Financial Analysis

"Business Combination GE Licensing On August 19, 2024, we acquired 100% of the issued and outstanding equity interests of GE Intellectual Property Licensing, LLC and GE Technology Development, Inc., which, collectively with each of their subsidiaries, comprised General Electrics IP licensing business that primarily targeted the consumer digital media and electronics sectors (""GE Licensing"" or the ""acquiree""). The acquisition is an extension of our existing licensing businesses and is expected to strengthen and expand the scale of our IP portfolio. The total consideration for the acquisition is comprised as the following (in thousands): Amount Total amount paid for consideration $ 444,882 Less: Noncontrolling interest in Via (9,921) Settlement of pre-existing relationship (750) Total consideration transferred for acquisition of GE Licensing 434,211 Less: Cash acquired (2,232) Total consideration, net of cash acquired $ 431,979 We have accounted for the taxable transaction under the acquisition method of accounting for business combinations, and the results of operations of GE Licensing have been included in our consolidated statements of operations from the date of acquisition. Additionally, we have estimated the fair values of the net tangible and intangible assets acquired, and liabilities assumed as of the acquisition date, with any amounts paid in excess of the net assets recorded as goodwill. The fair values assigned to assets acquired and liabilities assumed were bas …

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Commitments and Contingencies In the ordinary course of business, we enter into contractual agreements with third parties that include non-cancelable payment obligations, for which we are liable in future periods. These arrangements can include terms binding us to minimum payments and/or penalties if we terminate the agreement for any reason other than an event of default as described by the agreement. The following table presents a summary of our contractual obligations and commitments as of June 26, 2026 (in thousands): Payments Due By Fiscal Period Remainder of Fiscal 2026 Fiscal 2027 Fiscal 2028 Fiscal 2029 Fiscal 2030 Thereafter Total Naming rights $ 2,522 $ 8,534 $ 8,642 $ 8,751 $ 8,862 $ 18,061 $ 55,372 Purchase obligations 16,344 35,934 21,704 19,347 19,208 112,537 Donation commitments 153 153 153 153 432 1,044 Total $ 18,866 $ 44,621 $ 30,499 $ 28,251 $ 28,223 $ 18,493 $ 168,953 Naming Rights We are party to agreements for naming rights of certain facilities, most significantly for naming rights and related benefits with respect to the Dolby Theatre in Hollywood, California, the location of the Academy Awards. The term of this agreement is 20 years, over which we will make payments on a semi-annual basis until fiscal 2032. Our ongoing annual payment obligations are conditioned in part on the Academy Awards being held and broadcast from the Dolby Theatre. Our payment obligations may be suspended or reduced in certain circumstances, including the protracted closure of …

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The following table presents a summary of the composition of our revenue for all periods presented (in thousands, except percentage amounts): Fiscal Quarter Ended Fiscal Year-To-Date Ended Revenue June 26, 2026 June 27, 2025 June 26, 2026 June 27, 2025 Licensing $ 282,351 93 % $ 289,905 92 % $ 974,367 93 % $ 966,390 93 % Products and services 22,644 7 % 25,641 8 % 72,964 7 % 75,716 7 % Total revenue $ 304,995 100 % $ 315,546 100 % $ 1,047,331 100 % $ 1,042,106 100 % The following table presents the composition of our licensing revenue for all periods presented (in thousands, except percentage amounts): Fiscal Quarter Ended Fiscal Year-To-Date Ended Market June 26, 2026 June 27, 2025 June 26, 2026 June 27, 2025 Broadcast $ 106,579 38 % $ 111,286 38 % $ 326,041 33 % $ 321,297 33 % Mobile 51,010 18 % 56,295 19 % 220,199 23 % 217,942 23 % CE 31,506 11 % 28,071 10 % 118,057 12 % 115,668 12 % PC 28,343 10 % 33,589 12 % 116,523 12 % 123,247 13 % Other 64,913 23 % 60,664 21 % 193,547 20 % 188,236 19 % Total licensing revenue $ 282,351 100 % $ 289,905 100 % $ 974,367 100 % $ 966,390 100 % We license our technologies in approximately 60 countries, and our licensees distribute products that incorporate our technologies throughout the world. We generate the majority of our revenue from outside the U.S. Geographic data for our Licensing revenue is based on the location of our licensees headquarters, Products revenue is based on the destination to which we ship our products, and Services r …

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"Goodwill and Intangible Assets Goodwill The following table outlines changes to the carrying amount of goodwill (in thousands): Goodwill Balance as of September 26, 2025 $ 529,900 Translation adjustments (1,557) Balance as of June 26, 2026 $ 528,343 Intangible Assets Intangible assets are stated at their original cost less accumulated amortization, and principally consist of acquired patents, technology, and customer relationships and contracts. Intangible assets subject to amortization consisted of the following (in thousands): June 26, 2026 September 26, 2025 Intangible Assets, Net Cost Accumulated Amortization Net Cost Accumulated Amortization Net Acquired patents and technology $ 629,497 $ (347,564) $ 281,933 $ 587,743 $ (324,507) $ 263,236 Customer relationships 187,758 (87,380) 100,378 221,007 (87,401) 133,606 Other intangible assets 23,142 (23,019) 123 23,171 (22,956) 215 Total $ 840,397 $ (457,963) $ 382,434 $ 831,921 $ (434,864) $ 397,057 During the third quarter of fiscal 2026, we purchased various patents for cash consideration of $4.7 million, and upon acquisition, these patents had a weighted-average useful life of 15 years. During the fiscal year-to-date period ended June 26, 2026, we purchased various patents for cash consideration of $41.7 million, and upon acquisition, these patents had a weighted-average useful life of 13.2 years. These patents have been categorized as ""acquired patents and technology"" intangible assets class. During the fiscal year-to-da …

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"Income Taxes Our income tax expense, deferred tax assets and liabilities, and unrecognized tax benefits reflect management's best assessment of estimated current and future liabilities. We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Significant judgments and estimates are required in determining the consolidated income tax expense. On July 4, 2025, the U.S. Congress passed budget reconciliation bill H.R. 1 referred to as the One Big Beautiful Bill Act (""OBBBA""). The OBBBA contains several changes to corporate taxation including modifications to capitalization of research and development expenses, limitations on deductions for interest expense, and accelerated fixed asset depreciation. The international provisions are generally effective for our fiscal 2027. Dolby currently anticipates that the tax changes within OBBBA will not have a material impact to its financial statements. Dolby continues to review the OBBBA tax provisions to assess impacts to its financial statements. Unrecognized Tax Benefits As of June 26, 2026, the total amount of gross unrecognized tax benefits was $92.7 million, of which $30.5 million, if recognized, would reduce our effective tax rate. As of September 26, 2025, the total amount of gross unrecognized tax benefits was $83.7 million, of which $28.1 million, if recognized, would reduce our effective tax rate. The fiscal year-to-date period ended June 26, 2026 increase was primarily due to current year reserves for tr …

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Legal Matters From time to time, we are involved in various legal proceedings that occasionally arise in the normal course of business. These can include claims of alleged infringement of IP rights, commercial, employment, and other matters. In our opinion, resolution of these proceedings is not expected to have a material adverse impact on our operating results or financial condition. On a quarterly basis, we evaluate based on the known facts and circumstances whether a potential loss or range of losses is considered probable and reasonably estimable in accordance with U.S. GAAP. We record a provision for a liability relating to these legal proceedings when a loss is both probable and the amount of the loss can be reasonably estimated. Legal costs associated with these legal proceedings are expensed as incurred. Given the unpredictable nature of legal proceedings, it is possible that an unfavorable resolution of one or more such proceedings could materially affect our future operating results or financial condition in a particular period, including as a result of required changes to our licensing terms, monetary penalties, and other potential consequences. However, based on the information known by us as of the date of this filing and the rules and regulations applicable to the preparation of our unaudited interim condensed consolidated financial statements, other than the litigation matter discussed below, any such amounts are either immaterial, or it is not probable that a …

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Leases As Lessee As a lessee, we enter into contracts to access and utilize office space, including those payable to our principal stockholder and portions attributable to the noncontrolling interests in our consolidated subsidiaries. The following table presents the maturity analysis of lease liabilities (in thousands): June 26, 2026 Operating Leases Remainder of Fiscal 2026 $ 3,098 Fiscal 2027 12,064 Fiscal 2028 10,771 Fiscal 2029 7,776 Fiscal 2030 4,405 Thereafter 19,362 Total undiscounted lease payments 57,476 Less: imputed interest (10,026) Total lease liabilities $ 47,450 As Lessor As a lessor, we lease our Dolby Cinema product solution to exhibitors. The terms of these leases are typically 10 years. Lease components consist of fixed payments and/or variable lease payments based on contracted percentages of revenue. Generally, leases do not grant any right to the lessee to purchase the underlying asset at the end of the lease term. Dolby Cinema lease arrangements have options to extend the lease term at expiration by increments ranging from 1 to 5 years. Assets provided under an operating lease are carried at cost within property, plant, and equipment, net on the unaudited interim condensed consolidated balance sheets, and depreciated over the useful life of the asset using the straight-line method. Fixed operating lease payments are recognized on a straight-line basis over the lease term to revenue. Variable lease payments received under our Dolby Cinema operating leas …

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Recently Issued Accounting Standards Standards Not Yet Effective Income Taxes. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires further enhancement of income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This ASU will be effective for our annual period beginning September 27, 2025, and requires prospective application with the option to apply the standard retrospectively. We will begin including the enhanced income tax disclosures on a prospective basis within the Form 10-K for the year ended September 25, 2026, but do not expect the standards adoption to have a material impact on the consolidated financial statements. Income Statement. In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which requires public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in notes to financial statements, including purchases of inventory, employee compensation, depreciation, amortization of intangible assets, and selling expenses. In January 2025, the FASB issued ASU 2025-01, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date , which cla …

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Related Parties During the fiscal year-to-date period ended June 26, 2026, our subsidiary, Via, sold its HEVC/VVC program intangible assets to Access Advance, our equity method investment, for a total consideration of $25.0 million. As an equity method investment, we possess the ability to exercise significant influence, but not control, over operating and financing decisions of Access Advance.

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Restructuring Restructuring charges recorded as operating expenses in our unaudited interim condensed consolidated statements of operations represent costs associated with separate individual restructuring plans implemented in various fiscal periods. The extent of our costs arising as a result of these actions, including fluctuations in related balances between fiscal periods, is based on the nature of activities under the various plans. Fiscal 2026 Restructuring Event In June 2026, we initiated restructuring actions with the purpose of reorganizing and consolidating certain activities and positions within our global business infrastructure. In connection with this plan, we recorded expense in the third quarter of fiscal 2026 of $4.0 million in severance and other related benefits. These activities are expected to result in estimated gross pre-tax operating income savings of approximately $2 million in fiscal 2026 and $12 million in fiscal 2027, 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. Cash payment of the severance and other termination benefits are expected to be substantially completed by the end of the first quarter of fiscal 2027. We estimate that we will incur additional employee-related restructuring costs during fiscal 2026 and the first quart …

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"Revenue Recognition We enter into revenue arrangements with our customers to license technologies, trademarks, and patents for sound and imaging solutions, and to sell products and services. We recognize revenue when we satisfy a performance obligation by transferring control over the use of a license, product , or service to a customer. A. Identification of the Contract or Contracts with Customers We generally determine that a contract with a customer exists upon the execution of an agreement and after consideration of collectability, which could include an evaluation of the customer's payment history, the existence of a standby letter of credit between the customers financial institution and our financial institution, public financial information, and other factors. At contract inception, we also evaluate whether two or more non-standard agreements with a customer should be combined and accounted for as a single contract. B. Identification of Performance Obligations in a Contract We generate revenue principally from the following sources, which represent performance obligations in our contracts with customers: Licensing. We license our technologies , including patents , to a range of customers who incorporate them into their products for audio and imaging functionality across broadcast, mobile, CE, PC, gaming, and other markets. Product Sales. We design and provide audio and imaging products for the cinema, television, broadcast, and entertainment industries. Services. We …

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Operating Segments We operate as a single reportable segment. We derive the majority of our revenue from licensing audio and video technology to electronics manufacturers, and a lesser portion of our revenue by offering premium audio and video technologies to cinema exhibitors. Our CODM is our Chief Executive Officer, who reviews financial information presented on a consolidated basis to assess performance and allocate resources. Our CODM uses consolidated net income, as reported on the unaudited interim condensed consolidated statements of operations, as the primary measure of segment profit or loss by comparing actual results to the prior year comparative results and any internally or externally set expectations. Our CODM does not assess segment performance or make operating decisions using asset or liability information. The following table presents selected financial information and significant segment expenses for the periods presented (in thousands): Fiscal Quarter Ended Fiscal Year-To-Date Ended June 26, 2026 June 27, 2025 June 26, 2026 June 27, 2025 Total revenue $ 304,995 $ 315,546 $ 1,047,331 $ 1,042,106 Less: Cost of licensing (1) 16,128 15,103 47,754 42,474 Cost of products and services (1) (2) 16,393 21,116 57,033 54,469 Research and development expense (1) (2) 56,054 56,794 167,407 165,112 Sales and marketing expense (1) (2) 74,426 75,234 238,511 234,906 General and administrative expense (1) (2) 63,495 59,904 183,754 174,146 Restructuring charges 3,955 (547) 16 …

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"Summary of Significant Accounting Policies Concentration of Credit Risk Our financial instruments that are exposed to concentrations of credit risk principally consist of cash, cash equivalents, restricted cash, investments, accounts receivable, and contract assets. We maintain cash, cash equivalents, and investments with multiple financial institutions that have high credit standing, and that we believe are financially sound and have minimal credit risk exposure, although at times our balances may exceed the applicable insurance coverage limits. We monitor and manage the overall counterparty credit risk exposure of our cash balances to individual financial institutions on an ongoing basis. Our investment portfolio may consist of investment-grade securities diversified amongst security types, industries, and issuers. All of our securities are held in custody by large national financial institutions. Our investment policy limits the amount of credit exposure to a maximum of 5% of our total portfolio to any one issuer, except for the U.S. Treasury, and we believe no significant concentration risk exists with respect to these investments. We also mitigate counterparty risk through entering into derivative contracts with high-credit-quality financial institutions. Actual or potential defaults of one or more financial institutions could impact our results of operations or financial position, and make it challenging to find alternative qualified counterparties. The majority of our …

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Subsequent Event Share Repurchase Program . On July 30, 2026, we announced that our Board of Directors approved increasing the size of our stock repurchase program by $350 million, bringing the amount available for future repurchases of our Class A Common Stock to approximately $427 million. Stock repurchases under this program may be made through open market transactions, negotiated purchases, or otherwise, at times and in amounts that we consider appropriate. The timing of repurchases and the number of shares repurchased depend upon a variety of factors, including price, regulatory requirements, the rate of dilution from our equity compensation plans, and other market conditions. The program does not have a specified expiration date, and can be limited, suspended or terminated at our discretion at any time without prior notice. Shares repurchased under the program will be retired and returned to the status of authorized but unissued shares of Class A common stock.

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