out These growth anticipate of audio foundational digits recoveries from are see Dolby adoption $XX XXXX fiscal single a Atmos As foundational adoption. offset lower Mobile XXXX, Dolby compared revenues in of Vision, and revenues fiscal projecting to represented flat imaging by shipments year-over-year true-ups basis industry benefited we by fiscal or Mobile total revenues down saw XX% to programs. we and higher fiscal to revenues XXXX. on XX% revenue revenues and be our be to we lower as grow approximately timing currently increased in analysts XXXX, digits. single look are of audio low the patent broadcast in by growth lower million low our and factors Dolby partially to to from Vision licensing increased we as higher projected from

in be electronics fiscal as programs. by driven prior higher CE total revenues of unit On contract. a as licensing XXXX,, to high as Dolby revenues adoption of could bars as revenues These of our Our by XX% of Vision In year Vision were increasing represented will year-over-year due in Dolby by imaging Dolby and audio licensing increased result as compared volumes to timing about recoveries. Atmos and mobile to and year by that growth a AVRs partially X% foundational Consumer factors anticipate QX million about in revenues well digits, of year under lower well XXXX. the fiscal basis, due driven as higher adoption $XX audio XX%, or we up to foundational sound mid increased higher Dolby Atmos. mobile offset grow revenues single patent

Vision saw across adoption growth Dolby higher from devices. and of Dolby also We Atmos CE

Atmos higher and increased revenues of year, Vision. of full Dolby growth was CE year both growing which compared revenues adoption to audio foundational with prior Dolby and drivers QX XX% line Our in

XXXX, As CE ahead see fiscal revenues year-over-year. year you relatively we flat to look

growth see from higher our contributions lower and patent CE revenues expect licensing Dolby partially Atmos We as about increasing drivers Dolby estimating DMAs XXXX. we as in to Vision revenues audio These total in lower represented industry will by are of fiscal imaging anticipate offset and year adoption analysts foundational decrease sound year-over-year be from to as well bars volumes unit recoveries. XX% PC and programs.

year higher the recoveries by were compared of Dolby Vision. and and million to growth growing PC revenues a prior lower PC XXXX Atmos year than revenues from Dolby were as about year by audio strong driven result higher or throughout factors $XX partially X%, These XXXX. fiscal revenues foundational by fiscal year Our shipments offset

Our QX year PC revenues and increased prior QX, Atmos Dolby were about X% higher compared driven to revenues. by Vision Dolby

growth Other imaging and our up year revenues Dolby higher foundational They fiscal XX% growth about mid As markets adopt XX% revenues Dolby by driven as Atmos programs. our to $XX the low look patent revenues from cycle well to in patents. million as single we PC about licensing higher in as from XXXX, XXXX. revenues year-over-year, ahead revenues we markets increased refresh fiscal of year-over-year total in year related Vision were we other Cinema as gaming. In digit gaming reopened more due continue to Dolby theaters PCs or XX% QX, see and represent about console to and due higher to saw to grow

we we as look people Cinema even markets as revenues grow fiscal continue of we estimate also an growth that XX% could the in to QX to more are higher return at from ahead momentum As anticipate to to XXXX, see Dolby able revenues we rate over continued movies other and gaming.

compared margin million million, fourth the in and expenses to million compared to fourth quarter prior the business, Operating operating activity year's a in million last the of two basis non-GAAP were compared included at XX.X% a XXXX. compared in on XX.X% we of to fiscal on $XXX.X XX.X% communications quarter revenue income expenses fourth in of of Operating $XXX.X demand income the QX in or the $XXX.X Prior XX.X% non-GAAP in basis non-GAAP million a XXXX. Operating or higher was our XX.X% Total prior QX income on industry. year. on $XX.X our quarter the revenue on year minus X% products or in was compared Operating XX.X% the of QX. was the fiscal quarter income in compared $XXX.X gross fiscal or a or revenue million revenue a of a and basis. on about fourth $XX.X services in compared On million last million year to non-GAAP in expenses GAAP and year guidance was revenue year. increase GAAP our in hardware year-over-year or and XX.X% on in was year $XX $XX.X or to for million cinema quarter for reflects pre-pandemic year. was a non-GAAP revenues was million of $XXX.X or basis, basis XX% on were Products a business year Full of a exited about of QX. fiscal XX% in in $XX Income to operating products year. basis early basis XXXX QX GAAP tax was GAAP and GAAP a XX.X% basis fiscal full on year XX.X% revenue basis QX end million million our last revenue $XX.X million of The quarters in basis. a the which $XX to included on in revenue million in Beyond in XXXX. low about cinema $XX to were XXXX Operating services $XXX basis fourth licensing, million related $XXX.X

million income a $X.XX diluted year. or share the per non-GAAP diluted to true-ups. last $X.XX share return rate items, to fourth QX. per income in GAAP Net $X.XX was year's diluted in share $XX.X was last compared of from or million $X.XX including per basis the in in on QX per basis compared tax quarter or quarter fourth on share diluted or of discrete benefited a million million $XX.X a Our $XX.X number provision Net $XX.X

quarter. $X.X we investments. quarter, operations last billion in million to generated the from fourth generated the compared year's During and fourth cash fourth in quarter We about million ended cash with $XXX in $XXX

quarter, our shares available repurchase about and million about ended authorization of going $XXX the we forward. During stock fourth million one bought quarter stock back of common the with

on or also The We per compared to be XX% December shareholders November cash of announced XXXX, of $X.XX a record XX, X, quarter. to an increase XXXX. $X.XX share, of dividend today prior the on dividend will payable

this, billion in Now fiscal result We billion X% which This could let's XXXX. $X.XXX fiscal XXXX. X% in the in to revenue to to in XXXX as $X.XX turn fiscal could billion $X.XXX Within for $X.XX licensing range guidance X% to currently to XXXX, result year billion. to total year-over-year X% a compared revenues estimate growth range year-over-year billion year year billion fiscal of about would compared from $X.XXX growth. $X.X from would to

I expect Dolby mobile, increased increasing earlier, growth revenue Cinema offset partially due well as extent, Dolby our for markets referenced and discussing end Dolby in a and foundational to our other PC adoption growth Atmos patent by broadcast, of and audio programs, strong growth revenues. lower as we to As revenues imaging our Vision by market, gaming in in and lesser

in and year with products Dolby.io. fiscal we relatively range growth services cinema products fiscal $XX Gross for and to year year million $XX for be consistent expected to improvements XXXX XXXX, fiscal margin with from this could in For XXXX. million anticipate revenues, are

shift operating me Let expenses. to

We have expectations. impact that several year-over-year our factors

in is an XX-week payroll for First, QX. us week year results fiscal extra a in of fiscal XXXX that and

return effect typically in also during we that will like mentioned, go that normal addition lower some expenses Kevin As to in events pandemic, in QX. merit travel annual see were a fiscal of and the increases

Lastly, areas Vision, Dolby.io. to we in continue Atmos like and Dolby Dolby invest

to non-GAAP from factors and million on estimating of year share for $X.XX to million a operating will to between a on remains $XXX margins model basis. and business all full between on to we earnings With we basis the are $X.XX strong XX% $XXX non-GAAP range on GAAP basis. operating fiscal million on estimate our between we range above, from $X.XX deliver XXXX a million very a expenses to XX% could Based per $X.XX non-GAAP basis. and a expect With basis diluted a $XXX this, GAAP these GAAP to as on that considerations, XX% and basis XX% on $XXX

that Let we me shift translates to to for how see what QX. fiscal

volatility see $XXX ranging and $XXX the could that, that from the from licensing million. will year's year million. our from $XX Within and prior Note conditions larger to Dolby million significant to revenues during given and million Vision total growth under QX, For pandemic. QX than from $XX favorable a Last to programs. products that of range of Dolby increasing QX the benefited in partially revenues $XXX for contract. QX offset Atmos revenue also revenue was patent was services true-up range imaging in and from million over adoption we timing million. of QX, we recoveries of million $XXX benefited fiscal $XX This XXXX shipments by normal,

on first $X.XX million, is And $X just million projected to projected GAAP GAAP GAAP the our effective basis on queue million. of move to Operating $XXX $X basis. million and first tax XX-week QX on basis. a diluted up the basis year. million on is income which per a from combination fiscal QX a both let's contemplates range outlook $XXX the is be factors $XXX Operator, $X.XX on Based you the to to question. QX on million XX% rest non-GAAP the impact rate are the from non-GAAP of and a estimate basis share range from is $XXX range to be we covered, quarter. that, please non-GAAP in XX% to estimated for expected I that the on from are to $X.XX a for XX%. to and range could GAAP on to expenses estimated to the margin of XX% margin expenses a from about to gross from XX% on QX in QX non-GAAP P&L to estimated Q&A. $X.XX can earnings me for to XX% Operating to to basis Let range With move QX. gross the to Other

Operator

Instructions]. [Operator

William Schackart first The of the Ralph line question Blair. with is from

You may proceed.

Ralph Schackart

for I audio is Thanks XXXX for helpful. disclosure. called afternoon. question. I digits. question on guide first the thanks in revenues. single Good low think FY guess Kevin, for the taking Very revenue for a And increased decrease the you foundational

into curious unit-based maybe be is? that's cetera of guidance? and I macro factored shortages, of if guessing sort chip might on which just there, environment portion that and broader am impacting et sort Just of with that a commentary how the it the

Kevin Yeaman

Ralph, about say I observed, as still I can the we by I start when you environment, guess reports shipment unit the the with forecast, Yes. that as would you most estimates, macro know, it it's And dynamic. we analyst say industry and vary does category. device

Some little up. are a

timing with consumer uncertainty spending. flattish down. than are chain a characterize as the of that single we of the did larger a of that around digits the lapping people is, year. and slightly we down noting reason this in why it year little and also normal best The year of just lot from kind contract have QX our crossed last a that's are particular had might Overall, that estimation Some we then supply we true-up

that given to So unit things. the environment those more sensitive of kind flattish, a little is it's

see So we that that on lot devices also a low we this a across dating and back back had lot growing geographies. single a When pandemic, of It's strong XX% But low I the want this it's Ralph, growth It's different average. digits. of foundation. year, different to sure forward, couple last clear single it's years, really you several make look a across before to diversified is could digits. we year see going of years

couple these And kind And we it's have going dynamics. given individual any it dynamic. that's obviously, And of so at year, years last how particularly forward. be to on these going based in been of look

Ralph Schackart

I then appreciate Dolby.io opportunity And tonight. Great. you the framing for us

On self-serve about seeing think increase also and the you I talked and some API improvements call, activity. some features the in increasing then

limitation to a guess, of further just adoption? I some some sort enhancements functionality product going adoption that had been curious the see forward? drive to necessary of, Or Just is that features you or

Kevin Yeaman

Yes.

I this. think I like would frame it

been As has now, know, right. market months you about XX Dolby.io for, in like,

to spatialize and day. into these focus use into APIs media a were improving first differentiated, improving able value were that couple to simplify getting improve of lot highly quality, I voice. Phase communications audio I if So us was tended and X a all on where we the that They gave are that there confidence to we able we would across of to being out phases, our is that world. every capture, being And a services to applications say

time, lot that and we usage, specifically we to and how get lot users learned And a cases to whether a audio are and to major passive do maximize people want active use it's to to the get scale many a video, that. about and speakers. we During learned support had that as July know, around update or we in for also need you we

We have to that. continued actually now advance

in differentiation. a also have We lot more terms of added

raise that cases have scale customers couple tested in we that a So and of the kind release introducing learned differentiate and we of out where today. that fact, continuing to in position on to think, new it we like now great are we Ralph, few use now, in quality. that are usage and to customers been has have, today, we the have some of they their And we market major a what schedule we are compete have getting continue very rolled a and weeks ago, and the we expanded to is we the have would during a feel robust features of bar on even have characterize way our existing months and that feedback I we I it's all that for and

have so see So begun yes, more take some self-service recently, of that activity. the we to form exciting really

now she's As about, focused you of a increasing and all brought the addition know, leader increasing in building, And pipeline. focused awareness, talked onboard to the end June. we just really on we towards roadmap things on new really the the being

what's So we about ahead. excited are

Ralph Schackart

asking that, the love company for any how But be calendar foundational if would seem quick or side Vision or on Thank your more One might just on earnings I any or It benefit guess, Great. technologies? be other one, could. and Kevin, QX thoughts it metaverse. the without like the doesn't from they you. Atmos I complete call

Kevin Yeaman

even think roadmap it's certainly I is about the closely after is where are that, that and experience which the mean all, first the by going that extension, take Dolby. our of with. Dolby.io developers, engaging And maybe I I build they virtual more metaverse. with developers like and and that many forms. well, of are guess, takes, there's creates define we by I that cases and start But would can think But we that it across watching as something an some opportunity what is think themselves certainly we see as I audiovisual both immediately doing the ultimately, I with experience. it because opportunities come metaverse, likely environments that, and use Dolby.io the think Sure. in can team form foundational guess I of and audiovisual saying the across we an as

Ralph Schackart

Thanks Great. Kevin.

Operator

Colliers. the with question The line from of is Thank Frankel you. Steven next

Steven Frankel

Good for the afternoon. opportunity. Thanks

slipped You never guys, that in I before, something that a have your contract about the year. of Dolby said fiscal quarter and the new into this notion talk out script, of heard

think what tell we wonder about I it? should could about So that us how you and

Kevin Yeaman

Yes.

then you first things do have reports royalty revenue of vast all, from the as know, Steve, on reported, But revenue we of from our up majority So are like trued that estimated quarterly recoveries. royalties based comes quarterly. and

might contracts revenue when to are fiscal those are once at things have a a there's why recovery we usually yes. lot or have minimum have And like means We payments one of they cross reasons in And payments that year, but we least just are shift of periodic forecasting year, our periodic. that happen one which that this commitments, timing. could

Steven Frankel

Or Okay. year? given it end where shift revenue it's later landed, And does QX up that to going into in QX? the

Kevin Yeaman

lapping things it see recovery One, of year. contract in QX And timing from some QX estimates range true-up XXXX. couple are there certainly we that as QX. to payments. We those FY and that in as relates benefit last remember going of well. did highlighted last we year we larger-than-normal the year, the that last And from it included a had our It's on of of for

So in year. you the jump that's to why last trend are compared seeing the QX

Steven Frankel

am judge markers Okay. to? lay How outsiders, supposed hoping you Shifting look we, could of us fiscal .io. out for could as to some in I that to over io maybe we are the success XXXX.

Kevin Yeaman

Yes.

about very So cases, significant set use where I while I of first can bring talked we the io today to use we really broad foremost, and about cases I would say, be think differentiation. that Steve, can a talked applied

And do experiences watch more would then talk number rate. with focused run we include look those to to a specific developers, active I of within metrics time, developers likely about to you. And over for course, to revenue So verticals. I of would that's ability bring and our look share

not there are We yet.

great would on So meantime, to focus bring to in experiences the I ability light. our

Steven Frankel

was some the are the pace to where it going. as quarters. quarter last a for insight given Maybe And Okay. share significant few of you bodies hiring could those

Kevin Yeaman

Yes.

initiatives. One So relates relates tell to is one Atmos And Vision. it as as you two it and growth the script, as to things. our is, from certainly, can

We kind fallen hiring it. we also like we a on are worked it pandemic, I focusing making and as gaming, Dolby.io. we music, catch of a that last did during to progress would context behind we on on probably in had manage bit like are bit where like the And in I is the also focusing a think of across quarter, up are little little say automotive. lot

Steven Frankel

we of one, holiday terms in last do think season where you the then Vision licensing market the is another head into market XK share? And Okay. the as share in

Kevin Yeaman

Yes.

XX% We TVs, about adjust that arrears. which the screeners XX%. numbers between of I percent learned are for we market. focus and because will think range XK a have So I on XX% their are And of at we think learned have the we and about give TVs, to

we in XXXX up the PC of remember note, a other to mobile, move last around still to so I from And year. have would XX% a Dolby my coming lot quickly. be where in outside our that catching that ecosystem. up pretty TVs also Apple on That's cases XX% XK Vision XX% bit. and of little from in will will And use is and number Steve, that number Atmos Dolby growth

the to at relates We are pretty PC. still stages as early really it

last saw we that Dolby probably playback added with quarter. You only Vision

of So we that's about. we I talked kind how see that. guess But I would,

go sorry, ahead. So

Steven Frankel

And state And would world of then the screen given for as XXXX? new the the discussions one in new around today? signings about other slip in is, up in opened any stands only what's backlog comments the the now I slate where cinema the especially year, last the

Kevin Yeaman

expect Dolby revenues would the scheduled. Dolby to see, We Yes. formats it But box I and of the number than still a office pre-pandemic years. be than do mean, in office return Cinema and in are new general a we We expect some we of higher fact lower premium have growth openings Cinema the premium also from the to garnering just format that pre-pandemic. share box course,

Steven Frankel

Great. you Kevin. Thank Okay.

Kevin Yeaman

and I Steve, Vision. Atmos one second back to the come if And could to add

attaché rats. about TVs and specifically asked You

which the do foundational from And that a that see is that a TVs, is believe and Atmos, as the imaging category a rates as revenue stepping having approaching think it, driver. to be little category So et we back the patent on that way cetera. just quarter currently thinking high is that you growth attach portfolio, licensing of Vision, today. about the about revenue, as of give potential combination I Dolby Dolby bit a the of We

Steven Frankel

you. helpful. Well, that's Thank really

Operator

Thank you. JPMorgan. the line next question Chung Paul is of The with from

You may proceed.

Paul Chung

Hi. for taking my Thanks question.

So Mercedes. you are really on particularly the at just Atmos, in starting at high-end here auto,

how the see given speakers? adoption in per the then particular? right per first That's opportunity Are across And So seeing expect multiple kind Or the further OEMs? to way higher with the to about this of do be car discussions kind auto about Mercedes? do you other you of of accelerating it we side? is car Will question. think kind like ASP think

Kevin Yeaman

Thanks. Yes.

are excited the about automotive opportunity. We

terms people high demos right now, are experiences right. ability in demo automotive that our of Atmos you are our think, on very music yes, and list. I our And wow to

We are that. in high-end some with wins starting and cars

it's what we So I that as to whether to context, always, have end with start and done the like Vision in are any see right, Atmos do, we that's the music higher Atmos course, think experience usually, But models. as with we everything a make of looking going be at of go ASPs, Dolby into enjoy music you pattern do aren't circle automotive the to yes, which our while higher average. a question, broadly higher, And in their your quite bit we amongst available we people specific across other experiences. and that all the ways another anticipate to to than entertainment back would going the still Dolby

Paul Chung

And into some music And generating the streaming And on been Atmos kind Music? feedback point? the will translate of interest at that then eventually streaming from Apple what's at is over other that auto side, demand large services?

Kevin Yeaman

Yes. I social our reviews from and from from can consumers. you strong. And the media out Well, has think, see there and partners, really from the been from artists response artists the consumers, posts

about I did And saw also activities excited last potential quarter, it's helped or the in other reception that's, really from generates partners, are raise that We we OEMs. marketing am interest whether awareness. some and engage that sure to of just you the momentum. And course, services which great

that's kind and interest forecast and where part the our have one the are that of we reasons we execute that's to many growth revenue. generates in to are why are So yes, of go of we able that

Paul Chung

be did hear million I on Did of is from I correctly correctly? to And $XX revenue, that product contribution it's that you. contribution, that million, io the business? Got you And to hear how included going the $XX in there? io much

Robert Park

considered and service. services. sitting Paul. Robert Yes, Hi It's It's Park. a products it's in

And we break it licensing. as included it's out include or separately. it not enough, it's will big when So

Paul Chung

Okay. me. Go from And then question ahead. last

Kevin Yeaman

No. That's okay. Go ahead.

Paul Chung

Yes.

op always So which in discretionary to guidance see. margin free some pretty again flow and year, on spend. and strong suggests record back nice of OpEx come earnings, is kind this cash primarily despite hit your revenue And a profitability

should of then will and the over years, we So on can increasing as cash generation be past given et some Thank then well? aggressiveness you cash XXXX the And strong up and expect you. we couple cinema free buybacks in flow other build, CapEx expect cetera? cash on pretty more free investments? flow balance more any And

Robert Park

one the QX. quarter, million last will increase I buybacks. on buyback the the Yes, this We start did with $XX versus

and our the the a least window also to we to back shorter cash we bought of authorization, And shareholders impacted intent our buyback. provides opportunistic. dilution represents it of we do to with it will with kind expect an terms saw and and buybacks of be focus balanced You that's continue to want have $XX in offset what continue million return $XXX a by to we at to But we continue opportunity allocation. remaining, million, capital to

be the for business. are also for expected fiscal to than were investing But expenditures in the XXXX capital year they much are different not We XXXX.

Paul Chung

Great. Thank you.

Operator

The next Thank from of Barrington line is question Goss Research. you. the Jim with

may proceed. You

Jim Goss

in elements were operating roughly what terms be of guidance you was three The operating we would of in. wonder to think growth Good in where categories? expense it $XX afternoon. in that if a above the I key category might sort I million budgeting the relative down expense major quarter break the

Kevin Yeaman

are Good our we step the that Yes. first about and back off, If at architecture of margins midpoint guiding I operating have, and the we model XX%. think I question.

That So impact, of the stronger given fiscal North try operating our operating kind revenue year healthy number XXXX. maintain OpEx, pre-pandemic which driving Star increase margins. a in in to said, a the just the there factors and margin, than that we our of have, are that's is our

I .io, have the into extra like which part adds go focal am year we course rise in is Also, partial the also and of And in year an are of travel, into our of third of this we the year and the like rent. gaming But for the areas particularly were others. investments depreciation which during here, cars. fiscal rebalance like think the week First, a Atmos, XX-week increases our events, expenses payroll, facilities that a QX, increase. is effect really hampered routinely annual return and we Envision, us, then pandemic, expenses most that impactful item expending

the think for growth. sure a making approach and innovation balanced to future both it's I invest we in So

and $X by is you $X extra that between Just week XXrd million million itself. not know it's small,

Jim Goss

are get or Okay. of as maintain relationship That's the does good. had? of it's And sort this within those that expenses, go pursuing bigger smaller growth? sort R&D does you Or

Kevin Yeaman

It's grow of business. growth going commensurate to the the with

So investing going in yes, absolutely. to are R&D, continue we

Jim Goss

is be of Okay. know the don't you have growth be of about about some would in makes to category roughly out heard talk way, sense, of And of ask course. technologies. share I what if foundational Could quite then a versus same to foundational category? the you frame in elements. total how that And lot would would major categories like the deem the of other it by represented the I terms I it you but what be

Kevin Yeaman

Yes. Sure.

really this what of to revenues. the of there of grouped that licensing And our adoption grouping So a revenue. segments three-quarters of we of high licensing as revenue, have technologies that is across as tend a is our have rates foundational can percentage think ones are broad it about roughly. and you really

And people AC-X, growth techniques the year. licensing this the is then And well. and looking is growth into would Cinema approaching seeing from like patent are as And and are assigned over versus is elements, and some Dolby those to Plus, the of foundational XX% there to at Dolby process where XX% the management that, And tying that revenues people accelerating So it the we all audio just year Dolby last Or areas? our management Dolby Digital Atmos, same? patents. include rates our Vision different the different portfolios. imaging XX% this is that's

Kevin Yeaman

We organized way. that not are

way in attach a our one I the large understand grow construct It's a that think We are while hand, are there's always foundational, important categories And high base it's to to revenue sharing drivers. which on our we Because looking regard. have of that into. you helping that really as we with rates.

of unit shipments, So it's we licensees new what's that new of our all kind driving overall more Dolby the dynamic around our are that's about Organizationally, have talking imaging are have offerings the those who the Dolby about with Atmos, been like selling patent wins portfolios Vision, what's and people and sensitive whereas we growth. much all things. to happening the

are of engineers have engineering things. those that We all

more specific might would people lot one A be one thing. than across to Some thing. be people of

this about really think how understand forward. a is to growth way So to revenue drivers going our

Jim Goss

All Kevin. right. it appreciate I Thanks

Operator

it additional are Instructions]. remarks. back over Yeaman Kevin no There will [Operator I now to closing for questions. pass

Kevin Yeaman

joining to next Great. updating you look today. Well, Thank quarter Thank you throughout we the quarter. you, thank for and seeing for again everybody, us questions and you forward you. the

Operator

and have Thank you call. great day. conference today's a concludes That

Dolby Laboratories (DLB) 17 Nov 212021 Q4 Earnings call transcript