DLB 10-K & 10-Q changes, risk factors and insider trading

Changing trends in content distribution and consumption may negatively impact our business. Changing trends in the way that content is distributed and consumed may impact our existing business and future opportunities for growth. One such trend ishas been the shift by consumers in certain markets away from subscription-based cable and satellite television providers toward streaming services, commonly referred to as "cord-cutting." While cable and satellite television often require a STB, today consumers can also access streaming media through smart TVs or DMA devices. As consumers trendhave trended toward canceling subscriptions to these traditional cable and satellite providers andin turnfavor toof streaming media, we expecthave observed declines in demand for STBs in certain regions to continue to decline. If we are unable to derive additional revenue from the smart TV and DMA markets to make up for decreases in our STB-related revenue, our financial results may be negatively impacted.regions. Other changes to the way content is distributed and consumed may impact our licensing and other businesses in a similar fashion, and we may not be able to anticipate and respond effectively to such future changes.

In order to increase the value of our technologies in the mobile market and increase OEM and software vendor demand for our decoding technologies, we have worked with online and mobile media content service providers to encode their content with our technologies. However, the online and mobile media content services markets are also characterized by intense competition, evolving industry standards and business and distribution models, disruptive software and hardware technology developments, frequent product and service introductions and short life cycles, and price sensitivity on the part of consumers, all of which may result in downward pressure on pricing or the removal of our technologies by these providers and may result in decreased revenue from our mobile market. Further, macroeconomic conditions such as inflation, trade barriers, geopolitical instability, global health risks, and other factors may adversely impact the ability of our partners to manufacture and distribute mobile devices and consumer demand for mobile devices.

Our revenue from the PC market is reliant on key partnerships and is vulnerable to macroeconomic risks. Our revenue from the PC market depends on several factors, including underlying PC unit shipments, the extent to which our technologies are included on computers, including through operating systems and various subsystems, and the terms of any royalties or other payments we receive. For example, beginning with PCs shipping with the 24H2 version of Windows 11, Microsoft is changingchanged the way Dolby’s DD and DD+ decoders are provided to third party PC OEMs. For such devices, Dolby hasnow begun distributingdistributes those codecs directly to PC OEMs instead of through Microsoft’s Windows operating system. To the extent that PC manufacturers do not incorporate our technologies in current and future products, our revenue could be impacted. Further, we rely on a small number of partnerships with key participants in the PC market. If we are unable to maintain these key relationships, we may experience a decline in PCs incorporating our technologies. Demand for PCs has also fluctuated significantly in recent years. Macroeconomic conditions may also adversely impact PC manufacturing, supply chain and distribution, the timing of the adoption of our technologies into products by partners and licensees, and the timing of launches for new products.

Our revenue and associated demand for Dolby Cinema and cinema products are affected by cinema industry and macroeconomic conditions, which are subject to risks including consumer trends and box office performance generally,in general, delays in cinematic releases, the seasonality of film releases and associated moviegoing attendance, potential tariffs and other trade barriers, and other events or conditions in the cinema industry. As anFor example, restrictions related to the COVID-19 pandemic and thecertain restrictionsentertainment relatedindustry tolabor the pandemicstrikes resulted in reduced cinema attendance and revenue. Additionally, the strikes by the Writers Guild of America and SAG-AFTRA in 2023 effectively halted the production, release and promotion of certain films for an extended period, resulting in decreased box office receipts, which directly impacted the revenue generated by Dolby Cinema theaters. Such disruptionsreceipts in the pastpast. haveSuch disruptions impacted, and potential similar disruptions in the future could potentially impactimpact, revenue generated by Dolby Cinema theaters and exhibitors’ willingness and ability to invest in Dolby Cinema and cinema products. Also, a portion of our opportunity lies in the China market, which is subject to unique economic and geopolitical risks. Furthermore, future growth of our cinema products offerings also depends upon new theater construction and entering into an equipment replacement cycle whereby previously purchased cinema products are upgraded or replaced. To the extent that such cinema industry and macroeconomic challenges constrain the growth of our Dolby Cinema and cinema products offerings, our revenue may be adversely impacted.

Customers and Distributors

Our licensing business depends on the incorporation of our technologies into products and the sales of such products, which are, in large part, not within our control. Our licensing businesses depend on OEMs and other licensees to incorporate our technologies into their products. Our license agreements are typically non-exclusive,andnon-exclusive, and frequently do not mandate use of our technologies. Our revenue will decline if our licensees choose not to incorporate our technologies into their products or if they sell fewer products incorporating our technologies.

Consumer spending weakness may impact our licensees and licensing revenuesrevenue generally. Weakness in general economic conditions due to inflation, elevated interest rates, lower consumer confidence, tariffs and non-tariff trade barriers, a potential recession, pandemic or other adverse economic conditions, may suppress consumer demand in our markets and consumers going to the movies. Many of the products in which our technologies are incorporated are discretionary goods, such as PCs, TVs, STBs, video game consoles, AV Receivers, mobile devices, in-car entertainment systems, and home-theater systems, which makes revenue generated by such technologies vulnerable to weakness in consumer spending. Prolonged weakness in consumer spending may also lead to licensees and other customers becoming delinquent on their obligations to us or being unable to pay, resulting in a higher level of write-offs. Weakness in consumer spending may also increase underreporting and non-reporting of royalty-bearing revenue by our licensees as well as increase the unauthorized use of our technologies.

IndustryTechnology Standards

Certain parts of our business are dependent on the inclusion of our technologies in industrytechnology standards, the adoption and development of which are not fully within our control. Standards-setting organizations establish technology standards for use in a wide range of products and solutions. The entertainment industry in particular has historically depended upon industrytechnology standards to ensure compatibility and interoperability across delivery platforms and a wide variety of consumer entertainment products. We make significant efforts to design our products and technologies to address capability, quality, and cost considerations so that they either meet or, more importantly, are adopted as industry standards across the broad range of entertainment industry markets in which we participate, as well as the markets in which we plan to compete in the future. We are also active in standards development where many contributing members work together to come up with next-generation technology standards in media, entertainment, and communications technologies. Nonetheless, it can be difficult to have our technologies and products adopted as industrytechnology standards. To do so, we must convince a broad spectrum of standards-setting organizations throughout the world, as well as our major customers and licensees who are members of such organizations, to adopt them as such. Multiple companies, including ones that typically compete against one another, are involved in the development of new technology standards for use in consumer products. Furthermore, some standards-setting organizations choose to adopt a set of optional standards or a combination of mandatory and optional standards; in such cases, our technologies may be adopted only as an optional standard and not a mandatory standard. Standards may also change in ways that are unfavorable to Dolby.

The market for broadcast technologies in particular has traditionally been heavily based on industrytechnology standards, in some cases mandated by governments choosing from among alternative standards, and we expect this to continue to be the case in the future.standards. The continued advancement of OTT media delivery and consumption is altering the landscape for broadcast standards. The importance of broadcast standards in the entertainment technology ecosystem has been gradually diminishing over the recent years. This trend is reducing the importance of the inclusion of our technology in certain broadcast standards while increasing the importance of inclusion within internet and mobile industrytechnology standards. We cannot predict the extent to which this trend may impact our revenue.

Participants may choose alternative technologies within standards. Even when a standards-setting organization incorporates our technologies in an industrytechnology standard for a particular market or geographic region, our technologies may not be the sole technologies adopted for that market. Furthermore, different standards may be adopted within a single market or region, and across different markets and regions. Our operating results depend upon participants in that market choosing to adopt our technologies instead of competitive technologies that also may be acceptable under such standard. For example, the continued growth of our revenue from the broadcast market will depend upon both the continued global adoption of DTV generally, including in emerging markets, and the choice to use our technologies where it is one of several accepted industry standards.

Being part of a standard may limit our licensing practices. When a standards-setting organization mandates our technologies, we generally must agree to license such technologies on a fair, reasonable, and non-discriminatory basis, which could limit our control over the use of these technologies. In these situations, we must often limit the royalty rates we charge for these technologies, and we may be unable to limit to whom we license such technologies or to restrict many terms of the license. We have in the past, and may in the future, be subject to claims that our licensing of industry standard technologies may not conform to the requirements of the standards-setting organization. Allegations such as these could be asserted in private actions seeking monetary damages and injunctive relief, or in regulatory actions. Claimants in such cases could seek to restrict or change our licensing practices or our ability to license our technologies. Additionally, where our technologies are incorporated into a standard, our licensing practices may become subject to additional regulatory requirements. For example, the European Union (EU) legislature is considering regulation that would impose a number of requirements on standard essential patent (SEP) licensing practices in the EU. Such regulation could, if it comes into effect, impose additional costs and disclosure requirements on our SEP licensing business and potentially reduce associated revenue.

Reporting practices and uncertainty may result in fluctuations in our royalty revenue from period to period. Our operating results fluctuate based on the risks set forth in this section, as well as, among other factors, on:

We recognize a material portion of our licensing revenue based on our estimate of sales of royalty-bearing products. Upon receipt of actual reporting of sales-based royalties, we record a favorable or unfavorable adjustment based on the difference, if any, between estimated and actual sales. Our sales estimates may be based on reports or studies from third parties may turn out to be inaccurate or incomplete, and that risk may increase when macroeconomic conditions are highly dynamic, which could result in significant variation in the amount of revenue we recognize in a quarter. Additionally, our results of operations could be impacted to the extent that we are required to accelerate recognition of revenue under certain arrangements, potentially causing the amount of revenue we recognize to vary materially from quarter to quarter. While our reporting practices do not change the cash flows or total revenue we ultimately receive from our contracts with customers, they could result in changes to the timing of our reported revenue and income, which in turn could cause volatility in the price of our Class A common stock.

Royalty reporting by our licensees may be inaccurate or understated. We generate licensing revenue primarily from OEMs who license our technologies and incorporate those technologies into their products. Our license agreements generally obligate our licensees to pay us a specified royalty for every product they ship that incorporates our technologies, and we rely on our licensees to report their shipments accurately. However, it is inherently difficult to independently determine whether our licensees are reporting shipments accurately, particularly with respect to software incorporating our technologies because unauthorized copies of such software can be made relatively easily. A third partylicensee may disagree with our interpretation of the terms of a license agreement or, as a result of an audit, a third partylicensee could challenge the accuracy of our calculation. We are regularly involved in discussions with third party technology licensees regarding license terms. Most of our license agreements permit us to audit our licensees’ records, and we routinely exercise these rights, typically by using an independent third party auditor. Such audits are generally expensive, time-consuming, and potentially detrimental to our ongoing business relationships with our licensees. In the past, some licensees have understated or failed to report the number of products incorporating our technologies that they shipped, and we have not been able to collect and recognize revenue to which we were entitled. We expect that we will continue to experience understatement and non-reporting of royalties by our licensees. We have been able to obtain certain recovery payments from licensees (either in the form of back payments or settlements), and such recoveries have become a recurring element of our business; however, we are unable to predict with certainty the revenue that we may recover in the future or our ability to continue to obtain such recoveries at all.

For instance, to broaden adoption of Dolby Vision and Dolby Atmos, we will need to continue to expand the array of products and consumer devices that incorporate Dolby Atmos and Dolby Vision, expand the pipeline of Dolby Atmos and Dolby Vision content available from content creators, and encourage consumer adoption in the face of competing products and technologies. Similarly, the success of Dolby Cinema and cinema products is dependent on our ability to partner with movie theater exhibitors to launch new Dolby Cinema siteslocations and screens using our cinema products and to deploy new sites in accordance with plans, and on the continued release and box-office success of new films in the Dolby Vision and Dolby Atmos formats released through Dolby Cinemas.formats.

•Our pending patent applications may not be approved; and

•Possibility that an issued patent may later be found to be invalid or unenforceable.unenforceable;

Our revenue could decline if we are unable to maintain patent coverage for our technologies. Many of the technologies that we license to our system licensees are covered by patents, and the licensing revenue that we receive from those licenses depends in part upon the life of such patents. In general, our agreements with our licensees require them to pay us a full royalty with respect to a particular technology only until there are no patents or, in some cases, no patent applications covering that technology in countries where applicable products are made and sold. As of September 27,26, 2024,2025, we had approximately 27,40028,400 issued patents in addition to approximately 5,9006,100 pending patent applications in more than 100200 jurisdictions throughout the world, which includes patents and patent applications acquired in connection with our acquisition of GE Licensing and THEO, described in more detail in Note 15 "Business Combinations" to our consolidated financial statements.world. Our currently issued patents expire at various times ranging from 2025 through December 2047. If we are unable to refresh our technology with new patented inventions or expand our patent portfolio, our revenue could decline. In addition to patents covering technology we license directly, if patents we license through patent pool arrangements expire or we are otherwise unable to maintain our share of pool royalties, then our revenue could be impacted. Additionally, if the patents licensed through a patent pool arrangement are deemed not to be valuable in the aggregate by the licensees of such patent pool, they may not renew their licenses, which could impact our revenue.

Unauthorized use of our intellectual property has occurred and will likely continue to occur. We have often experienced, and expect to continue to experience, problems with non-licensee OEMs and software vendors, particularly in certain emerging economies, incorporating our technologies and trademarks into their products without our authorization and without paying us any licensing fees. Unauthorized IP use occurs in the context of both branded products and technology offered through open standards. Manufacturers of ICs containing our technologies occasionally sell these ICs to third parties who are not our system licensees. These sales, and the failure of such manufacturers to report the sales, facilitate the unauthorized use of our IP. As emerging economies transitionhave transitioned from analog to digital content, such as the transition from analog to digital broadcast, we expecthave to experienceobserved an increase in problems with this form of piracy.

Maintaining and enforcing our IP rights in the U.S. and abroad presents challenges to our business. Our licensing business depends in part on the uniform and consistent treatment of patent rights in the U.S. and abroad. Changes to the patent and intellectual property laws and regulations in the U.S. and abroad, including the regulation regarding SEP licensing in the EU referenced above,abroad may limit our ability to obtain, license, and enforce our rights. Additionally, court and administrative rulings may interpret existing patent laws and regulations in ways that hurt our ability to obtain, license, and enforce our patents. We face challenges protecting our IP in foreign jurisdictions, including that our ability to enforce our contractual and IP rights, especially in countries that do not recognize and enforce IP rights to the same extent as the U.S., Japan, Korea, and European countries do, which increases the risk of unauthorized use of our technologies. Also, because of limitations in the legal systems in many countries, our ability to obtain and enforce patents in many countries is uncertain, and we must strengthen and develop relationships with entertainment industry participants worldwide to increase our ability to enforce our IP and contractual rights without relying solely on the legal systems in the countries in which we operate.

Reliance on key suppliers presents certain risks to our business, many of which are beyond our control. Our reliance on suppliers for some of the key materials and components we use in manufacturing our products involves risks, including limited control over the price, timely delivery, and quality of such components, as well as delays caused by military conflicts, including those between Russia and Ukraine and in the Middle East, and other potential interruptions to the supply chain. Due to the relatively small volume of components we purchase for use in manufacturing, we purchase such components primarily through distributors. As such, we have relatively limited influence over the suppliers of such components to, for example, ensure continuity of supply. Although we have identified alternate suppliers for most of our key materials and components, any required changes in our suppliers could cause delays in our operations and increase our production costs. In addition, our suppliers may not be able to meet our production demands as to volume, quality, or timeliness. Avoiding the potential inclusion of “conflict minerals” in the materials used in our products could also affect the sourcing, availability and pricing of such materials as well as the companies we use to manufacture our products.

Ensuring the quality of our products and the products in which our technology is incorporated is inherently difficult, and product quality failures can be costly. OurWhile we conduct security testing prior to releasing new products or new versions of existing products, and products that incorporate our technologies,there are complex and sometimes contain softwareerrors or hardware errorsvulnerabilities that are not detected during testing, particularly when first introduceddevelopment or whentesting. new versions are released. In addition, weWe have limited control over manufacturing performed by contract manufacturers, which could result in quality problems. Furthermore, our products and technologies are sometimes combined with or incorporated into products from other vendors, sometimes making it difficult to identify the source of a problem or, in certain instances, making the quality of our implementation dependent in part upon the quality of such other vendors' products. AnyWhile negativewe publicityhave processes to remediate errors and vulnerabilities, we cannot guarantee that we will detect all issues or impactdevelop relatingsuccessful topatches. these product problems could affect the perception of our brand and market acceptance of our products or technologies. These errors could result in a loss of or delay in market acceptance of our products or cause delays in delivering them and meeting customer demands, any of which could reduce our revenue and raise significant customer relations issues. In addition, ifIf our products or technologies contain errors, we could be required to replace or reengineer them orand, as with security vulnerabilities, we may rely upon parties who have incorporated our technologies into their products to implement updates to address such issues, which could causeleave delaysany such errors or increasevulnerabilities unresolved. As an example of these types of risks, in October 2025, a team of security researchers announced a vulnerability related to a specific Dolby software module. We have developed a corrective software patch and made the patch, as well as other assistance, available to potentially impacted partners. While many of our costs.partners have deployed the patch across their devices, the application of the patch across all affected devices will require the effort of our partners and, in some cases, the end users and other third parties, which we cannot guarantee. While there are technical impediments to exploiting unpatched devices, we cannot guarantee that malicious actors will not exploit unpatched vulnerabilities and damage or gain unauthorized access to affected products. Negative publicity or impact related to errors or vulnerabilities could affect the perception of our brand and market acceptance of our products or technologies. Moreover, if any sucherrors errorsor vulnerabilities cause unintended consequences, we could incur substantial costs in investigating and remediating those consequences, including defending and settling product liability claims. Although we generally attempt to contractually limit our liability, if these contract provisions are not enforced, or are unenforceable for any reason, or if liabilities arise that are not effectively limited, we could incur substantial costs in defending and settling product liability claims.

Many of the markets for our products and for products in which our technologies are incorporated are price sensitive. The markets for the consumer entertainment products in which our technologies are incorporated are intensely competitive and price sensitive. We expect to face increased royalty pricing pressure for our technologies as we seek to increase the adoption of our technologies in online content and portable devices, such as tablets and smartphones. Such pricing pressures may be exacerbated by elevated rates of inflation, tariffs and other trade barriers, which may cause device manufacturers to take additional steps to limit costs. Retail prices for consumer entertainment products that include our audio technologies, such as home theater systems, have decreased significantly, and we expect prices to decrease for the foreseeable future. In response, OEMs have sought to reduce their product costs, which can result in additional downward pressure on the licensing fees we charge. Further, Dolby.ioDolby OptiView faces pricing pressure from other platforms offering similar solutions that may be able to offer competing services at lower prices.

We face competition from other audio formats, imaging solutions, and integrated system offerings. We believe that the success we have had licensing our audio and imaging technologies is due, in part, to the high quality of the solutions that our technologies provide, our success in fostering content and device ecosystemsecosystems, and to the strength of our brand. However, both free and proprietary sound and imaging technologies are becoming increasingly prevalent, and we expect competitors to continue to enter these fields with other offerings. Furthermore, to the extent that customers perceive our competitors’ products as providing the same or similar advantages as our technologies at a lower or comparable price, there is a risk that these customers may treat sound and video encoding technologies as commodities, resulting in loss of status of our technologies, decline in their use, and significant pricing pressure. For example, we face competition with respect to our HDR imaging technology, Dolby Vision, and there can be no assurance that additional consumers will adopt Dolby Vision in the near future, or at all, or that we will maintain our existing customers.

•Companies building real-time digital experiences that increase audience engagement; and

•Device manufacturers.manufacturers; and

Industry relationships have historically played an important role in the markets that we serve, particularly in the entertainment market. For example, sales of our products and services are particularly dependent upon our relationships with major film studios and broadcasters, and licensing of our technologies is particularly dependent upon our relationships with system licensees and IC manufacturers. Industry relationships also play an important role in other markets we serve; for instance, our relationships with companies building real-time digital experiences support the adoption of Dolby.ioDolby OptiView solutions. If we fail to maintain and strengthen our industry relationships, industry participants may be less likely to purchase and use our technologies, products, and services, or create content incorporating our technologies, or develop standards that incorporate our technologies.

Our M&A activity is subject to certain risks, including risks associated with integrating acquired businesses. We evaluate a wide array of possible strategic transactions, including acquisitions. We consider these types of transactions in connection with, among other things, our efforts to strengthen our audio and cinema businesses and expand beyond audio technologies. Although we cannot predict whether or not we will complete any such acquisitions or other transactions in the future, any of these transactions could be significant in relation to our market capitalization, financial condition, or results of operations. The process of integrating an acquired company, business, or technology may create unforeseen difficulties and expenditures. Foreign acquisitions involve unique risks in addition to those mentioned above, including those related to integration of operations across different geographies, cultures, and languages; currency risks; and risks associated with the economic, political, and regulatory environment in specific countries. Future acquisitions could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses, and write-offs of goodwill. Future acquisitions may also require us to obtain additional equity or debt financing, which may not be available on favorable terms or at all, particularly during times of market volatility, elevated interest rates, and general economic instability. Also, the anticipated benefits of our acquisitions may not materialize.

•Cultural and logistical challenges associated with integrating employees from acquired businesses into our organization and integrating acquired businesses' accounting, human resources, and other administrative systems with existing systems;

•Possible write-offs or impairment charges resulting from acquisitions; and

•Unanticipated or unknown liabilities relating to acquired businesses; andbusinesses.

•U.S. and foreign government trade restrictions or sanctions, including those which may impose restrictions on the importation or exportation of products, equipment, materials, software, technologies, services, on technology transfers, or on the receipt or collection of payments and distribution of royalties, and any political or economic responses or counter-responses to such restrictions or sanctions, including any such restrictions, sanctions, responses, or counter-responses related to global military conflictsconflicts, a trade war or changes in US export controls related to China and other countries;

•Changes in global trade or trade relationships, including new and retaliatory tariffs, trade protection measures, import or export licensing requirements, trade agreements, trade embargoes and other trade barriers imposed by the U.S.U.S., China, or by other countries;

Certain foreign governments and industry participants have advanced arguments under competition laws that exert downward pressure on royalties for IP. The regulatory enforcement activities in such jurisdictions can be unpredictable, in some cases because these jurisdictions have only recently implemented competition laws. From time to time, we are the subject of requests for information, market conduct examinations, inquiries or investigations by industry groups and/or regulatory agencies in these jurisdictions. For instance, the Korean Fair Trade Commission requested information relating to our business practices in South Korea on various occasions, and initially made findings regarding the audit of a single customer. In July 2023, that determination was overturned by the Korean Civil court and thus the matter was fully resolved in Dolby’s favor. In the event that we are involved in significant disputes or are the subject of a formal action by a regulatory agency, our results could be negatively impacted and we could be exposed to costly and time-consuming legal proceedings.

In many foreign countries, particularly in those with developing economies, it is common to engage in business practices that are prohibited by U.S. regulations applicable to us such as the FCPA and U.S. export controls. Although we implement policies and procedures designed to ensure compliance with the FCPA and U.S. export controls, such measures can not guarantee that all of our employees, distributors, dealers, and agents will not take actions in violation of our policies or these regulations.regulations, which could subject us to criminal or civil penalties as well as potential stockholder litigation.

Changes in U.S. tax law,law includingmay affect our business. For example, in July 2025 budget reconciliation bill H.R. 1, referred to as the TaxOne CutsBig andBeautiful JobsBill Act ("Tax Act") and the Inflation“OBBBA”), Reductionwas Act,signed into law. The OBBBA contains several changes to corporate taxation rules which may affect our business. These provisions, their interpretations, and other proposed changes to law could further impact our corporate trading structure and adversely affect our tax rate and cash flow in future years.

In addition, the Organization of Economic Cooperation and Development (“OECD”), an international association of many countries including the U.S., has made changes to many long-standing transfer pricing and cross-border taxation rules that affect our operations. The OECD has introduced a framework to implement a 15% global minimum corporate tax, referred to as Pillar 2 or the minimum tax directive. The minimum tax directive has been adopted by the EU for implementation by its Member States into national legislationlegislation, several foreign jurisdictions, and may be adopted by other jurisdictions, including the U.S.jurisdictions. Further, the OECD, European Commission, EU Member States and other individual countries have made and could make additional competing jurisdictional claims over the taxes owed on earnings of multinational companies in their respective countries or regions. Recently, the G7 and the U.S. Treasury Department announced an agreement that impacts U.S.-parented group companies whereby the Pillar 2 rules and the U.S. international tax regime will operate in parallel. To the extent these developments impact actions takeby placetax jurisdictions in the countries that we operate, it is possible that these and future law changes and efforts may increase uncertainty and have an adverse impact on our effective tax rates or operations.

The Dolby family has control over stockholder decisions as a result of the control of a majority of the voting power of our outstanding common stock by them and their affiliates. AtAs of September 27,26, 2024,2025, the Dolby family and their affiliates owned 314,968246,295 shares of our Class A common stock and 35,597,73334,587,733 shares of our Class B common stock. As of September 27,26, 2024,2025, the Dolby family and their affiliates had voting power of 99.8% of our outstanding Class B common stock, which combined with their shares of our Class A common stock, represented 85.6%85.0% of the combined voting power of our outstanding Class A and Class B common stock. Under our certificate of incorporation, holders of Class B common stock are entitled to ten votes per share while holders of Class A common stock are entitled to one vote per share. Generally, shares of Class B common stock automatically convert into shares of Class A common stock upon transfer of such Class B common stock, other than transfers to certain specified persons and entities, including the spouse and descendants of Ray Dolby and the spouses and domestic partners of such descendants.

There are risks associated with our dividend program. We cannot provide assurance that we will continue to increase dividend payments and/or pay dividends. We are not obligated to pay dividends on our Class A and Class B common stock. In October 2014, we announced a quarterly cash dividend program for our stockholders that was initiated by our Board of Directors. Although we anticipate paying regular quarterly dividends for the foreseeable future, dividendwe declarationsare not obligated to, and thecannot establishmentprovide ofassurance futurethat recordwe andwill, paymentcontinue datesto pay dividends. Dividend declarations are subject to the Board of Directors’ continuing determination that the dividend policy is in the best interests of our stockholders. The dividend policy may be changed or canceled at the discretion of the Board of Directors at any time. If we do not pay dividends, the market price of our Class A common stock must appreciate for investors to realize a gain on their investment. This appreciation may not occur and our Class A common stock may in fact depreciate in value.

Macroeconomic conditions, including inflation, elevated interest rates, and supply chain constraints have impacted and may continue to impact the markets we serve and our business and results of operations. Our revenue and operations and the markets we serve have been, and may continue to be, impacted by macroeconomic conditions, including but not limited to, inflation, elevated interest rates, supply chain constraints, increased shipping costs, tariffs and changes in international trade relations, international conflicts, reduced discretionary consumer spending, and reduced new product investment by our customers caused by elevated interest rates and lower demand. The current macroeconomic environment has negatively impacted, and may continue to negatively impact, many of our licensees and that directly impacts, and may continue to impact, our financial results. The impacts of the current macroeconomic environment on our partners have resulted in, and may continue to cause, the disruption of consumer products' supply chains, shortages of certain semiconductor components, and delays in shipments, product development, and product launches. The macroeconomic conditions also impart substantial uncertainty into our operating environment, which presents additional challenges for our business. These factors and the related uncertainty may cause delays or a decrease in the adoption or implementation of our technologies into new products by partners and licensees. These conditions may impact consumer demand for devices and services and our partners’ ability to manufacture devices. Further, we may be negatively impacted by delays in transaction cycles and our recoveries efforts due to the noted macroeconomic conditions and related uncertainty. The future implications of these macroeconomic conditions on our business, the markets we serve, results of operations and overall financial position remain uncertain.

The following discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results may differ materially from those referred to herein due to a number of factors, including but not limited to key challenges listed below and risks described in Part I, Item 1A,1A "Risk Factors" and elsewhere in this Annual Report on Form 10-K. We disclaim any duty to update any of the forward-looking statements after the date of this Annual Report on Form 10-K to conform our prior statements to actual results.

Investors and others should note that we disseminate information to the public about our company, our products, servicesservices, and other matters through various channels, including our website (www.dolby.com), our investor relations website (http://investor.dolby.com), SEC filings, press releases, public conference calls, and webcasts, in order to achieve broad, non-exclusionary distribution of information to the public. We encourage investors and others to review the information we make public through these channels, as such information could be deemed to be material information.

The majority of our revenue is derived from two licensing models:models, Branded Technology Licensing,Licensing and Patent Licensing.Licensing, each of which individually comprises a substantial portion of our revenue. While each has had successes in fiscal 2024,successes, they share certain challenges. In particular, factors such as global supply constraints or device lifecycles may impact licensing revenue. Further, in certain countries, we and other IP owners face difficulties enforcing contractual and IP rights, including instances in which our licensees fail to accurately report the shipment of products using our technologies. Finally, we face geopolitical challenges including changes in diplomatic and trade relationships, trade protection measures,measures including the imposition of tariffs, and import or export licensing requirements. Further discussion of the potential impacts of the key challenges on our business can be found in Part I, Item 1A "Risk Factors."

Dolby’s branded technology licensing offers complete technology solutions to our licensees, primarily device manufacturers. Licenses include rights to software, patent rights, know how,know-how, and the relevant Dolby brand. Our branded technologies are primarily comprised of Branded Audio Codecs (DD+ and AC-4) and Dolby Atmos and Dolby Vision (Dolby Atmos for audio, and Dolby Vision for imaging). Licensing revenue is primarily driven by the adoption of our technologies on devices and the number of devices shipped by licensees. Our branded audio codecs have broad penetration across a diverse set of devices and end markets. Revenue from these technologies is primarily driven by device shipments from licensees, and as such, is impacted by consumer spendingspending. The remaining portion of our branded licensing revenue is derived from Dolby Vision and Dolby Atmos. Dolby Vision and Dolby Atmos have not been in the market as long as our branded audio codecs, thus revenue growth is driven by device shipments, increased adoption and the addition of new licensees.

We are focused on expanding our leadership in audio and imaging solutions for premium entertainment content by increasing the number of Dolby experiences that people can enjoy, which will drive revenue growth across the markets we serve. We work across our ecosystem of partners including creators, distributors and device manufacturers to increase the number of Dolby experiences that people can enjoy by enhancing content, including movies and TV, music and live sports, using Dolby branded technologies. Increased content in these areas increases our value proposition across our end markets. In movies and TV, thousands of movie titles and tens of thousands of TV episodes have been created and released in Dolby Atmos and/or Dolby Vision. Major streaming partners and services such as Netflix, Disney+, Apple TV+,TV, Amazon, HBO Max, Paramount+, and other streaming partners and services internationally, continue to enhance content in Dolby Vision and Dolby Atmos. In Music, exiting fiscal 2024, over 90% of Billboard’s Top 100 Global artists are releasing music in Dolby Atmos, 20 music streaming services now support Dolby Atmos, and over 1,000 music studios globally have been enabled with Dolby Atmos. In sports, the 2024Super SummerBowl, OlympicMarch GamesMadness, coverageFIFA wasClub World Cup soccer, the Stanley Cup Finals, the French Open, the Indian Premier League playoffs and finals, and the World Test Cricket Championship Final were available in DolbyDolby. VisionAlso, andPeacock Dolbycurrently Atmos,streams asits wereNFL theSunday T20Night CricketFootball World Cup, UEFA EURO 2024, Wimbledon, and the NHLgames and NBA post season. In India, the BGMI Master Series Grand Finals premiered in Dolby Atmos on Disney Star 4K. Also, US streaming provider Max announced that it will stream all of its live sports content in Dolby Atmos and Dolby Vision. In eGaming, in China, the League of Legends Summer Finals streamed livegames in Dolby Atmos.

Revenue from our patent licensing dependsis ondriven, in part, by the adoption and use of the standardized technologies in which we participate by device manufacturers. As in any technology licensing business, it is possible that changing partner preferences, consumer preferences, or other market dynamics could lead to adoptionincreased andor decreased adoption, or the use of alternative technologies.

Revenue derived from our patent licensing programs is also dependsdriven onby the success of the patent pools in which we participate, which is driven by licensee, licensor, and program renewals. The revenue we derive from patent pools also depends significantly on the patent pool administrators’ success in negotiating licenses with companies already using the relevant standard (i.e. licensee penetration). Additionally, our licensing revenue from patent pools is alsodriven, impactedin part, by the royalty share among pool licensors, which is determined based on the value of the patents each licensor contributes to the pool, as governed by allocation rules negotiated among the pool licensors.

The standardized technologies at the core of our patent licensing are intended for broad use across all device categories that play back audio and visual content. OEMsDevice manufacturers typically negotiate and acquire the patent rights for these technologies for implementation across all their device categories and product lines in their applicable end markets.

The following are highlights from our fiscal 2024 and key challenges related to Dolby’s licensing businesses, by market.

Highlights: We have an established global presence and broad adoption of our branded audio and patent licensing technologies in broadcast services and devices, which primarily include TVs and STBs. In fiscal 2024, Australia selected AC-4 as part of its new broadcast STB specification. We work with many TV OEMs and strategic partners to enable and promote Dolby Vision and Dolby Atmos experiences within their TV lineups. We have strong attach rates for Dolby Atmos and Dolby Vision with high end TVs and continue to grow adoption on mid-range TVs. We estimate that Dolby Atmos and Dolby Vision were on approximately 30% of all 4K TVs shipped during fiscal 2024, and manyMany partners continue to expand their support of the combined Dolby Vision and Dolby Atmos experience. ThroughoutIn 2024,fiscal TCL2025, andwe HiSense continued to adoptannounced Dolby Vision 2, which is expected to improve picture quality and Dolbyunleash Atmosthe deeperfull withincapabilities theirof modern TVs, by automatically adjusting contrast via ambient light detection, optimizing motion control for sports and gaming content, and tone mapping that enables creators to take full advantage of the latest advancements in higher end TV lineups.displays. Additionally,Hisense Polytron,and anTCL Indonesian TV OEM, launched a new TVannounced that supportsthey Dolbywill Atmos and Dolby Vision. Xiaomi announced new 4K QLEDrelease TVs that support Dolby Vision.Vision 2.

Key Challenges: Our pursuit of new licensees and further adoption of our technologies by existing licensees may be impacted by a number of factors. We must continue to present compelling reasons for consumers to demand our audio and video technologies, including ensuring that there is a breadth of available content in our formats and such content is being widely distributed. To the extent that OEMs do not incorporate our technologies in current and future products or our technology is not included in future broadcast industry standards, our revenue could be negatively impacted. Changing trends in the way that video content is distributed and consumed may impact our business and future growth in the broadcast market, such as the trend away from subscription-based cable and satellite television providers toward streaming services.

Highlights: We continue to promote adoption of our technologies across major mobile ecosystems, including Apple and Android. Our patent licensing technologies are adopted broadly throughout the mobile device ecosystem, and we completed several important renewals this year, including with Vivo.ecosystem. Dolby Atmos and Dolby Vision are included throughout the Apple device line-up and in Apple TV+,TV, and Dolby Atmos is included in Apple Music. Dolby Vision Capture has been supported on all iPhones since the iPhone 12 and iOS 18 recent release unlocked support for higher frame rates.12. We have strong adoption of Dolby Atmos and our branded audio codecs across high-end Android mobile devices and are focused on growing our presence on low and mid-tier phones. An increasing number of Android device manufacturers have adopted Dolby Vision and Dolby Vision Capture on high end devices and we are focused on the opportunity to significantly increase our adoption. The breadth of mobile devices supporting Dolby technologies continues to increase globally. In fiscal 2024,2025, Transsion,device amanufacturers globalsuch as OPPO, Motorola, and Xiaomi released new mobile devicedevices maker, announced that their latest smartphones will supportsupporting Dolby Atmos.technologies Xiaomisuch beganas shippingDolby its premium smartphone enabled withVision, Dolby Vision Capture, Dolby Vision, and Dolby Atmos in India. Honor launched the Magic 6 Pro smartphone that supports Dolby Vision and Lava Mobiles launched its new Blaze Curve 5G smartphone in India that supports Dolby Atmos. Oppo recently announced that they introduced five new phones supporting Dolby Vision Capture. Also in fiscal 2024 Transsion added a Dolby enabled low cost phone for consumers in Malaysia. Additionally, Sharp Singapore launched the R8s Pro smartphone series with Dolby Vision and Dolby Atmos and Realme launched the GT6, the first smartphone to support Dolby Vision video capture in telephoto video. Also, Apple launched the iPhone 16, which supports Dolby Atmos and Dolby Vision, and records in Dolby Vision.

Key Challenges: Growth in this market is dependent on several factors. Due to short product life cycles, mobile device OEMs can readily add or remove certain of our technologies from their devices. Our success depends on our ability to address the rapid pace of change in mobile devices, and we must continuously collaborate with mobile device OEMs to incorporate our technologies. We rely on a small number of partnerships with key participants in this market. If we are unable to maintain these key relationships, we may experience a decline in mobile devices incorporating our technologies. To the extent that OEMs do not incorporate our technologies in current and future products or our technology is not included in future mobile industry standards, our revenue could be impacted. We must also continue to support the development and distribution of Dolby-enabled content via various ecosystems.

Highlights: We have an established presence in the home entertainment market across devices such as wireless and smart speakers, soundbars, DMAs (devices that connect a computer to a home media system to the internet), and AVRs, through the inclusion of our branded audio codecs, and increasingly through the inclusion of Dolby Atmos and Dolby Vision. Our patent licensing technologies also have broad adoption in the home entertainment market. We continue to focus on expanding the availability of Dolby technologies to new devices. In fiscal 20242025, Sonosseveral launchednew headphonessoundbars that supportfeaturing Dolby Headtechnologies Trackingsuch with Dolby Atmos. Additionally, VIZIO announced integration ofas Dolby Atmos acrosswere itsintroduced entirefrom 2024various soundbarmanufacturers lineup.including Finally,Harman MetaKardon, announcedSamsung, supportLG, forand Dolby Atmos across its MetaQuest headset device lineup.Sonos.

Key Challenges: We must continue to present compelling reasons for consumers to demand our technologies wherever they enjoy entertainment content, while promoting creation and broad availability of content in our formats. With relatively short product life cycles for many consumer electronics, OEMs can add or remove certain of our technologies from their products which could impact our revenue. In addition, to the extent that our technology is not included in future industry standards, our revenue could be impacted.

Highlights: DD+ enhances audio playback in Mac computers through the operating system with native support in the Safari browser, and Windows-based PCs through PC OEM implementations and native support in the Microsoft Edge browser. Dolby's presence in these browsers enables us to reach more users through various types of content, including streaming video entertainment. A number of personal computersPCs from partners such as Apple, Lenovo, Dell, Samsung, MicrosoftMicrosoft, and ASUS also support Dolby Vision and/or Dolby Atmos, with continued expansion of applications through music, streaming, and gaming. At CES in January 2024, Alienware and ASUS announced their first gaming PC monitors to support Dolby Vision, and Dell announced that its latest XPS laptops will offer the combined Dolby Vision and Dolby Atmos experience. Also in fiscal 2024, Lenovo launched several new flagship products that support Dolby Vision and Dolby Atmos - including the Yoga Air, moto razr and moto S50 Neo. Lenovo's new Thinkpad X1 Carbon Gen 13 Aura Edition supports Dolby Vision, and its Thinkbook 16 Gen7+ and Thinkbook 16 Gen 7 supports Dolby Atmos. Several of our patent licensing technologies have significant presence in this market, and we benefited from significant new agreements this year with Lenovo, Acer, Asus, and (in October 2024) HP for HEVC.

Key Challenges: Demand for personal computersPCs has fluctuated significantly in recent years. We must continuously collaborate and maintain our key partnerships with personal computerPC manufacturers to incorporate our technologies, and we must continue to support the development and distribution of DolbyDolby-enabled content via various ecosystems. To the extent that personal computerPC manufacturers do not incorporate our technologies in current and future products, our revenue could be impacted. Beginning with PCs shipping with Windows 11, version 24H2, Microsoft is changing the way Dolby’s DD and DD+ decoders are provided to third party personal computer OEMs. For such devices, Dolby has begun distributing those codecs directly to personal computer OEMs instead of through Microsoft’s Windows operating system. We do not expect this change to have a material impact on our revenue.

Gaming consoles such as the Sony PlayStation and the Microsoft Xbox use DD+ to support gaming content and streaming for movie and television content. The PlayStation 5 supports compatible Dolby Atmos-enabled living room devices. The Xbox Series X and Series S gaming consoles support Dolby Vision and Dolby Atmos for streaming and gaming content. Additionally, our technologies continue to be incorporated into the latest headphones by various OEMs. In fiscal 2024, Alienware released 27 4K Dual Resolution Gaming Monitor that supports Dolby Atmos.

Key Challenges: Our automotive relatedautomotive-related revenue growth will be impacted if OEMs do not incorporate our technologies in their latest products. The long development cycle of the automotive industry reduces the frequency of our opportunities to be incorporated into additional products. Additionally, the automotive industry is cyclical, so our revenue from the auto market is affected by the broader cycles of the industry. Consumer demand for gaming devices is impacted by anticipation of console refresh cycles, which could result in fluctuations in our revenue. In addition, the gaming console market has competition from mobile devices and gaming PCs, which have faster refresh cycles and appeal to a broader consumer base.

Key Challenges: Although the premium large formatPLF market for the cinema industry has been growing, Dolby Cinema competes with other existing offerings. Our success depends on our partners and their success, and our ability to differentiate our offering and deploy new sites. In addition, the success of our Dolby Cinema offering is tied to global movie production and box office performance generally. For example, the strikes by the Writers Guild of America and Screen Actors Guild - American Federation of Television and Radio Artists ("SAG-AFTRA") in 2023 effectively halted the production, release and promotion of certain films for an extended period. That disruption resulted in, and similar disruptions to movie production and exhibition in the future may lead to, decreases in box office receipts and our cinema-related revenue.

A majority of our productsProducts and servicesServices revenue is derived from the sale of audio and imaging products for the cinema industry. Revenue from Dolby.ioDolby OptiView is also included in products and services.

Highlights: To help enable the playback of content in Dolby formats, we offer a range of servers, which include the IMS3000 (an integrated imaging and audio server with Dolby Atmos), and audio processors, such as the CP950, to cinema exhibitors globally. Dolby Atmos has been adopted broadly across studios, content creators, post-production facilities, and exhibitors. As of the end of fiscal 2024,2025, there are over 8,1008,500 Dolby Atmos screens installed or committed and over 3,5004,300 Dolby Atmos theatrical titles have been announced or released.

Key Challenges: Demand for our cinema products is dependent upon our partners and their success in the market, industry and economic cycles, box office performance, and our ability to develop and introduce new technologies, further our relationships with content creators, and promote new cinematic audio and video experiences. A significant portion of our growth opportunity lies in international markets, which are subject to geopolitical risks. Additionally, weakness in general economic conditions due to inflation, recession, pandemicthe imposition of tariffs and other trade barriers, or other worseningunfavorable economic conditions could have a negative impact on our cinema-related revenue due to reduced consumer discretionary spending. We may also be faced with pricing pressures or competing technologies, which would affect our revenue. In addition, supply chain constraints may impact our ability to provide cinema products and services to our customers. Long lead times and increased cost of materials due to the macroeconomic conditions, including higher interest rates have also negatively impacted the financial health of our cinema customers and partners, leading to reduced new product investment and lower demand. In addition, the strikes by the Writers Guild of America and SAG-AFTRA in 2023 effectively halted the production, release and promotion of certain films for an extended period. The resulting impacts of those stoppages have resulted in, and may continue to lead to, decreased box office receipts in the near term, which could potentially impact exhibitors' willingness and ability to invest in our cinema products.

Dolby.ioDolby OptiView

Highlights: Our strategy for Dolby.ioDolby OptiView is to bring Dolby’s audio and video technologies to a broader range of media content and digital experiences. We are expanding our addressable market by offering solutions to companies building real-time digital experiences that increase audience engagement. For instance, our solution can provide the capability to stream high quality audiovisual content with ultra-low latency that reduces the delay between the action and the viewer.

KeyDolby Challenges: Dolby.ioOptiView is an early-stage business, and it is uncertain when or if it will be a material revenue driver. Our success in this market will depend on adoption by companies building real-time digital experiences that increase audience engagement, the volume of usage of the services and our ability to monetize our services. In addition, the development and maintenance needed to provide a reliable and scalable platform may require us to incur additional costs to develop new skills within our existing employee base or hire external specialized talent. Although the market for real-time experiences has been growing, Dolby.ioDolby OptiView competes with other offerings.offerings from third parties.

Most of our licensing arrangements are structured as sales-based whereby we are paid a unit-based royalty. The unit-based sales data that triggers the royalty obligation is generally reported to us in the quarter after triggering the royalty obligation. We apply the royalty exception to these arrangements, which requires that we recognize sales-based royalties at the later of when the sales occur based on our estimates or the completion of our performance obligations.estimates. Our estimates of royalty-based revenue take into consideration the macroeconomic effect of global events, such as inflation, elevated interest rates, economic impacts related to industry challenges, or other economic conditions, which may impact supply chain activities as well as demand for shipments. These estimates also involve the use of historical data and judgment for several key attributes including industry estimates of expected shipments, the percentage of markets using our technologies, and average sale prices. Generally, our estimates represent the current period’s shipments for which we expect our licensees to submit royalty statements in the following quarter. Upon receipt of royalty statements from the licensees with the actual reporting of sales-based royalties that we previously estimated, we record a favorable or unfavorable adjustment based on the difference, if any, between estimated and actual sales.

We also enter into fixed and guaranteed licensing feesfee arrangements, that require the licensee to pay a fixed, non-refundable fee. In these cases, control is transferred and the transaction price - the amount we expect to be entitled to in exchange for the license right - is recognized upon the later of contract execution or the effective date. Transaction price is determined at contract execution and, to the extent variable consideration applies, is updated each subsequent reporting period until the completion of the contract. We evaluate whether other distinct performance obligations exist, such as PCS, and determine the stand-alone selling price. We do so by considering actual stand-alone sales in addition to market conditions such as competitor pricing strategies, customer specific information and industry technology lifecycles, internal conditions such as cost and pricing practices, or applying the residual approach method when the selling price of the good, most commonly a license, is highly variable or uncertain. In addition, we evaluate whether a significant financing component exists when we recognize revenue in advance of customer payments that occur over time and extend beyond one year. In general, if the payment arrangements extend beyond the first year of the contract, we treat a portion of the payments as a financing component. The discount rate used for each arrangement reflects the rate that would be used in a separate financing transaction between us and the licensee at contract inception and takes into account the credit characteristics of the licensee and market interest rates as of the date of the agreement. If we assess the financing component to be significant to the contract, the amount of fixed fee revenue recognized at the beginning of the license term will be reduced by the calculated financing component. The portion related to the financing component is recorded as interest income, and is not material to our consolidated financial statements.

Services revenue consists of fees charged to support theatrical and television production for cinema exhibition, broadcast, and home entertainment, including equipment training and maintenance, mixing room alignment, equalization, as well as audio, color, and light image calibration. Services revenue also includes PCS for products sold and equipment installed at Dolby Cinema theaters operated by exhibitor partners and support for the implementation of our technologies into products manufactured by our licensees. Also included in servicesServices revenue are amounts generated through Dolby.io.Dolby OptiView. Cost of services consists of personnel and personnel-related costs for providing our professional services, software maintenance and support, external contractors, and other direct expenses incurred on behalf of customers.

S&M expenses consist primarily of employee compensation and benefits expenses, stock-based compensation, marketing and promotional expenses for events such as trade shows and conferences, marketing campaigns, travel-related expenses, contractor fees, facilities costs, depreciation and amortization, information technology expenses, and legal costs associated with theunreported protectionand underreported use of our IP.

In September 2023,2025, we initiated a restructuring planactions within theorder purposeto ofcentralize focusingteams ourinto resourcesfewer onlocations ourto highestprovide strategicbetter priorities.access to talent pools, encourage multi-disciplinary collaboration, and simplify operations. In connection with this plan, we recorded an expense in thefiscal fourth quarter2025 of fiscal 2023 of $13.4$6.1 million in severance and other related benefitsbenefits. andThe anremaining impairment losscomponents of $16.9this millionplan relatedare primarilyexpected to internallybe developedcompleted software for projects we are no longer pursuing. In continuation with this plan, we recorded an expense inby the firstend of the second quarter of fiscal 20242026, resulting in an additional charge of $7.4approximately $10 million in severance and other relatedtermination benefits. Cash payment of the severance and other termination benefits wereare expected to be substantially completed by the end of the secondfirst quarter of fiscal 2024.2026. These activities resultedare expected to result in estimated gross pre-tax operating income savings of approximately $40$20 million withinin fiscal 2024,2026, whichdue wasto consistentestimated withsavings ourin expectations.compensation and benefits of impacted employees. The impact of these estimated savings on our operating expenses waswill be mostly offset by increased investment in our strategic priorities and the effects of inflation on our remaining expenses.

In JuneNovember 2023,2024, we implementedinitiated restructuring actions with the purpose of aligning our R&D resources, and to a focusedlesser restructuringextent plan,our primarilyS&M consisting of workforce reductions and facility consolidations to improve execution in alignmentresources, with our strategyhighest andstrategic topriorities. reduceIn ourconnection costwith structurethis through improved utilization of our global infrastructure. As a result of these actions,plan, we recorded expense in thefiscal third quarter2025 of fiscal 2023 of $10.9$9.2 million in severance and other related benefitsbenefits. andThe expenseremaining components of $6.9 million related to a facility consolidation in New York, NY. Actions and expenses related to this plan were substantially completed by the end of fiscal 2025. Cash payment of the secondseverance quarterand other termination benefits were substantially completed by the end of fiscal 2024.2025. These activities resulted in estimated gross pre-tax operating income savings of approximately $20 million in fiscal 2024,2025, due to estimated savings in compensation and benefits of impacted employees, which was consistent with our expectations. The impact of these estimated savings on our operating expenses was mostly offset by increased investment in our strategic priorities and the effects of inflation on our remaining expenses.

Other income/expense primarily consists of interest income earned on cash and investments and the net gains or losses from foreign currency transactions, derivative instruments, our proportionate share of net income or losses from our equity method investment in Access Advance,investments, and gains and losses on the sales of marketable securities from our investment portfolio.

Our effective tax rate is based on our fiscal year results and is affected each period end by several factors. These include differences from projected fiscal year results, changes to tax rates, the currentrelative statutorymix ratesof income earned in our domestic and foreign jurisdictions, theas relativewell incomeas earned in our foreign jurisdictions, and nonrecurringdiscrete items such as changes to our unrecognizeduncertain tax benefits that may occur in but are not necessarily consistent between periods. For additional information related to effective tax rates, see Note 12 "Income Taxes" to our consolidated financial statements.

Our principal sources of liquidity are cash, cash equivalents, and investments, as well as cash flows from operations. We also have additional access to liquidity under a revolving credit facility, as noted in our Current Report on Form 8-K filed with the SEC on November 19, 2024. We believe that these sources will be sufficient to satisfy our currently anticipated cash requirements through at least the next twelve months.

As of September 27,26, 2024,2025, we had cash and cash equivalents of $482.0$701.9 million, which consisted of cash.cash and highly liquid money market funds. In addition, we had short and long-term investments of $89.3$80.9 million, which primarily consisted of an equity method investmentinvestments and an equity securitysecurities without a readily determinable value.

Our revenue could decline if we are unable to maintain patent coverage for our technologies. Many of the technologies that we license to our system licensees are covered by patents, and the licensing revenue that we receive from those licenses depends in part upon the life of such patents. In general, our agreements with our licensees require them to pay us a full royalty with respect to a particular technology only until there are no patents or, in some cases, no patent applications covering that technology in countries where applicable products are made and sold. As of MarchJune 27,26, 2026, we had approximately 30,20030,100 issued patents in addition to approximately 6,6006,700 pending patent applications in more than 200 jurisdictions throughout the world. Our currently issued patents expire at various times ranging from 2026 through 2049. If we are unable to refresh our technology with new patented inventions or expand our patent portfolio, our revenue could decline. In addition to patents covering technology we license directly, if patents we license through patent pool arrangements expire or we are otherwise unable to maintain our share of pool royalties, then our revenue could be impacted. Additionally, if the patents licensed through a patent pool arrangement are deemed not to be valuable in the aggregate by the licensees of such patent pool, they may not renew their licenses, which could impact our revenue.

Conducting business internationally presents a number of risks to our business, including trade restrictions and changing, unpredictable, and/or inconsistent laws in the jurisdictions in which we operate. We are dependent on international sales for a substantial amount of our total revenue. Approximately 53%57% and 58%62% of our revenue was derived outside of the U.S. in the fiscal year-to-date periods ended MarchJune 27,26, 2026 and MarchJune 28,27, 2025, respectively. We are subject to a number of risks related to conducting business internationally, including:

The Dolby family has control over stockholder decisions as a result of the control of a majority of the voting power of our outstanding common stock by them and their affiliates. As of MarchJune 27,26, 2026, the Dolby family and their affiliates owned 249,435 shares of our Class A common stock and 34,197,733 shares of our Class B common stock. As of MarchJune 27,26, 2026, the Dolby family and their affiliates had voting power of 99.8% of our outstanding Class B common stock, which combined with their shares of our Class A common stock, represented 84.9%85.1% of the combined voting power of our outstanding Class A and Class B common stock. Under our certificate of incorporation, holders of Class B common stock are entitled to ten votes per share while holders of Class A common stock are entitled to one vote per share. Generally, shares of Class B common stock automatically convert into shares of Class A common stock upon transfer of such Class B common stock, other than transfers to certain specified persons and entities, including the spouse and descendants of Ray Dolby and the spouses and domestic partners of such descendants.

Macroeconomic conditions, including inflation, elevated interest rates, and supply chain constraints have impacted and may continue to impact the markets we serve and our business and results of operations. Our revenue and operations and the markets we serve have been, and may continue to be, impacted by macroeconomic conditions, including but not limited to, inflation, elevated interest rates, supply chain constraints including shortages of memory and semiconductor materials anand components, increased shippingfuel and transportation costs, tariffs and changes in international trade relations, international conflicts and geopolitical instability, reduced discretionary consumer spending, and reduced new product investment by our customers caused by elevated interest rates and lower demand. The current macroeconomic environment has negatively impacted, and may continue to negatively impact, many of our licensees and that directly impacts, and may continue to impact, our financial results. The impacts of the current macroeconomic environment on our partners have resulted in, and may continue to cause, the disruption of consumer products' supply chains, and delays in shipments, product development, and product launches. The macroeconomic conditions also impart substantial uncertainty into our operating environment, which presents additional challenges for our business. These factors and the related uncertainty may cause delays or a decrease in the adoption or implementation of our technologies into new products by partners and licensees. These conditions may impact consumer demand for devices and services and our partners’ ability to manufacture devices. Further, we may be negatively impacted by delays in transaction cycles and our recoveries efforts due to the noted macroeconomic conditions and related uncertainty. The future implications of these macroeconomic conditions on our business, the markets we serve, results of operations and overall financial position remain uncertain.

We generated over 90% of our revenue in the secondthird quarters of fiscal 2026 and fiscal 2025, and the fiscal year-to-date periods ended MarchJune 27,26, 2026 and MarchJune 28,27, 2025 from agreements to license branded technology and patents that enable approximately 1,000 electronic device manufacturers to enable and enhance the audio and visual capabilities of their products by incorporating our technology. As of MarchJune 27,26, 2026, we had approximately 30,20030,100 issued patents relating to technologies, that are licensed to third parties and comprise a significant portion of our licensing revenue. We have approximately 1,5001,600 trademark registrations throughout the world for a variety of wordmarks, logos, and slogans. These trademarks are an integral part of our technology licensing program as licensees typically place them on their products that incorporate our technologies to inform consumers that they have met our quality specifications.

Dolby OptiView is deliveringour unique content delivery system enabling immersive, interactive, and social experiences with real-time engagement for live events, especiallyfor example live sports. Dolby OptiView leveragescomprises Dolby’sa six decadesnumber of experienceproducts inthat thework scienceindividually ofor sight and soundtogether to deliveroptimize videothese withexperiences. clarity,Dolby depth, and detail via our unique content delivery system whichOptiView ensures a high quality,high-quality, synchronized viewer experience across the globe.globe, with minimal delay – as low as sub-second. This enables our customers to engage viewers effectively with near real time interaction tools that will strengthen connections and drive participation. Dolby OptiView Ads is an ad delivery system that increases the impact of ads delivered with video services through just-in-time delivery, personalization, and customizable on-screen presentation. Dolby OptiView Ads integrates with advertising platforms like Google Ad Manager.

We generated 94%93% and 94%92% of our revenue in the secondthird quarters of fiscal 2026 and fiscal 2025, respectively, and 93% and 93% of the fiscal year-to-date periods ended MarchJune 27,26, 2026 and MarchJune 28,27, 2025, respectively, through licensing our technology, brand, and patents, primarily to device manufacturers. The following table presents the end market composition of revenue from our licensing business for all periods presented:

We are focused on expanding our leadership in audio and imaging solutions for premium entertainment content by increasing the number of Dolby experiences that people can enjoy, which will drive revenue growth across the markets we serve. We work across our ecosystem of partners including creators, distributors, and device manufacturers to increase the number of Dolby experiences that people can enjoy by enhancing content, including movies and TV, music and live sports, using Dolby branded technologies. Increased content in these areas increases our value proposition across our end markets. In movies and TV, thousands of movie titles and tens of thousands of TV episodes have been created and released in Dolby Atmos and/or Dolby Vision. Major streaming services such as Netflix, Disney+, Apple TV, Amazon, HBO Max, Paramount+, Peacock, and other streaming services internationally, continue to enhance content in Dolby Vision and/or Dolby Atmos. Amazon Prime recently announced that it has added support for Dolby Vision to its ad-supported tier. InRecently, the second2026 quarterFIFA ofWorld fiscalCup 2026, various sport events werewas shown in Dolby Atmos and/or Dolby Vision across various broadcast, streaming, and pay TV, including Peacock and Comcast in the SuperU.S., Bowl,Bell theTV 2026in Olympic Winter Games,Canada, and theTV ICC Men's T20 Cricket World Cup. Additionally, Apple is currently streaming the 2026 Formula One seasonGLOBAL in Dolby Vision.Brazil.

The following are highlights from our secondthird quarter of fiscal 2026 and key challenges related to Dolby's licensing businesses, by market.

We have an established global presence and broad adoption of our branded audio and patent licensing technologies in broadcast services and devices, which primarily include TVs and STBs. We work with many TV OEMs and strategic partners to enable and promote Dolby Vision and Dolby Atmos experiences within their TV lineups. We have strong attach rates for Dolby Atmos and Dolby Vision with high end TVs and continue to grow adoption on mid-range TVs. Many partners continue to expand their support of the combined Dolby Vision and Dolby Atmos experience. AtDolby CESVision 2 is now in Januarymarket 2026,with Philips,some Hisense,Hisense TVs, and by the end of this calendar year, TCL alland announced various upcoming TV models thatPhilips will supportalso be shipping TVs with Dolby Vision 2.

We continue to promote adoption of our technologies across major mobile ecosystems, including Apple and Android. Our patent licensing technologies are adopted broadly throughout the mobile device ecosystem. Dolby Atmos and Dolby Vision are included throughout the Apple device line-up and in Apple TV, and Dolby Atmos is included in Apple Music. Dolby Vision Capture, Playback, and Dolby Atmos have been supported on all iPhones since the iPhone 12. We have strong adoption of Dolby Atmos and our branded audio codecs across high-end Android mobile devices and are focused on growing our presence on low and mid-tier phones. An increasing number of Android device manufacturers have adopted Dolby Vision and Dolby Vision Capture on high end devices and we are focused on the opportunity to significantly increase our adoption. We increasingly see adoption of our technologies in other personal, battery powered electronics, including devices providing augmented reality and virtual reality experiences. The breadth of mobile devices supporting Dolby technologies continues to increase globally. Xiaomi recently announced its flagship Redmi Note 15 Pro series that supports Dolby Vision, Dolby Vision Capture, and Dolby Atmos. Vivo releasedIn the X300third Ultraquarter cameraof phonefiscal 2026, RayNeo, the leading provider of augmented reality glasses, launched the RayNeo GT Max, the first AR smart glasses supporting Dolby Vision,Vision. asAlso well asin the iQOOthird 1500quarter Ultraof fromfiscal its2026, gaming-focusedInsta360, sub-brand,a leader in the action and panoramic cameras segments, launched the Luna Ultra, which supports Dolby Atmos and Dolby Vision. Additionally, Douyin, the Chinese version of TikTok, supports content in Dolby Vision on both iOS and Android mobile phones.capture.

We generate revenue from the automotive industry primarily through the adoption of Dolby Atmos in cars. As of the end of the secondthird quarter of fiscal 2026, we have announced partnerships with over 3540 car makers that are shipping or have announced models that support our technologies, up from over 20 car makers at the end of fiscal 2025. AtIn the Beijingthird quarter of fiscal 2026, Google announced support for Dolby Atmos through Android Auto Showwith inpartners Aprilincluding 2026,BMW, BMWGenesis, announcedMahindra, thatMercedes, its BMW 7 seriesRenault, and theSkoda. BMWRecently, iX3Volkswagen Long Wheelbase will support Dolby Atmos. BYD announced the Denza Z9GT aslaunched its first Dolby Atmos-enabled carvehicle toin serviceChina, the Europeanfully market.electric AlsoSUV ID, and Buick announced pre-sales for the Electra E7 in theChina, secondwhich quarter of fiscal 2026, Lexus announced its firstsupports Dolby Atmos-enabled car, and Firefly, a sub-brand of NIO, launched Dolby Atmos-enabled cars in Singapore and Thailand.Atmos.

Highlights: We continue to expand our global presence for Dolby Cinema, with sites located in the U.S. and internationally. Additionally, we increased the number of Dolby Atmos and Dolby Vision theaters or exhibitors in Austria,Taiwan, South Korea,Vietnam, and Vietnam.Germany.

To help enable the playback of content in Dolby formats, we offer a range of servers, which include the IMS3000 (an integrated imaging and audio server with Dolby Atmos), and audio processors, such as the CP950, to cinema exhibitors globally. Dolby Atmos has been adopted broadly across studios, content creators, post-production facilities, and exhibitors. As of the end of the secondthird quarter of fiscal 2026, there are over 8,600 Dolby Atmos screens installed or committed and over 4,500 Dolby Atmos theatrical titles have been announced or released.

Our strategy for Dolby OptiView is to expand our addressable market by offering solutions that increase audience engagement to companies building real-time digital experiences. For instance, Optiview enables the delivery of high-quality audiovisual content with ultra-low latency so that viewers can interact with live content as if they are there in real life.

For each line item included on our unaudited interim condensed consolidated statements of operations described and analyzed below, the significant factors identified as the leading drivers contributing to the overall fluctuation are presented in descending order of their impact on the overall change (from an absolute value perspective). This discussion and analysis highlights comparisons of material changes in the unaudited interim condensed consolidated financial statements for the quarters and fiscal year-to-date periods ended MarchJune 27,26, 2026 and MarchJune 28,27, 2025. Note that adjustments related to sales-based royalties that were misreported by licensees as well as unlicensed settlement activity, are collectively referred to as "recoveries." Amounts displayed, except percentages, are in thousands.

In September 2025, we initiated restructuring actions in order to centralize teams into fewer locations, relocate certain roles to provide better access to talent pools, encourage multi-disciplinary collaboration, and simplify operations. In continuation with this plan, we recorded expenses in the second quarter of fiscal 2026 of $2.2 million andexpense in the fiscal year-to-date period ended MarchJune 27,26, 2026 of $12.7 million consisting primarily of severance and other related benefits. The majority of the remaining components of this plan were substantially completed by the end of the second quarter of fiscal 2026. Cash payment of the severance and other termination benefits are expected to bewere substantially completed by the end of the third quarter of fiscal 2026. These activities are expected to result in estimated gross pre-tax operating income savings of approximately $20 million in fiscal 2026, due to estimated savings in compensation and benefits of impacted employees. The impact of these estimated savings on our operating expenses will be mostly offset by increased investment in our strategic priorities and the effects of inflation on our remaining expenses.

In November 2024, we initiated restructuring actions with the purpose of aligning our R&D resources, and to a lesser extent our S&M resources, with our highest strategic priorities. In connection with this plan, we recorded expense in the second quarter of fiscal 2025 of $3.9 million and in the fiscal year-to-date period ended MarchJune 28,27, 2025 of $9.7$9.2 million in severance and other related benefits. Cash payment of the severance and other termination benefits were substantially completed by the end of fiscal 2025. These activities resulted in gross pre-tax operating income savings of approximately $20 million in fiscal 2025, due to savings in compensation and benefits of impacted employees, which was consistent with our expectations. The impact of these savings on our operating expenses was mostly offset by increased investment in our strategic priorities and the effects of inflation on our remaining expenses.

As of MarchJune 27,26, 2026, we had cash and cash equivalents of $594.3$669.4 million, which consisted of cash and highly liquid money market funds. In addition, we had short and long-term investments of $81.7$87.1 million, which primarily consisted of equity method investments and equity securities without a readily determinable fair value.

The following table presents selected financial information as of MarchJune 27,26, 2026 and September 26, 2025 (in thousands):

Quarterly Dividend Program. During fiscal 2015, we initiated a recurring quarterly cash dividend program for our stockholders. In the secondthird quarter of fiscal 2026, a quarterly dividend of $0.36 per share was paid on our Class A and Class B common stock to eligible stockholders of record. On AprilJuly 30, 2026, Dolby announced a cash dividend of $0.36 per share of Class A and Class B common stock, payable on MayAugust 20,19, 2026, to stockholders of record as of the close of business on MayAugust 12,11, 2026.

Net cash provided by operating activities decreased $134.4$34.6 million in the fiscal year-to-date period ended MarchJune 27,26, 2026 as compared to the fiscal year-to-date period ended MarchJune 28,27, 2025, primarily due to the following:

Net cash provided by investing activities was $62.6$66.0 million lower in the fiscal year-to-date period ended MarchJune 27,26, 2026 as compared to the fiscal year-to-date period ended MarchJune 28,27, 2025, primarily due to the following:

Net cash used in financing activities was $99.3$129.5 million higher in the fiscal year-to-date period ended MarchJune 27,26, 2026 as compared to the fiscal year-to-date period ended MarchJune 28,27, 2025, primarily due to the following:

In the secondthird quarter of fiscal 2026, we did not enter into any off-balance sheet arrangements that are expected to have a material effect on Dolby's liquidity or the availability of capital resources.

WeIn arelimited partycases, to certainour contractual agreements contain a clause under which we have agreedagree to provide indemnification of varying scope and duration to the othercounterparty, partymost relatingcommonly to licensees in connection with licensing arrangements that include our licensed IP. SinceIn thesuch terms and conditions ofcases, the indemnification clausesarrangements usually provide for limitations on the scope or amount of potential obligations. We have also, in certain limited instances, elected to defend our licensees from third party IP infringement claims even when not contractually required to do notso. explicitly specify our obligations, we are unable to reasonably estimate the maximum potential exposure for which we could be liable. In addition, weWe have also entered into indemnification agreements with our officers, directors, and certain employees, and our certificate of incorporation and bylaws contain similar indemnification obligations. For additional details regarding indemnification clauses within our contractual agreements, see Note 15 "Commitments and Contingencies" to our unaudited interim condensed consolidated financial statements.