Ladies and gentlemen, thank you for standing by. Welcome to the Dolby Laboratories Conference Call discussing Fiscal Second Quarter Results. During the presentation, all participants will be in listening-mode only. Afterwards, you will be invited to participate in a question-and-answer session. As a reminder, this call is being recorded on Thursday, May 5, 2022. I would now like to turn the conference call over to Ashley Schwenoha, Senior Manager, Investor Relations for Dolby Laboratories. Please go ahead, Ashley.

Good afternoon. Welcome to Dolby Laboratories second quarter 2022 earnings conference call. Joining me today are Kevin Yeaman, Dolby Laboratories CEO; and Robert Park, CFO. As a reminder, today's discussion will include forward-looking statements, including our third quarter and fiscal 2022 outlook and our assumptions underlying that outlook. 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 the extent of the continuing impact of COVID-19 and related shutdowns, ongoing supply chain issues, and geopolitical instability on our business. A discussion of these and additional risks and uncertainties can be found in the earnings press release that we issued today under the section captioned Forward-Looking Statements as well as in the Risk Factors section of our most recent Quarterly Report on Form 10-Q. Dolby assumes no obligation and does not intend to update any forward-looking statements made during this call as a result of new information or future events. During today's call, we will discuss GAAP and non-GAAP financial measures. A reconciliation between the two is available in our earnings press release and in the Dolby Laboratories Investor Relations data sheet on the Investor Relations section of our website. As for the content of today's call, Kevin will start with a discussion of the business and Robert will follow with a recap of Dolby's financial results and provide our third quarter and fiscal 2022 outlook. So with that introduction behind us, I will now turn the call over to Kevin.

Thank you, Ashley and good afternoon, everyone. The quarter came in above the midpoint of our guidance on both revenue and non-GAAP EPS, and we continue to gain wins with Dolby Vision and Dolby Atmos and build momentum with Dolby.io. At the same time, we are operating in an increasingly uncertain environment and we are reducing our full year outlook to reflect the impact of lower estimated TV, gaming, and automotive shipments for the year. Robert will take you through the details in a few minutes. While the environment is dynamic, we have a durable business model, a healthy balance sheet, strong cash flow, and confidence in our long-term growth prospects. We have established a prominent position in the entertainment ecosystem and remain steadfast in our belief that people want to have the best quality experiences. We continue to see Dolby Vision, Dolby Atmos, and our imaging patents growing at a rate of over 35% on the strength of adoption across a broad range of use cases. There is much opportunity ahead with Dolby.io as we empower developers to create immersive experiences and raise the bar on quality. Let me start with foundational audio, which represented about 75% of our licensing revenue last year. With its deep adoption across devices, our foundational audio revenues are more heavily impacted by macro trends. We came into the year expecting foundational audio to be down low single digits and are now expecting year-over-year declines in the high single digits. This is due to lower TV shipments which we are now estimating to decline mid single digits globally and even larger declines in North America and Europe coming off strength in those regions last year. Additionally, supply chain issues have continued to weigh on gaming and automotive which has resulted in lower unit estimates in those markets. In the near term there are still many uncertainties that are limiting our visibility, including COVID-related shutdowns in China, the war in Ukraine, and ongoing concerns around supply chain and inflation. At the same time, we are well-positioned for the long term. Dolby has an enduring licensing business with a high-margin profile, strong profitability, and consistent cash generation. This business is diversified across a broad range of consumer devices with our foundational audio technologies included in many of the devices that people use to consume audio and video content. The expansive and growing amount of content available in Dolby combined with broad adoption across content distributors and devices puts us in a position to provide long-standing value, making for a durable business. Over the long term, we expect foundational audio to track roughly in line with market demand for the consumer devices we serve. Dolby Vision, Dolby Atmos, and our imaging patents, which represented almost 25% of our licensing revenue last year, benefit from these same valuable characteristics but with greater opportunity for growth ahead as they are earlier in their adoption cycles. We continue to increase the number of ways people can enjoy Dolby experiences through music, gaming, and live content. With over 400 studios in over 40 countries designed for recording music in Dolby Atmos and another 200 slated to open soon, it is now easier than ever for artists and producers to create immersive tracks. With an increase of music available in Dolby Atmos from new recordings and re-releases, Apple Music has stated publicly that plays in Spatial Audio tracks with Dolby Atmos have quadrupled since September. As music and Dolby becomes even more prevalent, we strengthen our core proposition in areas like mobile, PC, and automotive. In gaming, PlayerUnknown's Battleground Mobile, commonly known as PUBG, one of the most popular mobile games today, now supports Dolby Atmos. In live content, Disney Star will now broadcast Indian Premier League cricket with Dolby Atmos. Naver has launched Naver Shopping Live with Dolby Vision, the world's first Dolby Vision capable live commerce content. Dolby Vision's ability to capture and reproduce ultra-vivid colors and detailed textures, gives consumers a more realistic shopping experience online. With new content experiences, we are creating additional value to our partners and consumers and adding reasons for deeper adoption within devices. The growth of Dolby Vision and Dolby Atmos is evident with adoption from new customers and deeper adoption from existing partners. The combined Dolby experience is making its way into TVs of all sizes, with LG debuting the world's smallest OLED TV at 42 inches and Xiaomi launching a 100-inch model, both highlighting Dolby Vision and Dolby Atmos. We see new models of TVs and sound bars from several partners. In mobile, Vivo has launched their first tablet with Dolby Vision and Dolby Atmos, the first Vivo product to include the combined experience. We also see an increase in gaming-specific devices adopting Dolby experiences, including Lenovo's Legion gaming line with Dolby Atmos and Dolby Vision, and Xiaomi's gaming edition smartphone with Dolby Atmos. New phones and tablets from Oppo, Samsung, and realme launched this quarter as well, all highlighting Dolby Atmos. We are excited by the momentum of adoption and the opportunity still ahead of us. Now I'd like to turn to our developer platform. Our goal for Dolby.io is to be the destination for developers that want to build the most immersive online experiences. We offer the capabilities to help them create those immersive experiences with tools like high-quality audio and video capture, sound specialization that feels more lifelike, and delivery of live-streamed content at scale in ultra-low latency to massive audiences. Ultimately, we believe that quality matters everywhere and Dolby.io has applicability across all verticals. In the near term, we are focused on those in which quality of experience is top of mind, such as virtual live performances, online and hybrid events, gaming, premium education, and content creation and production. For example, we are talking to many customers who are building virtual worlds for gaming platforms, for music concerts, and live performances, creating new ways for people to collaborate for business and brand engagement. These customers are excited because we have the tools to infuse those virtual worlds with high fidelity, audience interaction and participation, and amazing content. A great illustration of this is a virtual event platform built with Unreal Engine that is integrated with Snapchat to bring the user's Bitmoji into an immersive environment. OS uses Dolby.io to stream concerts to viewers on Snapchat allowing them to interact with their avatars in real-time. We are working with other companies who are building immersive work environments, allowing business people to create their own avatars in staged meetings, events, showrooms, and training sessions in a virtual space, all of which can be enhanced by Dolby.io. Koan Interactive, for example, designed interactive experiences for brands. With our Spatial Audio, their customers can network and share insights with a more natural and realistic feel, similar to being in a live conference room. The possibilities of these types of interactions are endless, and we believe that Dolby.io has a key role in making them the most high-quality immersive experiences possible. We are encouraged by the discussions we are having with existing and potential customers. With an estimated TAM of $5 billion and growing, we are excited about the opportunity ahead and its potential to significantly contribute to long-term growth. To wrap up, we continue to operate in an uncertain environment impacting primarily our foundational audio revenues in the current year. At the same time, we are well positioned for the long-term. We are still seeing strong growth of Dolby Atmos and Dolby Vision as they are adopted deeper into new devices and content, giving consumers the most immersive entertainment experiences. We are excited about the opportunity ahead with Dolby.io and our ability to help developers create high-quality experiences through apps and services. All of this gives us confidence in our ability to navigate near-term headwinds and drive revenue and earnings growth into the future. With that, I'd like to hand it over to Robert to take us through the financials.

Great. Thank you, Kevin. Good afternoon, everybody. Let's get right to the numbers for Q2. Total revenue in our fiscal Q2 was $334 million, which was above the midpoint of guidance and included a negative true-up of about $2.5 million for Q1 2022 shipments reported that were below the original estimate. The negative true-up was primarily in foundational revenue in our broadcast market for TVs, which was approximately $11 million below our Q1 estimate, and to a lesser extent in our gaming market. These negative true-ups were partially offset by a favorable true-up in CE and PC. On a year-over-year basis, second-quarter revenue was about $15 million higher than last year's Q2, as we benefited from the strength in PC and CE, along with improved results for Dolby Cinema and our cinema products business. These increases versus the prior year were partially offset by lower units in TV, which are down more than 15% compared to last year's Q2 in North America and Europe, along with negative true-ups in broadcast, gaming, and automotive. Q2 revenue was comprised of $313.8 million in licensing and $20.5 million in products and services. Let's get into the year-over-year trends in licensing revenue by end market. Broadcast represented 33% of total licensing in fiscal Q2. While broadcast revenues of $104.5 million were essentially flat year-over-year, foundational revenues were impacted by a negative true-up for TVs coupled with a lower estimate for TV shipments for Q2. These factors were offset by higher adoption of Dolby Vision and Dolby Atmos TVs and new licensees on our imaging patent programs. Mobile represented 21% of total licensing in fiscal Q2. Mobile revenues of $66.1 million were essentially flat year-over-year, as new licensees and our imaging patent programs and timing of revenues under contract were offset by lower recoveries and a negative revenue true-up. As we stated on the last call, we expect our mobile revenue to grow mid-single digits in fiscal year 2022, which I will cover in more detail in a few minutes. PC represented about 18% of total licensing in fiscal Q2. Our Q2 PC revenues increased by $6.4 million or 12% compared to prior year Q2. This increase was driven by increased Dolby Atmos and Dolby Vision adoption, along with higher unit shipments. Consumer Electronics revenues of $54 million represented about 17% of total licensing in fiscal Q2. On a year-over-year basis, Q2 CE licensing increased by approximately $5.7 million or 12% driven by higher foundational audio revenues for DMAs and soundbars as well as higher recoveries. We also saw growth from higher adoption of Dolby Atmos and Dolby Vision in soundbars and DMAs. These favorable factors were partially offset by the larger true-up in the prior year. Other markets represented about 11% of total licensing in fiscal Q2. They were down $1.8 million year-over-year, as lower foundational revenues from gaming and automotive due to the ongoing supply chain constraints were partially offset by higher revenues in Dolby Cinema. Beyond licensing, our products and services revenue in Q2 was $20.5 million compared to $16 million in last year's Q2. The year-over-year increase reflects ongoing improvements in the cinema industry globally. Total gross margin in the second quarter was 89.4% on a GAAP basis and 89.9% on a non-GAAP basis. Operating expenses in the second quarter on a GAAP basis were $255.5 million compared to $204 million in Q2 of the prior year. This year-over-year increase was driven by a few factors. We recorded a $34.4 million expense, reflecting a settlement and related accruals in connection with a commercial dispute involving agreements that we assumed in a 2014 acquisition relating to our cinema products business. This is a one-time item and we expect this will fully resolve this matter. We also booked a $5.2 million restructuring charge in Q2 comprised of severance and related benefits as we adjust our resources toward areas where we see the largest opportunities along with changes related to the exit of a lease facility. Q2 2022 also saw higher salary costs from increased headcount and annual merit increases, along with increased marketing spend. Operating expenses in the second quarter on a non-GAAP basis were $187.2 million compared to $170.4 million in the prior year. Non-GAAP operating expenses increased year-over-year due to higher salary expense from more headcount, along with our annual merit increases and increased marketing spend. Operating income in the second quarter was $43.4 million on a GAAP basis or 13% of revenue compared to $83.2 million or 26% of revenue in Q2 of last year. Operating income in the second quarter on a non-GAAP basis was $113.3 million or 33.9% of revenue compared to $110.9 million or 34.7% of revenue in Q2 of last year. The income tax rate in Q2 was 16% on a GAAP basis and 17.3% on a non-GAAP basis. Our GAAP tax rate benefited primarily from discrete adjustments for the settlement charge and, to a lesser extent, stock-based compensation. Net income on a GAAP basis in the second quarter was $36.7 million or $0.36 per diluted share, compared to $76.2 million or $0.73 per diluted share in last year's Q2. Net income on a non-GAAP basis in the second quarter was $94 million or $0.92 per diluted share, compared to $94.8 million or $0.91 per diluted share in Q2 of last year. During the second quarter, we generated $63 million in cash from operations compared to $83.5 million generated in last year's fiscal Q2. We ended the second quarter with about $1.17 billion in cash and investments. During the second quarter, we bought back 1.1 million shares of our common stock, an increase of almost 50% from last year and nearly 175% from last quarter, and we ended the quarter with $421 million of stock repurchase authorization available. We are expecting higher levels of buyback in the second half of the year through a 10b5-1 trading plan. We also announced today a cash dividend of $0.25 per share. The dividend will be payable on Wednesday, May 25, 2022, to shareholders of record on Tuesday, May 17, 2022. Now let's discuss the outlook. Let me start by saying there is increased uncertainty in the current environment. Many of our partners have highlighted this increase in uncertainty and are not providing guidance, which makes it even more challenging to correlate our outlook to what they're saying in the markets they serve. Given the ongoing implications of the pandemic in Asia, and particularly the shutdowns in China, geopolitical instability in Europe, supply chain constraints, and inflationary concerns globally, our visibility into what our customers will shift is very limited, making it much more difficult to provide guidance. We'll be providing a scenario on what the full year could look like and certain factors assumed in key markets and a high-level estimate for Q3. The visibility challenges mostly impact our foundational audio revenues as these technologies are more broadly adopted across a wide range of products. For certain device categories like TVs, we are anticipating even larger year-over-year declines with global shipments expected to drop mid-single digits for the year and at even higher rates in North America and Europe where our tax rates are much higher. In addition, the supply chain issues from gaming consoles and autos are extending further into the year than previously anticipated. That being said, we still anticipate total licensing growth in fiscal 2022 will be driven by Dolby Atmos, Dolby Vision, and imaging patents across all end markets with year-over-year growth in excess of 35%. With that as a backdrop, we estimate fiscal year 2022 total revenue to come in between $1.3 billion and $1.35 billion. This would result in about a 1% to 5% year-over-year growth as compared to the $1.28 billion in fiscal year 2021. Within this, licensing revenue could range from $1.221 billion to $1.265 billion, compared to $1.214 billion in fiscal year 2021. We are reducing the expected year-over-year growth for our other markets category to 15%, primarily due to the ongoing supply issues in gaming and, to a lesser extent, auto. All of which are negatively impacting our foundational revenue, offset by growth in Dolby Cinema. Our PC market revenues are expected to grow high single digits, while mobile markets revenue are estimated to grow mid-single digits. Both PC and mobile growth will be driven by Dolby Atmos, Dolby Vision, and imaging patents. Our CE market is anticipated to be up slightly year-over-year again due to Dolby Atmos, Dolby Vision, and imaging patents. Broadcast revenue is now estimated to decrease mid-single digits as growth from Dolby Atmos, Dolby Vision, and imaging patents is more than offset by decreases in foundational revenue, particularly in TVs due to lower shipments that I mentioned earlier. Products and services revenue are still estimated to range from $75 million to $90 million for fiscal year 2022 with improvements in cinema products and growth of Dolby.io. Gross margins for fiscal year 2022 are expected to be relatively consistent with fiscal year 2021. With the one-time charges in Q2, GAAP operating expenses for fiscal 2022 could now range from $905 million to $925 million. On a non-GAAP basis, we now expect operating expenses to range from $745 million to $765 million. Given these changes, we now expect to deliver operating margins between 19% and 21% on a GAAP basis and between 32% and 34% on a non-GAAP basis. We expect other income to range from $3 million to $4 million for the year. Our effective tax rate for the year is projected to range from 16% to 18% on a GAAP basis and 17% to 19% on a non-GAAP basis. Based on the factors above, we now estimate that the full year diluted earnings per share will range from $1.98 to $2.48 on a GAAP basis. On a non-GAAP basis, full year diluted earnings per share is estimated to range from $3.27 to $3.77. Let me now cover a high-level scenario of what Q3 could look like. Determining the revenue split between Q3 and Q4 is difficult for the factors I mentioned earlier, as well as timing of recoveries and revenues under contract. That said, for the Q3 scenario, we estimate total revenues ranging from $285 million to $310 million. Within that, licensing revenues could range from $270 million to $290 million. Q3 products and services revenues could range from $15 million to $20 million. Q3 gross margin on a GAAP basis is expected to be 89% plus or minus, and the non-GAAP gross margin is estimated to range from 89% to 90%. Operating expenses in Q3 on a GAAP basis are estimated to range from $214 million to $224 million, and operating expenses in Q3 on a non-GAAP basis are estimated to range from $185 million to $195 million. Our effective tax rate for Q3 is projected to range from 19% to 20% on a GAAP basis and 18% to 19% on a non-GAAP basis. Based on a combination of the factors I just covered, we estimate that Q3 diluted earnings per share could range from $0.28 to $0.43 on a GAAP basis and from $0.54 to $0.69 on a non-GAAP basis. We believe there is further uncertainty and risk in the current environment, but it is difficult to quantify at this time. We felt it was important to convey estimates and assumptions for the remainder of the year based on the best information currently available. While we are seeing short-term external headwinds in certain markets for our foundational revenues, we continue to see strong momentum in our Dolby Atmos, Dolby Vision, and imaging patent program revenues and are optimistic about our Dolby.io growth opportunity. Taking a step back, the fundamentals of Dolby's business remain consistent: a sticky diverse customer base across a large set of devices where our technologies provide value over decades, high gross margins, operating cash flows, and a strong balance sheet. With that, let's move on to Q&A. Operator, can you please queue up the first question.

Thank you, ladies and gentlemen. Our first question comes from Ralph Schackart from William Blair. Please go ahead—your line is open.

Good afternoon. Thanks for taking the question. Just on the revised outlook, I just want to make sure I'm clear on it. It sounds like you had supply chain or continued supply chain headwinds for auto and gaming. So that, I guess, is sort of makes sense. But just on TV, how much of that revised outlook is due from, I guess, supply chain, and/or just TV prices increasing significantly year-over-year? And how much of that was potentially pull through from what we saw during COVID? Any color on the broadcast side would be helpful.

Yes, Ralph. Of course, there are a number of factors and we can't necessarily draw a straight line to any one of them. I wouldn't say we have many indications that TV is supply chain driven as gaming and auto. But of course, there was a good bump in the second half of last year, particularly in North America and Europe. So part of it could be coming off the other side of that. In general, it's an uncertain environment, so all those factors we talked about are contributing. But at the end of the day, the lower outlook reflects our view is what the year now looks like in terms of TV volumes.

Okay. Thanks. And then just—this is a tough question. But how much perhaps do you think your growth in new technology segments or new products such as Vision, Atmos, and imaging patents could be constrained due to supply chain uncertainty, or if one of your OEM doesn't want to launch new products? Just kind of curious if there's any sort of constraint on that near term as a result of the macro headwinds.

Well, I guess I would start by pointing out, Ralph, that we still expect to see 35% or greater growth in those areas. And that doesn’t mean that they're completely immune to all of these uncertainties. What it does mean is that, the two things I would point to: One, in the foundational business, we are on many of the devices that people use to enjoy entertainment, and we are going to be impacted by the overall macro trends. Whereas with Dolby Vision and Dolby Atmos, the much more significant factor is us getting on a greater percentage of the devices that are shipping. The other thing I would point out is that most of our partners are reporting, and you can hear it in their earnings reports, would generally point to the premium holding up better than the overall market. That leads more closely to where Dolby Vision and Dolby Atmos is. It's an adoption cycle because most people start with the high-end before they start moving it through the rest of the lineup.

Great. And just maybe on—Kevin, something investors are really focused on. Maybe give us a sense of any further commercialization efforts you had in the quarter, even if they're small and really not impactful on the overall business at this point given the scale of the other business. But just any sort of color on progress and traction intra-quarter would be helpful.

Yes. Thanks for that. We're excited about the opportunity, Ralph. Everything we've ever done at Dolby started with a space where people assumed that what they had was good enough. When we look at this space, we see a significant opportunity to raise the bar on the quality of apps and services by providing developers with these tools. We're focused first and foremost on those services, which really differentiate themselves based on quality. That's why we talk about examples in the area of virtual performance, gaming, and the like. Because once people begin to go there, it no longer looks good enough everywhere else. You've seen that pattern in the past with Dolby Atmos and Dolby Vision. The goal for us over time is to keep in pursuit of these awe-inspiring experiences so that everybody has to drive to that place. We're seeing many great examples. I gave a few in the intro. We have a partner this quarter named Boardroom One, a social audio app for media companies, academic societies, and professional associations. They added our Spatial Audio to launch their first event with the Contemporary Art Center in New Orleans, giving you that lifelike experience of being there from an audio perspective. I'll give you another company named Quick Time. They launched their latest version of their core live production software, NAB. They won an award for Product of the Year and their product integrates our video capabilities, spatial audio, and ability to live stream to large audiences, all in service of enabling remote production for their customers so they can get great broadcast quality, noise cancellation, and spatial audio natively in the web browser. This is one of our focus areas, especially for remote content creation and production. Again, it's an area that is highly valued at the outset. We're really excited about not only these couple of examples but the increasing number of discussions for the future.

Okay. That’s helpful. Thanks, Kevin.

Our next question comes from Paul Chung from JPMorgan. Please, go ahead—your line is now open, Paul.

Hi. Thanks for taking my questions. So it sounds like Apple Music users are kind of responding very well to Atmos Music. Can you expand on the usage there and the feedback? And then, how difficult is it to master a track in Atmos? Can you kind of apply it to the whole music library? Additionally, is Spotify taking notice here as well? Is there any other monetization from more usage of Atmos Music, or is it mostly just regarding the playback devices? Any thoughts on Atmos? Thanks.

Yes, sure. First of all, it's getting easier and easier for artists to create in Dolby Atmos. The first thing to solve is whether artists and producers have somewhere to go to mix in Dolby Atmos. There are now 400 studios with another 200 to come online soon. We've got great infrastructure for artists to create in Dolby Atmos. It’s all now based on plug-ins to the workflows and tools they're accustomed to using. I think we have something like two-thirds of the Billboard Top 100 Artists having at least one track in Dolby Atmos. That first track is like anything else; there's a learning curve. Once we get that first session or they take their first step towards Dolby Atmos, we see that continuing and it becomes a natural way for them to create. We are pleased with the continued reaction from artists, consumers, all across the board. For Dolby Atmos Music, the revenue opportunity is to continue bringing that to as many artists and services as possible. It really increases our value proposition to license everything from mobile devices, PCs, to big music listening devices in automotive. We are excited about what we have accomplished and the opportunity ahead as it relates to automotive.

Great. And then, just on auto.

I was just going to add that while there are some challenges, we see opportunities on the Dolby.io side for recurring revenue, where people can apply—it's not Dolby Atmos per se, but it gives people the ability to master. For instance, SoundCloud, we've discussed in the past, has a button you can press to master in Dolby. What that does is equalization and mastering to create a much higher quality soundtrack. With increasing use cases for music in these services, whether it's for virtual performances, or the ability to create your experiences, or just because music is part of the overall experience, there are interesting opportunities we're already experiencing in Dolby.io as it relates to improving the quality of music.

Got you. And then, just on auto, you released with the high-end Mercedes, what's the update and feedback? Do you expect to expand to the whole fleet? Are any other OEMs taking notice, and can auto over time become a material contributor?

First of all, just in terms of the reaction, I mean, this is as impactful of a wow Dolby experience as in demo that I've seen. People are blown away by the Dolby Atmos automotive experience. We've also got partners, as you know, like Lucid and NIO down the road. The Mercedes experience is amazing. It is, of course, our goal to bring that across product lines as broadly as possible. Yes, just in general, customers are noticing across our constituents, and we're in discussions across content creation and playback in automotive and other markets. We believe automotive could represent a significant opportunity for us.

Okay. And then lastly, Robert, on the buybacks. You have a lot of flexibility here. Is the pace of buyback going to exceed last year's levels, or how do we think about modeling buybacks?

On the buybacks, as I noted on the call, they accelerated significantly in Q2, and we expect that to increase in the back half of the year. One of the challenges we had with executing buybacks was the limited windows in which we could do open market purchases. So, we instituted a 10b5-1 trading plan to enable more seamless execution in the back half of the year to make buyback execution easier than it had been in the past. That is our mechanism moving forward. You should expect much higher activity in H2.

Great. Thank you.

Thank you. Our next question comes from Jim Goss from Barrington Research. Your line is now open. Please go ahead.

Good afternoon. A couple of things. First, on this discussion about music. It seems like the monetization related to music overlays some existing monetization options. I'm wondering about the incrementalism of this. It would seem like you'd have opportunities in mobile devices, televisions, PCs, consumer electronics, and possibly even smart speaker type applications. But they might have also had that same opportunity for video or video-audio combinations. So I'm wondering about the incremental revenue opportunity with music.

Yes. All of those are devices through which you can enjoy music, and therefore, are all opportunities for Dolby Atmos. We do have a growing number of televisions supporting Dolby Vision and Dolby Atmos leading with the value proposition of streamed content. We also have a significant growth opportunity ahead with Dolby Atmos and Dolby Vision across these devices. We see additional contexts, music, gaming, live content as reasons to adopt across these devices and further into the lineups. We noted earlier that automotive is a lead value proposition, and that relates directly to Dolby Atmos Music.

Okay. The way it might come to the fore is to look at the growth in the individual categories and the mix. It would just be contributing to some additional gains in the areas where you are gaining your royalty revenues.

Yeah, that was a big driver. We're continuing to expect Dolby Atmos, Dolby Vision, and our imaging patent portfolio to grow over 35% this year. This is both a function of the success we've had getting more content and expanding to additional entertainment contexts. We started with movies and TV, and now it's expanding to music, gaming, and live sports, even mentioned cases for online shopping. All of those factors contribute to the demand for Dolby Atmos and Dolby Vision, and give us confidence in our ability to keep driving growth forward.

Okay. And, Kevin, with the TV sales I know this is a very unusual cycle with the supply challenges. Are you thinking that after the current pause, you will be able to accelerate both Atmos and Vision, and the combination in more and more televisions? At some stage do you want to be somewhat restrictive in terms of which types of devices at which quality level get both Atmos and Vision just to maintain that exclusivity element, or do you really want them to be on as many as possible?

Everything we do is aimed at raising the bar on quality and providing the most immersive experience. That starts with our first couple of partners and content creators who value quality. As more people recognize that, good enough will no longer suffice. We want to raise the bar on quality, hold that standard. We have a certification process and standards in place. Over time, we will look to have that on as many devices as possible so that everybody expects premium experiences in Dolby.

And is this process allowing you to raise royalty rates on some of these devices? Traditionally, Dolby has maintained a low bar, but as this becomes a more significant piece of the product, are you able to raise royalty rates?

Right now, I would say the growth driver is about what we've discussed, which is greater adoption and bringing more content to devices.

Okay. Thanks very much.

We have no further questions, so I hand it back to Kevin Yeaman for closing remarks.

Great. Well, thank you everybody for joining us today. We look forward to keeping you updated.

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.