Ladies and gentlemen, thank you for standing by. Welcome to the Dolby Laboratories Conference Hall discussing first 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. To ask a question, press star 1 on your telephone keypad. As a reminder, this call is being recorded Wednesday, January 29, 2025. I would now like to turn the conference over to Mr. Peter Goldmacher, Vice President and the Minister Relations. Peter, please go ahead.

Thank you, Operator, and good afternoon. Welcome to Dolby Laboratories' first quarter 2025 earnings conference call. Joining me today are Kevin Yeaman, Dolby Laboratories CEO, and Robert Park, Dolby Laboratories CFO. As a reminder, today's discussion will include forward-looking statements, including our fiscal 2025 second quarter and full year 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 impact of macroeconomic events, supply chain issues, inflation rates, changes in consumer spending, 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 recently 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 non-GAAP financial 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.

Thanks, Peter, and thanks to everyone for joining us today for the first quarter FY25 earnings call. Both licensing revenue and total revenue came in towards the high end of the range of the guidance that we provided on our last earnings call, and non-GAAP earnings for the quarter came in above the high end of the range. It's a strong start to the year, which gives us confidence that we are on track to achieve the annual financial guidance we gave on the fourth quarter earnings call. We continue to expect foundational revenues to be roughly flat for the full year and we have robust engagement from our broad ecosystem of content creators distributors and oem partners dolby atmos dolby vision and imaging patents are well positioned to grow roughly 15 for the full year and we continue to expect to grow non-gap earnings faster than revenue i'll cover a few of the highlights for the quarter and then i'll turn the call over to robert to review the financials our creative community continues to show strong support for Dolby Atmos and Dolby Vision. All eight of the 2025 Grammy nominees for Best New Artist are available in Dolby Atmos, and seven out of eight Grammy nominees for Record of the Year and Album of the Year are available in Dolby Atmos. For calendar year 2024, over 80 percent of the domestic box office and almost 70 percent of the global box office came from Hollywood and local titles released in Dolby Atmos and Dolby Vision. In addition to music and movies, the momentum continues to build across music, TV, live sports, and user-generated content. We wrapped up CES a few weeks ago, and the Dolby experience was on display across the show floor, including in cars, TVs, PCs, and soundbars. Starting with auto, we have announced partnerships with over 20 OEMs, and those 20-plus OEM brands have over 60 models in market with Dolby Atmos. Many of our partners, after starting with their high-end models, are expanding Dolby Atmos deeper into their lineups. One of our earliest partners, Mercedes, had over 15 models in market by the end of 2024. We are also excited that Lee Auto has the first car in market with both Dolby Atmos and Dolby Vision. In-car entertainment is an investment priority for automotive, and consumers are spending more time enjoying entertainment in their cars, whether they are waiting to pick someone up or getting a charge. With Dolby Atmos and Dolby Vision, the car is transformed into a high-end entertainment experience, and we are excited about the growth opportunity ahead. The broader ecosystem around in-car entertainment also continues to coalesce around the Dolby experience. At CES, Samsung Display announced that it will include Dolby Vision in automotive displays, and Texas Instruments announced that it is now supporting Dolby Atmos and its new family of chips for automakers, all making it easier for OEMs to adopt and implement. Also, Pioneer demonstrated Dolby Atmos as an aftermarket solution in a four-channel sound system. We continue to make progress with further adoption on TVs. In November, Amazon announced that the Fire TV Omni Mini LED will support Dolby Atmos and Dolby Vision. And there were a lot of new Dolby Atmos and Dolby Vision-enabled TV launches at CES, from partners including Hisense, TCL, Panasonic, Sharp, and RCA. In PCs, OEMs including Asus, Dell, Lenovo, and Samsung all announced new computers, laptops, or peripherals that support Dolby Atmos and or Dolby Vision. Also this quarter, Amazon launched its first soundbar supporting Dolby Atmos, Harman Kardon introduced the Enchant soundbar lineup with Dolby Atmos, and Samsung announced new soundbars with Dolby Atmos to complement their TVs. Looking forward, with a solid first quarter behind us, we remain optimistic for the rest of FY25 and beyond. We like what we are seeing and hearing from our partners. Our ecosystem is strong, our momentum with creatives and distributors continues to build, and that energy continues to propel our opportunities with our OEM partners. And so with that, I'll turn it over to Robert, who will take you through the financials in a bit more detail.

Thanks, Kevin, and thanks for everyone joining us on the call today. Before we review the quarter in some detail, I'd like to hit the highlights. Revenue for Q1 was near the high end of the range we laid out in the Q4 earnings call, primarily driven by a favorable true-up, and earnings came in above the high end of the range. We were off to a good start for fiscal 25. At the same time, it's early in the year, so we're keeping our full-year guidance unchanged. We're making progress on the business front, and our partners remain engaged. Our value proposition remains strong, our financials are solid, and we are confident in our long-term growth prospects. Q1 revenue was $357 million, up 13% compared to the year-ago quarter. Licensing revenue of $330 million was up 12% year-over-year. This includes a $17 million favorable true-up for Q4 fiscal 24 shipments reported that were above our original estimate. The true-up was across all end markets, but was most notable in broadcast and auto. Products and services revenue was $27 million, up 22% year-over-year. Detailed licensing performance by end market is on our IR website, and as a reminder, timing of recoveries, minimum volume commitments, and true-ups can drive volatility between quarters. A notable movement this quarter was in mobile, which was up 74% year-over-year. The two main reasons for this increase are revenue from GE licensing and the timing of minimum volume commitments. Moving to the bottom line, in Q1 we earned $1.14 per diluted share on a non-GAAP basis, above the high end of our guidance, primarily due to a stronger revenue and we generated $107 million in operating cash flow. We repurchased $15 million worth of common stock and have about $387 million remaining on our repurchase plan authorization. We declared a $0.33 dividend up 10% from our dividend a year ago and ended the quarter with cash and investments of approximately $611 million. GAP operating expenses in the quarter included a restructuring charge of approximately $5 million as we continue to align our resources with our business priorities. Turning to guidance, our full-year revenue is typically weighted more towards the first half of the year. Last year the weighting was 53%, 47%, first half to second half, and we expect a similar weighting this year. For Q2 fiscal year 25, we expect revenue between $355 million and $385 million. Within that, licensing revenue is estimated to range from $330 million to $360 million. Gross margin should be approximately 91% on a non-GAAP basis. We expect non-GAAP operating expenses to be between $190 million and $200 million. Our affected tax rate for Q2 is projected to be around 18.5% on a non-GAAP basis. So as a result, we estimate that non-GAAP EPS should be between $1.19 and $1.34 per diluted share. Moving on to the full year, we are maintaining our full year guidance for revenue and earnings. To repeat and reiterate what we said last quarter, for the full year, we expect non-GAAP earnings to be between $3.99 and $4.14 on revenue between $1.33 billion and $1.39 billion. We expect license revenue to be between $1.22 billion and $1.28 billion, and non-GAAP operating expenses to be between $765 million and $775 million. We expect revenue from foundational audio technology to be roughly flat, and revenue from Dolby Atmos, Dolby Vision, and imaging patents to grow roughly 15%. From an end market perspective, there's no change to what we communicated last quarter. We expect growth in mobile and other markets. Broadcast and PC are expected to be flattish, and consumer electronics is expected to be down mid-single digits for the year. To wrap things up, the creation and distribution of DOLI-enabled content continues to grow nicely, and our partners are still very engaged. Our financials remain strong, and we are well-positioned for long-term growth. With that, I'd like to turn it back to the operator to open the line for your questions. Operator?

Thank you. And once again, everyone, it is star one if you have a question. We'll go first to Stephen Franco, Rosenblatt Security.

Good afternoon. I appreciate the opportunity to ask some questions and the comment on the relative flatness of foundational for the year. Was that also true in Q1, or are you seeing any different trends in the beginning of the year?

Hey, Steve, it's Robert here. You know, we focus on the full year being our view is still to be flattish, but nothing in Q1 indicated anything other than that.

Okay, and the outside growth in mobile in Q1, was that simply a pull-in of something that maybe you thought would land later in the year, or that's just the timing of the ebbs and flows of these deals, or is there anything kind of a level deeper about penetration rates or deal sizes that we could read into this number as well?

Two things, Steve. One is just, as you know, within mobile, we've talked about the fact that there's more higher prevalence of minimum volume commitment, so timing can vary from quarter to quarter on mobile. The other thing is the integration of GE licensing. While that affected all markets, mobile had the largest impact.

And then on your CES review, the Samsung OLED screens for cars seems pretty exciting. What do you think the timetable is for that to begin to show up in models? Is that something that happens pretty quickly, or is this your typical OEM auto design cycle that these vehicles could be a couple years out?

Yeah, so, well, first of all, we're really excited about the opportunity with Dolby Vision in addition to the strong momentum we have with Dolby Atmos. I mean, clearly, in-car entertainment is a big investment priority for automotive, and we have put ourselves at the center of that. As you know, we were demonstrating the first car to have Dolby Vision in market. That's Lee Auto at CES. We were demonstrating that. So we think that the ecosystem is ready for it. I think the Samsung partnership in particular shows that they also see the opportunity. And so having them natively integrating Dolby Vision into their displays for automotive, I think both validates the opportunity and it makes it easier for implementation cycles. We've obviously been working on this, Steve, so we would expect more progress throughout the year, and we're excited to extend what we've done with Dolby Atmos in the car to include Dolby Vision and Dolby Atmos.

One last quick one for Robert. On the outsized true-up in the quarter, was that one manufacturer in particular, or it was just in general in Q4 you undershot where actual volumes ended up?

Yeah, there's not one particular vendor, excuse me, OEM or partner that stands out. It was really up across all markets, but particularly in TVs and auto.

Okay, great. Thank you. I'll jump back in the queue.

We'll take the next question from Patrick Schull, Barrington Research.

Hi. Thank you. On the expected growth for Atmos, Vision, and the image patent licensing, could you maybe talk about some of the key variables that would take you to the higher end of your target growth range for that versus what might be kind of a drag in 2025?

Yeah, I think the so the biggest factors there from an end market point of view are automotive, where, you know, we feel great about the momentum we have. And it's just a matter of, you know, the pace of adoption and especially the pace of rollout. So that's the biggest variable there. So we'll keep you, you know, up to up to speed on on all of our wins each quarter as far as that is going. um tv in the living room um we have uh last year our adoption rate grew to about 30 percent of 4k tvs with uh dolby atmos and dolby vision um the increase from 25 percent a couple years before that was the work that we've been saying that we're doing paying off and that's working with tv manufacturers to extend the dolby experience deeper into their lineups where we have particular traction with the likes of Hisense, TCL. They're also doing well market share-wise. And then mobile, where one of our highest focus areas is getting more Dolby Vision and Dolby Vision capture in mobile. And on the content side, bringing up to speed the ecosystem for user-captured content, being able to share and edit that content. So those are the three areas. And so what's going to, you know, drive it, what would produce upside is if, you know, obviously if more of those things are shipping and obviously the pace of wins and getting them into the market and how popular those models are.

Okay. Thank you. Just then on Dolby Cinema, I guess, could you provide any sort of update on the screen base for that?

Yeah, we did add screens this quarter. It wasn't a significant increase, but it's getting going again. Certainly after the last four years where it's been a tough environment for exhibitors to invest, we've seen a significant pickup in the outlook for being able to add screens going forward. We did see year-over-year improvement in both Dolby cinema and cinema products and so so we're working with our partners there and as I and as I think you know as we said before over these last four years the percentage of the box office that accrues to the premium screens the premium large format screens like Dolby cinema has increased significantly and so as exhibitors are beginning to look forward there have greater confidence in the 25 and 26 box office, and they look to invest. Where they want to invest is in premium screens.

All right. Thank you.

Up next, we'll hear from Ralph Shackert, William Blair.

If you can compare and contrast as you look out into 2025 now versus maybe a year ago as you're looking out in 2024, maybe speak to some of the product momentum you see now versus maybe you saw then. And obviously, the macro environment foundational is better. But just maybe if you could start there, and then I'll follow up for either you or Robert.

Thanks. yeah thanks Ralph well so first of all you know we came into the year you know a quarter ago saying that our our customers and partners were increasingly optimistic that the environment stabilized which is what gave us the which is why we guided to roughly flat for foundational and they continue to be highly engaged on on Dolby Atmos Dolby Vision and and what we continue to be excited about that. I think also, as it relates to automotive, we more than doubled the number of OEM partners over the course of FY24. Most of those partners are looking to expand deeper into their lineups. We have Dolby Vision with Lee Auto. We have, obviously, a pipeline that we're looking to grow there. So I think we're just, one of our higher growth areas is coming off a larger base, and we continue to have strong momentum. In TV in the living room, getting that ball rolling again, where we were at 25% of 4K TVs for about two years, having risen that to 30% and continuing to have a lot of initiatives in the pipeline to keep that growing um and and you know as i also said earlier we're we're optimistic about the the further potential for dolby vision dolby vision capture in the mobile ecosystem great and then i'm just maybe follow up an io get a lot of investor questions just kind of get a sense of how you could frame the opportunity i know you did a while ago and then the model sort of pivoted since then um so maybe if you could take a step back and sort of

frame the opportunity for us. And then just to maybe kind of bolt on to that, as we think about IO, it's, I guess, the benefits in the in-app environment are pretty clear. But maybe if you could speak to the opportunity beyond apps, you know, is there an enterprise play here or sort of give us a sense of, you know, how that product could evolve over time? Thank you.

Yeah, of course. So, yeah, you talked about the pivot, which was coming into FY24 when we went from kind of a self-service developer model to recognizing a very strong demand signal for companies in and around sports that are looking to offer more real, continue to evolve and improve their real-time interactive digital experiences, which are such an important part of how their audiences are engaging these days. In particular, our ability to stream high-quality audio video content in ultra low latency so we can do it seconds we can do it in sub seconds whereas the average today could be seven cents seven seconds but you could have 15 you could have 25 and that makes it hard to have a a an experience where you know you're watching the game I'm watching the game you're in Chicago I'm in San Francisco I see the touchdown 15 seconds before you right so and on top of that we've built other functionality and of course with Theo, we've brought on a great list of customers that are in our target areas, and we have a more complete solution. So I would say, Ralph, that it continues to be those digital experiences we think are, we see as a significant investment priority for these organizations, and so that continues to be the first thing we're going to talk about. But yes, it does extend into experiences that might not be digital one customer that we added earlier this earlier this year which has now gotten up to speed and is and is using the solution is patty power which patty power is a sports betting shop in ireland it's it's the first of the flutter cut it was the original flutter company which you know, Flutter now has over 15 entities. And Patty Power is using us for their in-shop experience. And so, you know, when you go into the shop and you're watching the horse race, for them, low latency has always been important. But, you know, they were doing it early. So they were using sort of a startup and some of their own stuff. And the reliability was a real problem. It would cut out. Even if it was going, you might not be able to discern the number of the horse. And so they went forward with us. We're now live in 600 betting shops. Each of those shops can have up to two dozen or more streams going on of different events at any given time. And the reliability has just gone up dramatically. So they've had a dramatic reduction in service calls because they're now getting the high-quality audio-video stream in low latency. And, of course, we're excited about the fact that they're part of a larger group and that we look forward to that, creating more opportunities as we go forward. Great. Thanks, Tim.

Everyone, at this time, there are no further questions. Does management have any closing remarks?

No. Thank you for joining us. and we look forward to keeping you up to speed in our progress. Thank you.

Thank you. And once again, ladies and gentlemen, that does conclude this conference. Thank you all for your participation, you may now disconnect.