Dolby Laboratories

Ladies and gentlemen please remain holding. The conference will begin momentarily. Again, please remain holding. The conference will begin momentarily. Thank you. Thank you. Ladies and gentlemen, thank you for standing by. Welcome to the Dolby Laboratories conference call discussing fiscal third quarter 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. At that time, if you have a question, you will need to press star one on your telephone. As a reminder, this call is being recorded Thursday, July 29th, 2021. I would now like to turn the conference call over to Jason Dee, Senior Director of Finance and Investor Relations for Dolby Laboratories. Please go ahead, Jason.

Good afternoon. Welcome to Dolby Laboratories' third quarter 2021 earnings conference call. Joining me today are Kevin Yeaman, Dolby Laboratories President and CEO, and Louis Hsu, Executive Vice President and Chief Financial Officer. As a reminder, today's discussion will include forward-looking statements, including our fourth quarter, second half, and fiscal 2021 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. In particular, The extent of the continued impact of COVID-19 on our business remains uncertain at this time. A discussion of these and additional risk 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 the discussion of the business And Louis will follow with a recap of Dolby's financial results and provide our fourth quarter, second half, and fiscal 2021 outlook. So with that introduction behind us, I will now turn the call over to Kevin. Kevin?

Thank you, Jason, and good afternoon, everyone. Q3 was another strong quarter for Dolby. Our revenue and earnings for the quarter were solid, and we are on track to deliver annual revenue growth of over 10% and year-over-year earnings growth at an even higher rate. At the same time, Dolby experiences are accessible to a growing number of people around the world, highlighted by the launch of Dolby Atmos on Apple Music and the Tokyo Olympics broadcasted in Dolby Vision and Dolby Atmos. Before Louis takes you through the numbers, I wanted to highlight the recent progress we have made in enabling Dolby experiences across a much broader range of content, which creates opportunities for continued revenue and earnings growth. The inclusion of Dolby Atmos and Apple Music marks a significant step forward in bringing Dolby Atmos music to a much larger audience and establishing it as the best way to create and listen to music. The Dolby Atmos music experience has been prominently featured by Apple and has been met with positive and enthusiastic reactions from artists, industry partners, and consumers. Apple Music subscribers around the world can easily access albums and playlists of Dolby Atmos songs and can enjoy their music across Apple's wide range of products that support the combined Dolby experience. And recently, Dolby Atmos-enabled Android devices can also enjoy Dolby Atmos on Apple Music. Beyond Apple Music, Naver Vibe, a music streaming service in South Korea, launched support for Dolby Atmos this quarter. Additionally, our partners like Tidal, Amazon Music, Hungama, and Angami continue to grow the number of songs available in Dolby Atmos on their streaming services. As the ways in which consumers can enjoy Dolby Atmos music expands, we are also focused on growing the library of music through our engagement with artists and music distributors. DistroKid, a leading distributor of independent music, announced that they will be delivering songs in Dolby Atmos on both Apple Music and Tidal. We see enthusiastic engagement from popular artists, including Ariana Grande, BTS, Billie Eilish, and Glass Animals, who are among the many artists highlighting the availability of their music in Dolby. As we expand the availability of Dolby Atmos music to consumers, we add to the reasons to adopt Dolby Atmos in mobile, PC, and automotive. We also had some exciting wins in live broadcast this quarter. Comcast is currently delivering NBC's live Tokyo Olympics coverage in both Dolby Vision and Dolby Atmos to their X1 customers. This marks the first time that the Olympics can now be enjoyed in the combined experience. Also this quarter, Euro 2020 broadcasted in Dolby Atmos across multiple broadcasters in Poland, Malaysia, across the Middle East and North Africa. And the Eurovision Song Contest was broadcast in Dolby Atmos live to viewers in the Netherlands. By enabling a growing number of live broadcast events, we build upon our strong presence in movie and TV content and add to the value proposition for deeper adoption of Dolby in TVs, set-top boxes, DMAs, and mobile applications. The momentum of Dolby Vision and Dolby Atmos content across streaming services continues to be strong as our partners bring new titles in Dolby Vision and Dolby Atmos. Paramount Plus added support for Dolby Atmos when they recently released A Quiet Place 2 in the combined Dolby experience. We have also seen our partners expand the amount of original local content that is enabled in Dolby. ITE recently announced they will be making Dolby Vision and Dolby Atmos content available on their international app that is available in over 190 countries and will be enabling Dolby experiences in new original local content on their platform. Apple TV Plus is enabling new local episodic content in Dolby Vision and Dolby Atmos in Korea. Netflix released their first original film for Thailand in Dolby Vision this quarter, and Disney Plus Hotstar is enabling new local content for India in Dolby. Stan, a leading OTT service in Australia, now supports the combined Dolby experience on their platform. Enabling relevant local content in Dolby is another important factor in driving more adoption across the global markets that our OEM partners serve. This quarter, Xiaomi and Skyworth released new TV models highlighting both Dolby Vision and Dolby Atmos. In Japan, Regza launched their first TV with Dolby Vision IQ, adding to a growing list of partners that includes LG, Panasonic, TCL, Xiaomi, and Hisense, SageMcom recently launched their all-in-one video soundbox, which combines set-top box and soundbar functionality with support for Dolby Atmos. And LG announced the rollout of updates coming to their OLED TVs that optimize for the best gaming experience in Dolby Vision. Gaming is another area we are focused on growing the number of experiences in Dolby, and we've begun to see momentum with mobile games becoming available in Dolby Atmos. With gaming and music, we are enabling more of the relevant content for mobile phones and PCs to now be Dolby experiences, adding to the reasons for adoption on these devices. This quarter, we saw Dolby Atmos highlighted across several mobile phone launches in India, including Oppo and their Realme branded phones, and Xiaomi's Redmi gaming smartphone. Within PC, Samsung recently launched a new Galaxy Book lineup featuring Dolby Atmos. We continue to build on our momentum of Dolby Vision and Dolby Atmos across content, services, and devices. At the same time, we still see significant opportunity to increase adoption as we grow the amount of content experiences available in Dolby. Let me shift to cinema. We now have about 95% of our Dolby cinemas open globally, and our partners remain deeply engaged. In recent months, more content has returned to the big screen, and we have seen positive signs in box office performance. This was highlighted in the U.S. with strong opening weekends from titles like Black Widow and F9 The Fast Saga that were both available in Dolby Cinema. We continue to see moviegoers seeking to enjoy these movies in the best way possible, with box office skewing more towards Dolby Cinema and premium experiences compared to pre-pandemic levels. And we are now bringing Dolby expertise and innovations that create the best way to enjoy content to a much broader range of experiences and real-time interactions through Dolby.io. We are very excited to have welcomed Marie Hoovy to the Dolby team this quarter to lead our Dolby.io efforts. Marie brings strong leadership experience and a track record of leading engagement with developer communities, including most recently at DocuSign, where she established the company's first-class developer experience. During our first year with Dolby.io and Market, Our focus has been on building our engagement with the developer community, learning from these interactions, and continually evolving our offerings to best meet the needs of developers. Since launch, we have seen strong demand for higher quality real-time experiences. We have now begun to roll out a significant update that will enable larger scale interactions with more participants. We have positive feedback from current customers who are now live with this release, And we are actively engaging a significant pipeline of potential customers that these increased capabilities can directly address. We see engagement across a variety of use cases, including podcasting, remote collaboration tools, virtual meetings, and online education. We are excited by the many ways developers are engaging with our APIs, and we are just at the beginning of what Dolby.io can enable in creating higher quality, everyday audiovisual experiences. So to wrap up, Dolby is available to a much larger audience across a wider range of content today than ever before. As we build upon our presence in movie and TV content with more Dolby experiences in music, gaming, and live events, we increase the reasons for deeper adoption of Dolby across devices. And with Dolby.io, we are building the momentum to bring the Dolby magic to a wide range of use cases and experiences. All of this gives us confidence in our ability to drive revenue and earnings growth into the future. And with that, I'd like to hand it over to Louis to take us through the financials.