Dolby Laboratories, Inc. (NYSE:DLB) Q3 2019 Earnings Conference Call - Final Transcript

Aug 01, 2019 • 05:00 pm ET


Dolby Laboratories, Inc. (NYSE:DLB) Q3 2019 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by and welcome to the Dolby Laboratories Conference Call discussing Third Quarter Results. [Operator Instructions] As a reminder, this call is being recorded Thursday, August 1, 2019.

I would now like to turn the conference over to Jason Dea, Director of Investor Relations at Dolby Laboratories . Please go ahead, Jason.

Jason Dea

Good afternoon. Welcome to Dolby Laboratories' third quarter 2019 earnings conference call. Joining me today are Kevin Yeaman, Dolby Laboratories, President and CEO; and Lewis Chew, Executive Vice President and Chief Financial Officer. As a reminder, today's discussion will include forward-looking statements. These statements are subject to risks and uncertainties that may cause actual results to differ materially from the statements made today. A discussion of some of these risks and uncertainties can be found in the earnings press release that was issued today under the section captioned Risk Factors, as well as in our most recent report on Form 10-Q.

Dolby assumes no obligation and does not intend to update any forward-looking statements made during this call as a result of new information or future events. During today's call, we'll discuss GAAP and non-GAAP financial measures. A reconciliation between the two is available in our earnings press release and in the Dolby Laboratories' Investor Relations data sheet on the Investor Relations section of our website.

As for the content of today's call, Lewis will begin with the recap of Dolby's financial results and provide our fiscal 2019 outlook. And Kevin will finish with a discussion of the business.

So with that introduction behind us, I will now turn the call over to Lewis.

Lewis Chew

Okay. Thanks, Jason. Good afternoon, everybody. As a reminder, we adopted the new revenue accounting standard ASC 606 beginning this year, and we use the full retrospective method and that required us to recast previous year's revenue under 606. In our earnings release, we've included a table that shows the quarterly FY '18 revenue figures as adjusted, under 606 and this is the same table that we published last quarter. So any comparisons I make to prior year revenue numbers are with respect to the 606 recasted numbers.

I think it's worth noting that Q3 of last year was the quarter most impacted by the 606 recast, with a large portion of revenue i,e, as originally reported under 605, shifting out of that quarter in the prior quarters and prior years due to 606.

So, let's jump into the numbers, In the third quarter of FY '19, total revenue was $302 million compared to $338 million in Q2 and $215 million in last year's Q3. Licensing revenue for the quarter was $272 million, while products and services was $30 million. Our licensing revenue was in line with expectations, while products and services was about $10 million below the midpoint of original guidance.

Here's a further breakdown of licensing by end-markets. Broadcast represented about 49% of total licensing in the third quarter. Broadcast revenues were up about 60% year-over-year, and