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DATE

Thursday, July 30, 2026 at 5:00 p.m. ET

CALL PARTICIPANTS

• Vice President of Investor Relations - Peter L. Goldmacher
• Chief Executive Officer - Kevin J. Yeaman
• Chief Financial Officer - Robert J. Park

TAKEAWAYS

• Revenue -- $305 million, falling within management guidance ranges despite timing-related impacts in foundational audio.
• Non-GAAP EPS -- $0.69, exceeding the midpoint of guidance as lower operating expenses helped offset revenue shifts.
• Licensing Revenue -- $282 million, supported by growth in imaging patents and Dolby Atmos adoption.
• Products and Services Revenue -- $23 million, reflecting the company's ongoing hardware and professional service activities.
• Operating Cash Flow -- $167 million, contributing to a quarter-end cash and investments balance of $756 million.
• Share Repurchases -- 1.2 million shares for $65 million, part of a newly increased total authorization of $427 million.
• Dividend -- $0.36 per share, representing a 9% increase compared to the prior year.
• Q4 Revenue Guidance -- $362 million to $392 million, reflecting a projected 23% increase driven by the Video Distribution Program and automotive sector.
• Q4 Licensing Revenue Guidance -- $335 million to $365 million, including the impact of a large deal signed with Meta early in the period.
• Q4 Non-GAAP EPS Guidance -- $1.13 to $1.28, incorporating higher projected gross margins of approximately 90%.
• Fiscal Year 2026 Revenue Guidance -- $1.41 billion to $1.44 billion, with licensing revenue expected between $1.31 billion and $1.34 billion.
• Fiscal Year 2026 Non-GAAP EPS Guidance -- $4.25 to $4.40, reflecting higher tax expenses incurred during the third quarter.
• Operating Margin Improvement -- 100 basis points annually on a non-GAAP basis, an upward revision from previous estimates.
• Video Distribution Program (VDP) -- 45 licensors, with new major licensees including Meta and Alibaba.
• Automotive OEM Partners -- 40 manufacturers, including recent launches by Volkswagen and Buick in China.
• Combined Growth Area Revenue -- 15% increase, driven by the collective performance of Dolby Atmos, Dolby Vision, and imaging patents.
• Other Market Segment -- up high teens for the full year, primarily fueled by the automotive sector and VDP licensing.
• Mobile Market Segment -- up mid single digits for the year, supported by Dolby Atmos and Vision adoption despite pressure on device volumes.
• Broadcast Market Segment -- up mid single digits, resulting from higher recoveries in imaging patents.
• Consumer Electronics Segment -- expected to be flattish, as lower unit volumes are offset by Atmos adoption and recoveries.
• PC Market Segment -- down low single digits, due to lower unit shipments and reduced recoveries.
• Content Revenue Target -- 10% of total revenue by the end of fiscal year 2028, as the company expands its focus beyond device licensing.
• Restructuring Charge -- $4 million, related to organizational changes aimed at aligning resources with high-impact areas.
• Foundational Audio Revenue -- down slightly for the year, as the business transitions toward newer immersive technologies.
• Stock Repurchase Authorization -- $350 million increase, approved by the board to support ongoing capital return initiatives.

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RISKS

• Yeaman stated, "how much that is in part offset is, you know, memory chip is something we are watching closely," noting that rising memory costs could reduce device shipments in the mobile and personal computer markets.

SUMMARY

Management reported that third quarter results aligned with guidance, characterized by steady adoption of immersive audio and imaging technologies across the entertainment ecosystem. The company is executing a multiyear strategy to expand its total addressable market by capturing usage-based revenue from content platforms, targeting a significant revenue contribution from these partners by fiscal year 2028. This transition is being led by the Video Distribution Program (VDP) and the Dolby OptiView platform, which seek to monetize digital media streaming through comprehensive patent pooling and advanced ad-insertion technologies. While management highlighted sequential growth opportunities in automotive and wearables, they remain cautious regarding macroeconomic factors and supply chain costs that impact consumer electronics manufacturing.

• CEO Yeaman highlighted the Video Distribution Program's momentum, noting that "45 licensors have already attracted some of the biggest names in streaming as licensees to the pool," including Meta and ByteDance.
• The company is expanding its presence in the automotive sector through integration with Android Auto, which Yeaman noted "makes it easier for dealers to demo and sell the Dolby Atmos experience in the car."
• Dolby OptiView Ads achieved certification through Google's ad manager technology partner program, with Yeaman reporting that one customer saw revenue generation increases of 75%.
• Management is prioritizing the live sports market with AI-driven solutions for fan engagement, stating that these new products are scheduled to begin shipping in the coming months.
• CFO Park noted that Q4 revenue will benefit from the timing of minimum volume commitments, particularly in the mobile market, which tends to be back-end loaded.
• The adoption of Dolby Vision is extending into new categories, with Yeaman citing the launch of the world's first augmented reality smart glasses equipped with the technology by RayNeo.
• Management indicated that while television manufacturing is less affected by rising memory prices, the mobile and PC sectors are seeing some manufacturers eliminate lower-end product lines due to increased bill-of-materials costs.

INDUSTRY GLOSSARY

• VDP (Video Distribution Program): A patent pool that licenses video imaging technologies to content streaming platforms.
• Dolby Atmos: An immersive audio technology that allows sounds to be placed and moved in three-dimensional space.
• Dolby Vision: An advanced imaging technology that provides high dynamic range (HDR) and wide color gamut for video.
• Dolby OptiView: A platform for ultra-low latency video streaming, ad monetization, and cross-platform playback.
• OEM (Original Equipment Manufacturer): A company that produces parts and equipment that may be marketed by another manufacturer.
• BOM (Bill of Materials): A comprehensive list of parts, items, assemblies, and other materials required to create a product.
• Foundational Audio: Dolby's established audio technologies used in broadcast and physical media, such as Dolby Digital and Dolby Digital Plus.

Full Conference Call Transcript

Operator: If you would like to ask a question, please press 1 to raise your hand. To withdraw your question, press 1 again. As a reminder, this call is being recorded Thursday, 07/30/2026. I would now like to turn the conference over to Mr. Peter L. Goldmacher. Vice president of investor relations. Peter? Please go ahead.

Peter L. Goldmacher: Good afternoon. Welcome to Dolby Laboratories Third Quarter Fiscal Year 26 Earnings Conference Call. Joining me today are Kevin J. Yeaman, Dolby Laboratories' CEO and Robert J. Park, CFO. As a reminder, today's discussion will include forward looking statements including our fiscal 26 fourth quarter and full year outlook and our assumptions underlying that outlook. These statements are subject to risks and uncertainties that may cause 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 recent annual 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 would like to turn the call over to Kevin.

Kevin J. Yeaman: Thanks, Peter, and thanks to everyone joining us on the call today, Revenue and earnings for the third quarter were within the range of guidance we provided on the last earnings call. We are narrowing the range of guidance for the full year and keeping the midpoint of revenue the same. We expect strong sequential growth in Q4, driven by momentum in a number of our key growth areas. We have strong visibility into the pipeline of deals for the quarter And many of them have closed early in Q4. Robert will share more details on this and on the financials overall in a few minutes.

Dolby has maintained its leadership position for over 60 years by innovating and raising the bar on the entertainment experience. We do this by working with creatives, content distributors, and device makers, giving us a unique on the collective needs, challenges, and opportunities of the entertainment ecosystem, which enables us to deliver experience that come to life in the highest possible quality. This quarter, I would like to start with our focus on expanding our total addressable market beyond device licensing. We are working with a growing number of content partners that are looking to differentiate on experience and drive deeper engagement with their audiences.

And we are making good progress on our target for 10% of revenue from these partners by the end of FY28. Let's start with the video distribution program. The patent pool that licenses imaging patents to content streamers. Meta, 1 of the world's largest streamers of video content, became a licensee of the program covering its Facebook, Instagram, and WhatsApp platforms. Also, Alibaba became a licensee this quarter to cover its video operations, including ecommerce, entertainment, and digital media platforms. We are encouraged by the early traction and the quality of the participants joining the pool. In less than 1 year since inception, 45 licensors have already attracted some of the biggest names in streaming as licensees to the pool.

Including ByteDance, Kuaishou, Meta, Roku, Tencent, and Alibaba. We remain excited by the early momentum from this pool, and we expect it to continue. Moving on to Dolby OptiView, We closed a number of key deals in the quarter. Including a multiyear agreement with Roberts Communications Network, the largest provider of horse racing content in the US. For ultra low latency video streaming. Also in the quarter, Google announced that Dolby OptiView Ads, our ad insertion engine, was the first product certified through their ad manager technology partner program. This certification recognizes the performance and monetization improvements that Dolby OptiView Ads delivers. When integrated with Google Ad Manager.

While this partnership is early days, we are looking forward to working with Google to win new customers. Last quarter, I talked about how at the NAB show in Las Vegas, we showed new solutions for fan engagement in live sports. These solutions use AI to predict viewer behavior and to generate compelling stories for individual fans based on the action and their interests. Fan engagement is a top focus for the sports industry, we have seen strong interest in these new solutions, which will be shipping in the coming months. We believe that the Dolby OptiView platform which brings together these capabilities with ad monetization, low latency streaming, and cross platform playback.

Is a unique system that will lead the future of the live sports experience. We are excited by the progress we are making and expanding our addressable market to include content platforms where we earn revenue based on usage. Moving on, Dolby Vision and Dolby Atmos continue to bring the most immersive experiences to life. Starting with the World Cup, viewers in all 3 World Cup host countries were able to enjoy the World Cup in Dolby, through partners including Peacock and Comcast in The US, Bell in Canada, and TV Azteca in Mexico. Fans in some of the most passionate football countries like Brazil, Colombia, Germany, and Spain were also able to enjoy the World Cup in Dolby.

On TVs, Dolby Vision 2.0 is now in market with some Hisense TVs. And by the end of this calendar year, TCL and Philips will also be shipping televisions with Dolby Vision 2.0. Moving on to auto, we have announced agreements with over 40 auto OEMs since the program started. A few of our new OEM wins this quarter include Volkswagen in China launching its first Dolby Atmos vehicle, and Buick announcing presales for the Electra E7, a plug-in hybrid SUV with Dolby Atmos, also in China. Also this quarter, Google announced support for Dolby Atmos through Android Auto with launch partners including BMW, Genesis, Mahindra, Mercedes, Renault, and Skoda.

With Dolby Atmos supported across Apple CarPlay and now Android, it has never been easier for users to stream Dolby Atmos to their car. It also makes it easier for dealers to demo and sell the Dolby Atmos experience in the car. We are excited about the continued momentum in car entertainment which continues to be a top focus for the industry. Moving on to user generated content and social media. High quality user generated content is an important factor in driving engagement. And we have strong adoption of Dolby Vision on many of the world's largest social media platforms. Like Instagram, Facebook, and Douyin.

In addition to driving demand for Dolby on mobile phones, we are starting to make our way into new device categories, like smart glasses, and video cameras. Ray Neo, the leading provider of augmented reality glasses, launched the RayNeo GT Max, the world's first AR smart glasses equipped with Dolby Vision. And Insta360, the market share leader in action and panoramic cameras, launched the Luna Ultra, which supports Dolby Vision capture. We are pleased by the momentum behind user generated content in Dolby, and expect it to continue to grow as a priority for device OEMs. Wrapping up, we remain confident in our opportunity to drive growth beyond device licensing.

With progress on both the video distribution program and Dolby OptiView. And we continue to bring more Dolby experiences to more people around the world with the growing adoption of Dolby Atmos and Dolby Vision across a wide range of devices and use cases. All of this gives us confidence in our ability to drive long term growth. With that, I would like to turn the call over to Robert to cover the financials.

Robert J. Park: Thank you, Kevin, and thanks to everyone joining us on the call today, For the quarter came in at $305 million which was within the guidance we shared last quarter. We saw better than expected revenue in Dolby Atmos, Dolby Vision, and imaging patents, offset by deal timing and foundational audio revenue. Non GAAP earnings per share was $0.69, just above the middle of the range of guidance. As lower than expected operating expenses offset lower than expected revenue and higher tax Licensing revenue was $282 million and products and services revenue was $23 million. We generated approximately $167 million in operating cash flow and repurchased 1.2 million shares or $65 million of common stock.

We recently received Board approval to increase the existing share-repurchase authorization by $350 million bringing our total authorization to about $427 million. We declared a $0.36 dividend up 9% from our dividend a year ago, and ended the quarter with cash and investments of $756 million Q3 GAAP operating expenses include a $4 million restructuring charge for organizational changes made as we align our resources to focus on the most impactful areas. Detailed licensing performance by end market can be found on our IR website. As a reminder, end market growth rates are typically smoother on an annual basis as the timing of recoveries, minimum volume commitments, and true ups could drive quarterly volatility.

End market performance for the quarter came in mostly as expected with no significant outsized moves. Turning to guidance. For Q4 fiscal 2026, we expect revenue to be between $362 million to $392 million Within that, we expect licensing revenue to be between $335 million and $365 million. Gross margin should be approximately 90% on a non GAAP basis, and we expect non GAAP operating expenses to be between $195 million and $205 million Non GAAP earnings per share is expected to be between $1.13 to $1.28 Let me provide more context on Q4. Our Q4 revenue guidance at the midpoint represents a 23% year-over-year increase in revenue.

This reflects momentum we are seeing in key growth areas we have been prioritizing, namely the video distribution patent program, Including a large deal with Meta that signed early in Q4. Higher units from Dolby Atmos in the car, revenue from new device categories like wearables. In addition, Q4 is also benefiting from timing of deals like minimum volume commitments. For fiscal year 2026, we expect total revenue to range from $1.41 billion to $1.44 billion Within that, licensing revenue is expected to be between $1.31 billion and $1.34 billion We are targeting non GAAP operating expenses to be between $785 million and $795 million. We expect non GAAP earnings per share To be between $4.25 and $4.40.

This reflects the higher tax expense from discrete items in Q3. We are expecting an annual operating margin improvement of approximately 100-basis-points for the year on a non GAAP basis. Up from the range between 50-basis-points to 100-basis-points we guided to last quarter. For the full year, we are expecting other revenue to be up high teens driven by auto and VDP, Broadcast to be up mid single digits due to higher recoveries in imaging patents. Mobile, which includes wearables, is expected to be up mid single digits driven by adoption of Dolby Atmos and Dolby Vision. And CE should come in flattish with lower unit volumes offset by higher recoveries and Dolby Atmos adoption.

PC is down low single digits primarily due to lower unit shipments and lower recoveries. We expect foundational audio revenue to be down slightly for the year Dolby Atmos, Dolby Vision, and imaging patents revenue to be up roughly 15% year-over-year. In summary, the team has executed well. And our performance reflects the operational focus on our key growth areas, despite an environment that has remained dynamic all year. As we have demonstrated over multiple economic cycles, our approach is to control what we can control. We remain focused on our growth strategy, driving innovation, and allocating resources to the areas that will have the greatest impact.

Our financials remain solid with organic revenue growth, high gross margins, expanding operating margins, healthy cash flows, and a strong balance sheet. With that, I will turn it over to the operator to open the line for any questions. Operator?

Operator: We will now begin the question and answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Ralph Schackart with William Blair. Your line is open. Please go ahead.

Ralph Schackart: Good afternoon. Thanks for taking the question. Robert, I want to circle back on your Q4 commentary with extra color. You talked about 23% year over year growth. You called out some momentum, I think, in, video distribution program. I think it was signed early in the quarter, building in-car and wearables. And historically, this business has been difficult for, at least for analysts to forecast on a quarterly basis, but that growth rate is sort of a standout, and I know you could have revenue sort of move in and move out of quarters. A little bit long winded, basically asked, can you talk about maybe the sustainability or durability of this growth rate?

And how much of this could also be impacted by maybe some quarterly revenue shifting out of Q3 and Q4?

Robert J. Park: Yeah. Hi, Ralph. Those are the areas driving the growth and the momentum we are seeing, both the VDP, including the large deal signed at the beginning of this quarter. Higher units from Dolby Atmos in the car and new device categories like wearables. But also mention that there are Q4 also benefits from timing of things like minimum volume commitments, particularly mobile that tend to be a little bit more back end loaded than they were last year. Last year's Q4 was a little softer if you look at the quarterization and just happens to be timing of certain things that come in.

Ralph Schackart: Great. And then, you know, you had some large licensees on the VDP part, Meta, and I think you talked about Alibaba. Maybe talk about after signing these sort of, larger companies, what that does in terms of encouraging participation from future life licensees. They seem like pretty standout announcements this quarter.

Kevin J. Yeaman: Yeah. Thanks, Ralph. It is, of the things that is giving us confidence in the program, and our long-term growth it is about a year into the program, and we have seen a lot of these programs come together. And this 1's coming together really well, both in terms of, you know, the pace of it and the breadth of it, We are at 45 licensors. We have got a number of high profile licensees, you mentioned Meta and Alibaba signing this quarter, And the impact that has is yeah it does tend to make it easier to get the next deals.

You know, in any given point in time in a program like this, there is a group of customers that are looking for a solution to the problem of operating in a fragmented IP environment for which patent pools are very a very helpful solution. there is a group of companies that are doing their homework. They want to know is the is the pool comprehensive enough? Is it the right pool? Is it the right price? More people coming along starts to get them to move faster along their process. And then of course, any given program, there is always going to be some holdouts and you keep working each of those phases of the pipeline.

But clearly, for, you know, 1 year, this program is coming along very nicely. And great to see some really nice wins this quarter.

Ralph Schackart: Great. Thank you.

Operator: Your next question comes from the line of Steven Frankel with Rosenblatt Securities. Your line is open. Please go ahead.

Steven Frankel: Good afternoon. Thank you for the opportunity. Kevin, when you first introduced the concept of VDP, you talked about targeting some of the large domestic streaming networks. And Meta is a great win, and hopefully, we will get more like that. But what is the level of discussion with these targets in the streaming space today? And do you still feel like that is a realistic potential win on the horizon?

Kevin J. Yeaman: Yeah. Thanks, Steve. Well, first of all, I yeah. I mean, Meta, 1 of the largest stream streamers of video content on the planet, and the pipeline is strong, and it includes streamers of all types of video content. And I am not gonna go into the details of the pool's discussion with any 1 customer, But again, I think for 1 year, we feel really good about how this program has come along. And every time you get another licensee on board, it makes it that much easier to get to get the next licensee.

So we are, I mean, relative to a year ago, the way that the execution has gone, I would say we are feeling increasingly confident in that in that program.

Steven Frankel: Great. And you know, given the strength in other, you know, auto seems to be continuing its ramp and you are announcing new customers and now you have expanded to Android auto. Are we getting closer to a point where the auto business might get broken out?

Kevin J. Yeaman: Yes. We are getting closer. And as you know, we have, typically done that when it is 10% of licensing. And I think certainly as we go into the next year, that is something we are going to have a close look at because it is it is the highest growing end market for us and it is the largest within other. Great.

Steven Frankel: And, Robert, a couple questions on the numbers. What were true ups? And were any of the buckets affected by large catch up payments.

Robert J. Park: Yeah. The true up was really negligible this quarter, Steven. it is less than a million dollars positive. So really small.

Steven Frankel: The second question regarding any true ups, we have gotten-- Recoveries.

Robert J. Park: Yeah. Okay. Totally. Oh, nothing. No. As I noted on the call, not nothing notable this quarter. In terms of outsized movements. Okay.

Steven Frankel: Great. And then, you know, from a macro perspective, there is been a lot of fear that the rising memory cost was going to impact how CE customers thought about new product introductions. You know, what can you tell us as you look to what is coming down the pipeline using your technology do you feel like the plans they talked about at CES are still going forward, or have they been impacted in any way?

Robert J. Park: So I think, you know, CES, we were, you know, largely focusing on big focus areas for us at CES were automotive, where as you noted we continue to see really strong adoption, strong pipeline, things continue apace. We also were highlighting Dolby Vision 2.0 where we saw there are now Hisense customers that are that have Dolby Vision 2.0 on their TVs. And we are on track for the for them to have, and then Philips and TCL, by the end of this year. I think backing up, because memory is obviously a hot topic, Steven, I think as it relates to our end markets, mobile is by far the market that is impacted the most by memory prices.

Our largest device market is TV. that is 1 of the lesser impacted markets in terms of a percentage of BOM. Second most impacted market would be PC in terms of the memory impact on them. So for this year, all that is factored into our guidance. As I have said before, it relates to mobile because of the prevalence of minimum volume commitments that has a kind of a mitigating or I guess you might even say sort of a delaying effect And so that is factored into our guidance. It kind of falls into the category. We have got some ups and we have got some downs.

As we look into next year, the longer this goes on, the longer it starts to the more it starts to flow through. Now you know, we do expect to grow with strength in video distribution program, automotive, the new categories like wearables. We got some exciting new products coming in Dolby OptiView. But how much that is in part offset is, you know, memory chip is something we are watching closely. So again, TV is not affected as much. Mobile and PC the most. there is no uniform answer as to how that impacts Dolby. Each customer approaches this quite differently.

So, you know, on the 1 hand, you might get customers that have room to absorb this into their gross margins, and that may not have any impact on unit volumes and so minimal impact to Dolby. Others are raising prices. Some are doing a combination, and we are raising prices. Then it really is a matter of how much pricing power do they have, what is the price sensitivity. But it is not necessarily a 1 for 1 impact on Dolby.

And then in other cases, particularly in mobile where at the low end memory cost has gone from you know, my understanding is it is gone from plus or minus 15% to even over 50% of BOM. it is really significant. We are seeing some customers that are just eliminating 1 of their lower lines because they just cannot solve that equation. Then what they are doing is trying to get people to move up a level and they are also investing in trying to maintain those higher end lines. And so, again, that does in fact, of course, lowers device shipments.

But on the other hand, for Dolby, it is not proportionate in the sense that we have a higher attach and we have higher technology content, the further you go up those lines. So it is very dynamic. We are watching it really closely. And again, we expect to grow with the strength we have in our focus areas, but we are definitely watching memory prices and how much an offset that might be.

Steven Frankel: Great. Thank you so much.

Operator: Your next question comes from the line of Patrick Sholl with Barrington Research. Your line is open. Please go ahead.

Patrick Sholl: Hi. Thanks for taking the question. Within Dolby Vision 2, I was wondering if there was any sort of differentiation in terms of the pace of adoption between the various tiers on that new technology.

Kevin J. Yeaman: I would say there is no change in pace from what we have talked about. We have got those 3 customers that Hisense has some of its in market TVs updated. We expect TCL and Philips to be shipping by the end of the year. We are kind of at that point in the year where I think that at CES will become the focal point for most of our customers that will be adopting it going forward. And on the content side, Canal plus and Peacock are both on track to they are integrating now and getting ready to be able to provide content in Dolby Vision 2.0.

Patrick Sholl: Okay. And then on the VDP, is there like, is there a content type focus within that and like, and how you expect, like, the pace of getting licensees to be a part of that program, or is it kind of as you said, more certainly, I understand it is more broad, but is how you are seeking this to generate growth on that, focusing on a specific, like, type of content? Initially first.

Kevin J. Yeaman: Really, at the center of it is, companies that are, at scale, taking advantage of the best in video codec technologies in order to, achieve their business objectives. And that is a broad range of content. You can tell from some of our first licensees from Meta to Roku, ByteDance to, Alibaba's coverage includes including ecommerce. So it really is a function of anybody who is relying on the IP covered by this patent pool, growing with more licensors joining with the success it is had over the last year. To deliver video at scale.

Patrick Sholl: Okay. Thank you.

Operator: Your next question comes from the line of John Rigatti with Baird. Your line is open. Please go ahead.

John Rigatti: Hi. Thanks for the question. This is John on for Vikram Kesavabhotla. A couple for me. I wanted to start with auto. I would be interested to hear if you could unpack what is driven what you think has driven some of the faster adoption with your technology and some of the international autos, and then what needs to change in the US market for you to be able to unlock more of that segment there? And I have a couple of follow ups.

Kevin J. Yeaman: Yeah. I think I mean, I think, you know, if I go back to the beginning of the program, a lot of our initial momentum was in China where they were becoming the, you know, the leading innovators in EVs, and they were putting a really high focus on the in car entertainment experience. And China is also happens to be the largest vehicle market in the world, and so that got the attention of auto manufacturers around the world to be able to compete in China at which point then it makes it just you are just a step away from then shipping those cars throughout, throughout the world.

And so that is what you know, and so in Europe, we have got Mercedes and BMW. In India, we now have Mahindra and Tata. The US, we do have Cadillac So I think well, I mean, we are pleased with how the pace and how it is grown. Like I said, 40 OEMs in, since the program began. And I think know, the next big milestone for us is looking to get further penetration in the mainstream. And, you know, we have got we have talked about some cars in the past, like the Hyundai in China and some of the cars in India.

But people always start with the high end, and now it is a matter of really focusing on getting that into the mainstream higher volume models. And that will benefit us in the US and around the world. Yeah. Great.

John Rigatti: And then maybe on OptiView, if you could talk a little bit more just about the vision there. And, obviously, it is still very early days, but just some of the a couple examples on maybe what is resonating most as you have taken that out to partners.

Kevin J. Yeaman: Yeah. Thank you. So, look, at the highest level, the vision is this. Which is that we are no longer in a world of 1 to many where we all have to experience the exact same sports experience at the exact same time. We are a world of streaming where we ought to be able to understand what engages you and be able to personalize that experience and to do that in real time in a way where you can interact with your friends around the experience. So the vision for Dolby OptiView is to provide a solution that allows these sports organizations and streamers, to be able to do that.

And so, we started, of course, with the ability to stream in ultra low latency. that is important so that you are not seeing the touchdown you know, 15 seconds before I am, which is no fun for either of us. Maybe it is fun for you. it is not fun for me. The we have got a player that is integrated with that. And we have some now you are beginning to see some new additions to the portfolio which get closer to that more personalized experience. So 1 of the things I talked about today was, OptiView ads. Which is something we mentioned a couple of quarters ago.

But we have now been in market with the first couple of customers. They are in the process of testing the third generation of the product. And once that testing is complete, we are planning to really begin to scale this to our customer base in the fall. And the big difference there from the customer perspective is the revenue generation potential.

1 of our customers is seeing increases of 75%. it is because we have a server-guided technology which requires far less lead time than competing solutions to kind of pick the ad and deliver which means that by filling that ad slot just before it is needed, we can do a better job of targeting that ad to the viewer, it is more likely that the viewer is still there, and ultimately just increase fill rate. So and then the solution is also integrated with the player and that prevents the ads from being blocked. So we are pretty excited about that.

As I said, it became 1 of the well, the first at the time was the first technology to be certified by Google Ad Manager as a partner technology. And that is because it is designed to slot right into their workflows and work seamlessly with Google Ad Manager. So as we get to the fall and are looking to scale this, we are also looking forward to working with them. To highlight the benefits to their customers. And then, I talked about last quarter about how at NAB we were previewing our sports intelligence platform. And so we continue to get really good engagement from customers on what we are doing with that.

We look forward to having some specific solutions in market next year. And this is really focused on now moving toward really being able to understand how engaged a fan is or when their interest is waning. But importantly, being able to do something about that with the audio visual experience that keeps them engaged. So again, the vision is simply to, provide our customers with the ability to better engage their fans and audiences with real time personalized experiences. And we are really excited about how the portfolio of solutions is coming together to make that happen. Yeah. that is great. Thank you.

John Rigatti: I guess the last ones for me is just you touched a little bit on the Dolby Vision 2.0 and some of what is obviously in market now. Some of the demand you are seeing there. I would be interested if you could talk a little bit as well about the impact that Dolby Vision 2.0 being in the market is having on adoption of Dolby Vision 1. Possibly kind of the segmentation or the tiering that OEMs are able to do across both of those. And then also, maybe just for Robert on capital allocation.

If I look at kind of the repurchase activity on a quarterly basis, it looks like so far in 2026, you are going at about 2x the rate of 2025. Just any kind of color you could give on how you are thinking about capital allocation for the balance of this year? And then going forward would be great. Thank you.

Kevin J. Yeaman: Yeah. I think, so as it relates to Dolby Vision 2, I would say it is early days. I mean, again, we are focused on getting these first 3 customers in market and these are all examples where they are moving from Dolby Vision to Dolby Vision 2.0 as you would expect starting with some of their higher end. We do have strong engagement. And like I said, I think you know, CES is probably about the time we would expect for, our customers to say more about their go-forward plans with Dolby Vision 2.0. And, Robert, do you want to add anything? Yeah.

Robert J. Park: Hey. Hi, John. Yeah. Thanks for noticing that, yeah, we have increased the velocity and volume of our buyback activity, and we will continue to do execute our policy of at least offsetting dilution of stock based comp. But we do look at this quarterly, make our decisions quarterly based on facts and circumstances and needs of the business. But, yes, we have been stepping up year to date.

John Rigatti: Okay, every quarter. Great. Thank you, guys.

Operator: There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.