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| Statement |
|---|
| We've enjoyed strong adoption for movie and TV enthusiasts for a long time and now sports enthusiasts are able to enjoy the Dolby experience |
| And there is a larger amount of televisions in the low-to mid-tier and we're really confident in our ability to bring the Dolby experience to those devices given the momentum we have with movies and TV and given the increasing momentum we have with live sports |
| All of this gives me confidence in our long-term growth opportunity and our ability to execute on it |
| Second, we're streamlining the business to best support our top line priorities, which will deliver margin expansion |
| These technologies have broad penetration across a diverse set of devices and end markets and we continue to strengthen our position through ongoing innovation |
| And third, despite the economy, we feel good about our long-term prospects as our value proposition remains strong and our financials are solid |
| I don't think you ever stop looking at it and make sure that you can be as effective and efficient as possible and the results of that as you see is expansion of the operating margins between 1 and 2 percentage points for the year |
| I am enormously proud of all the people that work at Dolby to bring great experiences to market |
| And one of the things we're excited up there is the continued momentum you see in sports content |
| We remain excited about our business, because we see the momentum from our creators and strong engagement from our distributors and device manufacturers, which we expect to drive long-term growth |
| Looking at our licensing by end-market, we see solid growth in other markets and PC should benefit from slightly higher units, higher revenue for imaging patents and recoveries |
| And we believe this sets us up very well to continue to drive partnerships with device manufacturers to drive long-term growth |
| Non-GAAP operating expenses for the full year should be in the $740 million to $750 million range, which will result in about a 1 to 2 percentage point improvement in operating margins on a full-year basis |
| In light of these conditions, we are sharpening our priorities to drive margin growth faster than sales growth this year |
| Bringing Dolby Atmos music to automotive represents one of our most compelling growth opportunities and momentum continues to build |
| And that's because of the strength we see in the amount of content coming to market in the distribution of that content and we continue to get design-wins and have great engagement with our partners |
| To wrap things up, the creation and distribution of Dolby-enabled content continues to grow nicely and our partners are still very engaged, our financials are solid and we are well-positioned for growth when economic conditions improve |
| Our partners and customers still want to bring the best audio and video experiences to their consumers and we continue to have strong engagement |
| I think that we have had some great wins internationally over the last couple of quarters |
| These partnerships are driven both by our strength in movie and TV content, as well as our fast-growing presence in music |
| Four of the top-five mobile phone OEMs and the leading social media platforms in China are leveraging Dolby technology, an indication of our strong and growing presence enabling user-generated content |
| We also had continued momentum in the quarter from longtime partners shipping new products with Dolby Atmos and Dolby Vision, including Apple and the iPhone 15, Microsoft's latest version of the Surface, and Amazon's new Fire TV 4K |
| And so we continue to have confidence in our ability to grow at a 15% to 25% CAGR in the mid-term |
| And we do continue to have strong engagement across our pipeline |
| But what I would say is our confidence in the growth in Dolby Atmos and Dolby Vision is really founded and we continue to see, tremendous growth in the content across each of our focus areas |
| And our other category grew 52% year-over-year in the quarter and was up 35% for the full-year, driven primarily by growth in imaging patent admin fees and Dolby Atmos in auto |
| So, you have seen some wins from us in the last couple of quarters in India this quarter and in Indonesia, so certainly there is more opportunity there, but I think in terms of the growth opportunity that we're excited about, we're really thinking first and foremost about increasing our penetration on the low-to-mid-tier devices and sports is a really important value proposition for that and we really increased our presence in sports and we're excited about where that's going forward |
| We had some great wins this quarter, we signed up BYD, the Chinese car manufacturer who has already launched its first car with Dolby Atmos |
| Revenue from our Dolby Atmos, Dolby Vision, and imaging patents category was up 20% year-over-year and represented just over one-third of our licensing revenue |
| But when we have the level of momentum we have with content and the amount of adoption we have through distribution, we develop a very high degree of confidence that we can and will get on a much higher number of devices |
| Statement |
|---|
| Products and services revenue was $25 million, down 13% year-over-year driven by lower cinema product sales |
| Our foundational technologies revenue was down approximately 5% year-over-year |
| While we see growth in Dolby Atmos and Dolby Vision in these markets, this year, the overall revenue declines are primarily due to tough comps in terms of the timing and size of deals including minimum volume commitments and recoveries and true-ups in foundational engineering patents last year |
| Consumer electronics was up 15% year-over-year in the quarter, but was down 9% for the full year, primarily due to lower device shipments |
| As Kevin discussed at the outset of this call, there’s still uncertainty in the market and our guidance assumes no material change in the macroeconomic environment |
| Q1 is down year-over-year largely due to true-ups last year and timing of revenue associated with minimum volume commitments and recoveries |
| As Kevin mentioned in his comments, while we continue to see steady growth of content created and distributed in Dolby Technology and strong engagement from our partners, device shipments remain soft, and some design wins are taking longer to get to market |
| PC sales remained sluggish |
| 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 current macroeconomic events, ongoing supply chain issues, inflation rates, changes in consumer spending, and geopolitical instability on our business |
| We expect a slight decline in foundational and while we continue to expect a multi-year CAGR of 15% to 25% in Dolby Atmos, Dolby Vision and imaging patents over the medium-term, we do not expect to achieve our targeted growth of 15% to 25% this year |
| And even in the best of times, it's difficult to predict the timing of those adoption cycles, rarely does it go in a straight line and that's particularly true in this environment where it could take a quarter or two longer to get a device win, it could take a quarter or two longer to get -- for a customer to get from a device win to a device in market |
| Embedded in this guidance is an assumption of a mid-single-digit decline in foundational audio licensing revenue offset by high-single-digit growth in Dolby Atmos, Dolby Vision, and imaging patent licensing revenue and flat products and services revenue |
| Broadcast, our largest end-market, was down 6% year-over-year in the quarter, but was up 4% for the full year with Dolby Atmos, Dolby Vision and imaging patents, more than offsetting declines in foundational revenue due to lower shipments |
| But predicting that trajectory is not always easy, and it's a little bit harder in this environment that could take the form of design win taking longer, it could take the form of once we get the design win, the customer is waiting for a chipset to launch that product |
| For the things we can control, we are focusing internally on activities that will have the greatest near-term impact and are delaying or eliminating projects that don't offer compelling payback |
| The impact on Dolby from a top line perspective is that some new partnerships and design wins are taking more time |
| Kevin, you talked about the partnerships and design wins maybe they are lengthened or delayed because of the macro |
| The demand environment hasn't changed noticeably since the last time we spoke in August |
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