Dolby Laboratories

Ladies and gentlemen, thank you for standing by. Welcome to the Dolby Laboratory conference call discussing fiscal second quarter results. During the presentation, all participants will be in a listen-only mode. Afterwards, you'll be invited to participate in the question and answer session. At that time, if you have a question, you'll need to press star 1 on your telephone. As a reminder, this call is being recorded Tuesday, May 4, 2021. I would now like to turn the conference over to Jason Dee, Senior Director of Finance and Investor Relations for Dolby Laboratories. Please go ahead, Jason.

Good afternoon. Welcome to Dolby Laboratories' second quarter 2021 earnings conference call. Joining me today are Kevin Yamen, Dolby Laboratories President and CEO, and Louis Chiu, Executive Vice President and Chief Financial Officer. As a reminder, today's discussion will include forward-looking statements, including our third quarter and second half fiscal 2021 outlook and our assumptions underlying that outlook. These statements are subject to risk and uncertainties that may cause actual results to differ materially from the statements made today. In particular, the extent of the continued impact of COVID-19 on our business remains uncertain at this time. Discussion of these and additional risks and uncertainties can be found in the earnings press release that we issued today under the section caption, forward-looking statements, as well as in the risk factor section of our most recent quarterly report on Form 10Q. 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 Kevin will follow with a recap of Dolby's financial results and provide our third quarter and second half fiscal 2021 outlook. So with that introduction behind us, I will now turn the call over to Kevin.

Thank you, Jason, and good afternoon, everyone. With another strong performance in licensing revenues this quarter, we are off to a solid start to our fiscal year. Our first half fiscal 2021 revenues have grown about 10% compared to the first half of fiscal 2020, and earnings have grown at an even higher rate. Our financial results reflect the strength of Dolby's business model and the broad adoption of Dolby technologies across the devices and services that consumers are seeking to enjoy their content. Before Louis takes you through the numbers, I wanted to highlight some of the areas of our progress and the recent examples of how Dolby is enabling a broader range of content. With a growing number of content experiences becoming Dolby experiences, We add to our value proposition for deeper adoption in existing device categories, and we address the use cases for adoption in new device categories, which together drive our opportunities for growth. With Dolby Atmos for Music, we are enabling a significant step forward in how people can enjoy their favorite songs, which is creating new opportunities to expand the adoption of Dolby Atmos to a broader range of devices and services. Lucid Motors announced that they will be bringing the first automobile to market that will include Dolby Atmos. The Lucid Air will enable the Dolby Atmos for music experience for the car and is the first example of a significant opportunity to address the primary entertainment use case within automotive. Lucid is just one example of how we are creating more ways for consumers to enjoy a growing library of music in Dolby Atmos. We have strong engagement with top artists around the world, as more songs and albums are being made available in Dolby Atmos, including many recent Grammy-nominated artists like Taylor Swift, Lady Gaga, and Megan Thee Stallion. This quarter, Hungama, a top music streaming service in India, began supporting Dolby Atmos. They joined Tidal, Amazon Music, and Angami, who are currently streaming music in Dolby Atmos. As we continue to build on the momentum for Dolby Atmos for Music, we see opportunities for more services to adopt Dolby Atmos and to deepen our adoption across mobile, PCs, automotive, and headphones. Gaming is another area where we see much of the opportunity ahead of us to bring Dolby Vision and Dolby Atmos to a growing number of experiences. Microsoft Xbox will be the first gaming console to support the combined Dolby experience for games. Xbox gamers will have more ways to enjoy the Dolby experience, with new gaming headsets released this quarter from Microsoft and Bang & Olufsen that highlight support for Dolby Atmos. Lenovo recently launched a new mobile phone designed to support gaming content, the Legion Phone Dual 2, that highlights support for Dolby Atmos. We also saw the first eSports event in Dolby Vision and Dolby Atmos this quarter. As part of Blizzard Entertainment's BlizzCon line, we enabled an event that showcased Overwatch matches to be viewed in the combined Dolby experience through PCs and gaming consoles. Esports gives us unique opportunities to engage gamers by bringing Dolby Vision and Dolby Atmos to the experiences that they are passionate about. As we grow the number of Dolby experiences within games, we add to our existing value proposition and drive more reasons for adoption on gaming consoles, PCs, and mobile phones. By expanding our presence in music and gaming, we address two of the primary use cases on a mobile device. At the same time, we see more ways for Dolby to enable the highest quality experiences across more of the content enjoyed on mobile devices. Over the past few quarters, we've highlighted how we are enabling new experiences in mobile, like being able to record in Dolby Vision with the iPhone 12, or being able to enjoy live sports content in Dolby Atmos through a mobile app. this quarter, Earshot, a leading podcast service in India, became the first podcast app to support Dolby Atmos. They will be making Dolby Atmos content available across different genres of podcasts and in multiple languages. As we continue to expand the relevance of Dolby Vision and Dolby Atmos across a broader range of content, we address more of the use cases for mobile devices, driving the reasons for deeper adoption with our partners. This quarter, Xiaomi launched their first mobile phones that support Dolby Vision and Dolby Atmos. This adds to the growing number of partners that support the Dolby experience within mobile, which is highlighted by the Apple iPhone 12 lineup that features the combined Dolby Vision and Dolby Atmos experience. In addition, Samsung, Oppo, and Sony continue to highlight Dolby Atmos with the recent launch of their latest flagship models. All of this progress adds to our strong position within movie and TV content, which continues to drive more device adoption within the living room. This quarter, Samsung released their Q7 soundbar, highlighting support for Dolby Atmos. Within TVs, our partners around the world, including Xiaomi, Shanghai, and Skyworth, released new models that support the combined experience. In addition to supporting Dolby Atmos, TCL and Hisense also highlighted support for Dolby Vision IQ within their recent TV launches. With this momentum, we still see a significant opportunity ahead to reach higher levels of adoption with Dolby Vision and Dolby Atmos in the living room, similar to the broad presence of our core audio technologies. The adoption of Dolby Vision and Dolby Atmos on devices is driven by a consistent flow of new titles that are being enabled in the combined Dolby experience. Our streaming partners, like Netflix, Disney+, Apple TV+, and HBO Max, continue to make a broad range of titles available in Dolby, and the combined experience is consistently highlighted with the release of their latest tentpole titles. Let me shift to cinema. As consumers begin to return to the movies, they are seeking out premium experiences, and Dolby Cinema is the best way to enjoy a movie. We now have about 90% of our Dolby cinemas open globally to certain capacity restrictions. Our engagement with exhibitor partners remains strong as we recently added a new Dolby cinema partner in China. And we also had four new Dolby cinema locations open during the quarter. We also see initial signs of strong box office performance from titles like Godzilla versus Kong and successful local content in China, including detective Chinatown three and hi mom, that were all available in Dolby Cinema. We look ahead to anticipated titles later this year, including Top Gun Maverick, A Quiet Place 2, and Black Widow that will all be available in Dolby Cinema. During the last year, we have started to bring the Dolby magic that powers the best movie, TV, and music experiences to a much broader range of content and interactions with Dolby.io, our developer platform. Our focus is on deepening our engagement with the developer community, growing the number of developers on the platform, and building their engagement with our APIs. Just last week, we completed an integration with Box.com and Dolby.io. Companies that use Box can now enable their users to easily improve the quality of their audio directly from where their files are stored within Box, powered by Dolby Media APIs. We are excited to bring unique solutions to Box's broad range of customers and the opportunity to drive more people to engage with Dolby.io. Our interactivity APIs are supporting a wide range of use cases, and we see new customers across multiple industries from online learning to enabling influencers to connect with fans, or even in one case, supporting an application that enables live streaming for medical teams. As we look ahead, We also see opportunities where real-time interaction come together with recorded media, and we can uniquely provide comprehensive solutions by embedding both our interactivity and media APIs. With a growing number of new experiences being enabled by Adobe.io, we are learning from our engagement with developers and evolving our offerings to best support the use cases where we see significant opportunities to bring higher quality media and best-in-class real-time interactions. So to wrap up, we have growing momentum in enabling Dolby Vision and Dolby Atmos experiences in more forms of content like music and gaming. As we enable our technologies to address a broader range of content, we build upon our strong position within movies and TV and create more reasons for adoption across devices and services. With Dolby.io, our technologies are beginning to address a much larger world of content, experiences, and interactions. All of this gives us confidence in our ability to drive revenue and earnings growth into the future. And with that, I'm going to hand it over to Lewis to take us through the financials.