Dolby Laboratories (DLB) The 44th Annual William Blair Growth Stock Conference summary

Business overview and ecosystem strategy

• Focuses on delivering high-quality audio and visual experiences through innovation in science and engineering, collaborating with creatives, content owners, and distributors to build robust ecosystems across devices and cinemas.

• Revenue is primarily generated from licensing technologies such as Dolby Atmos and Dolby Vision, with over 90% of revenue coming from these durable, high-margin streams.

• Licensing business achieves approximately 98% gross margin, reflecting the scalability and efficiency of the model.

• Company has successfully navigated multiple industry transitions, including analog to digital, physical media to streaming, and standard to high-definition upgrades.

• Emphasizes both the 'wow' factor for consumers and efficiency for professionals, ensuring broad adoption across content creation and distribution workflows.

Revenue streams and macro environment

• Foundational audio technologies, including branded codecs and patents, account for about two-thirds of the business and are closely tied to consumer device shipment cycles.

• Recent macroeconomic challenges have led to flat growth in foundational revenue, but the company expects a return to low single-digit growth as conditions improve.

• Dolby Atmos and Dolby Vision, comprising about one-third of the business, are targeted for 15%-25% compounded annual growth over the next three to five years, with high single-digit growth guided for the current year.

• Growth in these segments is driven by increasing adoption in TVs, mobile devices, and new verticals such as automotive and music.

• Major sporting events and partnerships with streaming platforms are expected to further drive device sales and content adoption.

Growth drivers and innovation focus

• Dolby Atmos and Dolby Vision are now present in about 25% of 4K TVs, with higher penetration in premium segments and growing adoption in mid- and lower-end markets.

• Expansion into music and automotive sectors is accelerating, with over 90% of top Billboard artists producing in Dolby Atmos and 15 automotive OEMs, including major EV brands, adopting the technology.

• The company leverages a virtuous cycle by engaging artists and early adopter device manufacturers, which drives content creation and consumer demand, reinforcing ecosystem durability.

• Dolby.io, a SaaS platform, has shifted focus to ultra-low latency streaming for sports and entertainment, closing its first seven-figure deals and aiming to open new addressable markets.

• Advanced Technology Group maintains a pipeline of innovations, including AI-driven features, to ensure continued leadership in audiovisual experiences.