Dolby Laboratories, Inc.

Q3 revenue was $305 million, with licensing revenue of $282 million and products and services revenue of $23 million. Non-GAAP EPS was $0.69. Robert Park said revenue was within guidance, with better-than-expected Dolby Atmos, Dolby Vision, and imaging patents offset by deal timing and foundational audio revenue; lower operating expenses and higher tax partially offset lower revenue. Q3 operating cash flow was approximately $167 million, and the company repurchased 1.2 million shares for $65 million. Cash and investments ended the quarter at $756 million. For Q4 FY26, Dolby expects revenue of $362 million to $392 million, licensing revenue of $335 million to $365 million, non-GAAP gross margin of approximately 90%, non-GAAP operating expenses of $195 million to $205 million, and non-GAAP EPS of $1.13 to $1.28. For FY26, the company expects revenue of $1.41 billion to $1.44 billion, licensing revenue of $1.31 billion to $1.34 billion, non-GAAP operating expenses of $785 million to $795 million, and non-GAAP EPS of $4.25 to $4.40. Management also said it now expects about 100 basis points of annual non-GAAP operating margin improvement, versus 50 to 100 basis points previously.

Kevin Yeaman emphasized that Dolby is using its ecosystem relationships to expand beyond device licensing, with content partners becoming a bigger growth opportunity. He highlighted strong progress toward the goal of getting 10% of revenue from these partners by FY28, led by the video distribution patent pool and OptiView. His tone was constructive and confident, repeatedly pointing to strong pipelines, early wins, and the belief that these programs can drive long-term growth.

Robert Park focused on the quarter’s financial performance and the full-year framework. He noted Q3 revenue of $305 million, non-GAAP EPS of $0.69, operating cash flow of about $167 million, and that the company bought back 1.2 million shares for $65 million; Dolby also lifted its repurchase authorization by $350 million to about $427 million total. On capital returns, he said the company will continue its policy of at least offsetting dilution from stock-based comp, and he pointed to the $0.36 dividend, up 9% from a year ago. He framed the full-year outlook as reflecting strong gross margins, expanding operating margins, and solid cash generation, while also citing a $4 million restructuring charge in Q3 GAAP operating expenses.

Analysts pressed on how durable Q4’s expected 23% year-over-year growth is and whether some revenue is being shifted between quarters. Park said growth is being driven by the VDP deal signed early in Q4, higher car units, wearables, and timing of minimum volume commitments, especially in mobile. Questions also focused on the VDP pipeline, and Yeaman said larger licensees like Meta and Alibaba make it easier to attract the next set of customers, though holdouts remain. On memory cost pressure, Park said mobile and PC are most exposed, the impact is already reflected in guidance, and the effect on Dolby is not one-for-one because customers respond differently with pricing, mix changes, and in some cases lower-end SKU cuts.