Q3 2020 Dolby Laboratories Inc Earnings Call
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The laboratories.
Fiscal third quarter 2020 financial results call at this time restaurants today.
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Yeah, I hope the Dolby laboratories fiscal third quarter 2020 financial results call.
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Ladies and gentlemen, thank you for standing by welcome to the Dolby Laboratories conference call discussing.
Third quarter results.
During the presentation, all participants will be in listen only mode.
It will be invited to participate in the question answer session.
We have a question you will need to press star one for the telephone.
This call is being recorded Monday August 2020.
Let's turn to Corp. conference call to Jason D Director of Investor Relations for Dolby Laboratories. Please go ahead. Please.
Good afternoon.
Laboratories third quarter 2020, <unk> earnings conference call.
Joining me today are cutting in Dolby laboratories, President and CEO.
This is true executive Vice President and Chief Financial Officer.
As a reminder, today's discussion will include forward looking statements, including our fourth quarter and full year fiscal 2020 outlook and our assumptions underlying that.
These statements are subject to risks and uncertainties that may cause actual results could differ materially from the statements made today.
In particular.
Currently in the mix of the Koby mentioned pendennis.
The extent of its continued impact on our business will depend on several factors, including the severity duration extend it depends on it.
As was action taken time governments physically consumers in response to the pent up.
All of which continue to evolve remain uncertain at this time.
A discussion of these an additional risks and uncertainties can be found in earnings press release issued today.
Actually captions forward looking statements as well going up which Dr. section.
Those <unk> quarterly report on form 10-Q.
Well the assumes no obligation and does not intend to update any forward looking statements made during this call as a result of utilization.
Oh Keytruda.
During today's call.
Scott GAAP and non-GAAP financial measures.
Reconciliation between the two which available <unk> earnings press release in the Dolby Laboratories Investor Relations data sheet.
The Investor Relations section otherwise.
Actually the culture of today's call Lewis will begin with a recap of building site results provide fiscal 2020 outlook.
Kevin will finish with the discussion.
Got it reduction behind Us I'll now turn the call duals.
Right. Thank you Jason.
All right good afternoon, everyone and I hope, you're all staying seats out there.
Glad to report that Q3 revenues came in at the high end to the scenario that we provided three months ago and our earnings were above the range as we had a large tax benefit in the quarter to go along with some lower than projected operating expenses.
While we did do better than Q3 outlook, it's worth noting that the numbers were lower than the original forecast from the start of the year before Cobiz 19 came into the picture. So here of the numbers.
Third quarter revenue was $247 million compared to 352 billion in Q2 and $302 million in Q3 as last year.
Our Q3 revenue guidance coming into the quarter once a range of 225 million to $250 million.
How about compare that to what we assumed in our guidance revenues from Jeebies, PC and mobile where at the higher end, while consumer electronics and set top boxes, where at the lower end of our scenario.
Products and services were at the high end to the range, but remember that we had lowered our expectations like 70% to 80% because of the significant impact of Cobot 19 shutdowns August cinema industry.
Now looking at total company quarter over quarter revenue was down by about $105 million from Q2.
Roughly half of that was driven by timing of revenue under contracts as well as lower recoveries.
At roughly the other half that was attributable to the impact from Cobot 19, which includes lower royalties from unit shipments across a variety of devices.
Lower sales of cinema products and services and lower revenue for box office Shira Dolby cinemas.
Now looking at total company year over year revenue was down by about $55 million versus last year's Q3, and that was predominantly attributable to cope with 19, that's similar to what I said, a minute ago lower unit shipments more products and services and lower Dolby cinema revenue.
The composition of Q3 revenue was $235 million is licensing at $12 million in products and services.
Let's go through a breakdown of licensing revenue by end market starting with broadcast.
Broadcast represented about 38% of total licensing into third quarter.
Broadcast revenues were down about 44% year over year that was driven by lower recoveries and lower unit volumes due to the pandemic. Despite the fact that adoption of Dolby vision add Dolby Atmos, you to TV set top boxes, it's higher than last year.
On a sequential basis broadcast was down by about 31% due to lower recoveries and lower unit volume.
Mobile represented approximately 33% of total likes thing in Q3.
Mobile was up by about 65% over last year due to higher recoveries AD revenues from our patent programs offset partially by unit volume impact from the pandemic.
On a sequential basis, but was up by about 3% driven by recoveries offset partially by unit volume intact from the pandemic.
PC represented about 10% of total licensing into third quarter.
He was down by about 4% year over year due to lower recoveries and lower unit volume, although it's worth noting that adoption of Dolby vision, a Dolby atmos or the P.C.S has increased since last year.
At sequentially PC was down nearly 50% due to timing of revenue under contracts and also more recoveries.
Consumer electronics represented about 9% of total like a thing.
Third quarter and on a year over year basis. He likes thing was down by about 29% driven by lower volume and lower recoveries.
On a sequential basis, he was down by nearly 60% due to timing of revenue under contracts as well as lower unit volume.
Other markets represented about 10% of total licensing in the third quarter.
They were down by about 34% year over year due to significantly lower revenues for Dolby sound about because nearly all those screens were close for the quarter add lower revenues from gaming due to console lifecycles.
Modest sequential basis other markets was down by about 16% driven by lower revenue from Dolby cinema and for via admin fees and those are the fees and the patent pool program that we administer this was offset partially by higher recoveries in automotive and gaming.
Beyond licensing our products and services revenue was $11.8 million in Q3 compared to $23 million in Q2 and $30.3 billion in last year's Q3.
We had anticipated a big drop off in sales in this category as most of this revenue comes from equipment that we sell to sort of exhibitors.
These customers in general continue to be negatively affected by the pandemic.
Now, let's cover margins and operating expenses for Q3.
Total gross margin in third quarter was 87.9% on a GAAP basis.
89% on a non-GAAP basis.
Products and services gross margin on a GAAP basis was minus $5.5 billion in the third quarter due to fix cost not fully covered by the lower volumes that we ran.
And as a reminder guidance I gave at the beginning of the quarter was for GAAP gross product margin to range from minus $6 million to minus $9 million.
Products and services gross margin on a non-GAAP basis was minus $3.5 billion in the third quarter for the same reasons as I just went over in the gap discussion and there as a reminder, our guidance for non-GAAP product gross margin was minus $5 million to minus $8 million.
Operating expenses in the third quarter on a GAAP basis, where $182.9 billion compared to $209 billion in Q2.
Operating expenses in Q3 were about 8 million less than the low end to the range, we guided mostly driven by timing of certain marketing programs or pushed into Q4, lower legal expenses and lower travel and outside services.
Operating expenses in the third quarter on a non-GAAP basis were $159.2 million compared to $188.4 million in the second quarter.
And the Q3 non-GAAP total was also below the range, we protected and for the same reasons that I discussed into gap expenses.
Operating income into third quarter was $34.1 billion on a GAAP basis, or 13.8% of revenue compared to $34.3 billion or 11.3% of revenue in Q3 of last year.
And last year's Q3 included a $30 million charge for restructuring mostly associated with an early exit from a leased facility.
Operating income in the third quarter on a non-GAAP basis was $60.5 million or 24.5% of revenue compared to $85.9 billion or 28.4% of revenue in Q3 of last year.
Income tax was a 27.4 billion dollar benefit in Q3 on a GAAP basis, and a 21.2 billion dollar benefit on the non-GAAP basis.
The Q3 income tax amounts include approximately $36 million of discrete benefits for specific items that were resolved during the quarter.
Net income on a GAAP basis into third quarter was $67.3 million or 66 cents per diluted share compared to $39.6 million or 38 cents per diluted share in last year's Q3.
Net income on a non-GAAP basis into third quarter was $87.5 billion or 86 cents per diluted share compared to $79.3 million or 76 cents per diluted share in Q3 of last year.
For both GAAP and non-GAAP net income in Q3 was above our original guidance due to revenue being at the higher end of our range operating expenses blower range and the favorable income tax I discussed.
During the third quarter, we generated about $134 million in cash from operations, which compared to about $91 billion generated in last year's third quarter.
And we ended the third quarter with a little over $1.1 billion in cash and investments.
During Q3, we bought back about 500000 shares of our common stock and ended the quarter with about $230 billion of stock repurchase authorization still available.
We also announced today a cash dividend of 22 cents per share, which would payable on August 26, 2020 shareholders of record on August 17th 2020.
Now, let's cover the outlook for Q4.
Three months ago, when I went over the guidance for Q3 I highlighted the challenges that we are facing any environment consumer demand was dropping visibility was much more limited than usual.
Industry data reports were not consistent or current.
Fast forward to now we have updated Tam data for some of our end markets, but not all of them.
Customer visibility is still very limited I remember, we won't have actual shipment data for the June quarter until all our customer sent us a reports over the next two months.
And the economy is still pretty uncertain, so with that as a backdrop here's our current scenario for Q4, along with some key assumptions that we've embedded into the outlook.
Let's start with products and services revenue most of which goes into the cinema industry.
Screens are opening more slowly than we thought last quarter. So we're assuming that there will not be any significant uptick in equipment purchasing activity from exhibitors in Q4.
We estimate that products and services revenue in Q4 could range from $10 million the $15 million.
Let's talk about licensing.
We estimate that licensing revenue in Q4 could range from $215 billion to $240 million.
It's in comparison to the $235 million that we had in Q3.
As I look at the transition from Q3 actual to the Q4 outlook scenario.
There's downward movement from timing of revenue on your customer contracts. This is not unusual and I think of it as Dolby seasonality in other words within the course of our fiscal year, we tend to have higher revenue in our Q2, and our Q3 and lower amounts in our Q1 Q4 and a lot of this is because of timing.
Revenue under various contracts.
Partially offsetting it this year isn't assumption that total unit shipments could increase modestly in Q4 over Q3 as consumer spending starts to improve.
Our Q4 scenario assumes that there will roughly be a 5% improvement in unit shipments plus or minus blended across all device categories.
For Q4 were also assuming very little revenue from Dolby Cinema box office share.
So to summarize our scenario for total revenue in Q4 use a range of 225 million to $255 million.
If I compare that to last year's Q4 actual revenue of $299 million. The majority of the potential decline would be attributable to the economic ripple effect of the pandemic and the remainder would largely be due to lower recoveries.
Let me finish up with the rest of the Q4 out looks like and turn it over to Kevin.
Gross margin for Q4 on a GAAP basis is estimated to range from 85% to 86%.
Non-GAAP gross margin is estimated to be about one percentage point higher than the gap number.
Products and services gross margin will remain a negative territory in Q4, mainly because of six costs that are not fully covered at the lower revenue levels.
The revenue range and the outlook I provided products and services gross margin on a GAAP basis could range from minus $6 million to minus $9 million in Q4.
And on a non-GAAP basis, it could range from minus $5 million to minus $8 million.
Operating expenses in Q4, our estimated range from $187 million 197 million on a GAAP basis.
And from $167 million to $177 million on a non-GAAP basis.
Other income is projected range from $2 million to $3 million for the quarter and our income tax rate for the fourth quarter is projected to range from 19% to 21% to both GAAP and non-GAAP basis.
Based on a combination of factors I just reviewed we estimate that Q4 diluted earnings per share on a GAAP basis could range from five from about five cents to about 20 cents and then on a non-GAAP basis, we estimate it would range from about 22 cents to 37 cents.
And as for the full year, if you do the math that would mean that our f. why 20 revenue for the full year could range from about $1.115 billion.
To $1.145 billion.
GAAP diluted earnings per share could range from $2.04 to $2 at 19 cents.
And non-GAAP diluted earnings per share could range from $2.76 to $2 at 91 cents. So now I'd like to turn it over to Kevin Kevin.
Thank you Lewis and good afternoon, everyone.
The strength of our financial model LG and value proposition well be continues to be well positioned to navigate through these challenging times.
Our people continue to bring their creativity and passion to enable more dolby experiences to more people around the world.
While our Q3 revenues came in at the high end of our scenarios. There is still a lot of uncertainty across many of the markets, which we offer.
In addition to lower consumer spending the Pandemics has resulted in some shifts in the timing of new customer wins.
At the same time, our partners remain deeply engaged with enabling new Dolby vision and Dolby Atmos experiences.
Its consumer spending does return, we're confident that with our strong positioning across a broad range of devices and services.
I will return to our powerful driving revenue and earnings growth.
Our formula for growth has already started increasing the amount of compelling content available Dolby.
The Dolby vision, and Dolby Atmos experience and movie and TV content has led to growing adoption across a broad range of devices.
We're also expanding with all the experience areas such as gaming that music that broaden our value proposition and create more opportunities in device categories like mobile E C and automotive.
In addition, we're beginning to address a growing population of content you on credit limits in the most recently with the launch of our developer platform Dolby Dot Io.
All of this gives us confidence in our ability to drive long term growth.
Let's turn to some of the highlights this quarter.
As people are watching a growing amount of stream content Dolby vision and Dolby Atmos continues to be highlighted within the content that matters most to people.
Well highly anticipated releases of Hamilton under the plus and gray hair on Apple TV plots are both available in Golden.
This quarter, we began to see the first titles in Dolby vision on Google play.
And how far the largest streaming service in India, you had to support Dolby vision for busy plus content.
This quarter, we talked several partners adopt Dolby vision and Dolby Atmos within their products.
Apple would support Dolby vision in Dolby Atmos across most of their devices announced that airports pro.
Well support Dolby Atmos with the release of iOS 14.
No no lots, which of those arc, therefore sound bar that supports Dolby Atmos.
Free what are the largest internet service providers in France watch their for set top box to support Dolby vision in Dolby Atmos.
Last month, you tell me watch their first lien supporting the combined experience.
Adoption of both Dolby vision, and Dolby Atmos within TV, it's continued to expand globally, most notably in India.
Quarter, Tcl, Sony one plus and Nokia all announcement TV models in India supporting the combined experience.
Also Panasonic expanded their adoption of Dolby vision I Q2 additional models this quarter.
It definitely 19, they'll be what Dolby vision with included down about 10% of Fourk TV shipments and we are on track to materially increase that adoption rate for fiscal 2000.
The significant growth opportunities still ahead of us.
Our strong presence in movie and TV content has enabled the initial adoption of Dolby vision, and Dolby Atmos within PC and mobile devices.
Beyond that we see a significant opportunity to accelerate adoption by enabling more experience is I'll lose devices, including gaming and music.
Recently title significantly expanded the number of devices that support Dolby Atmos music to include Dolby Atmos enabled sound bars and home theater equipment.
We're also seeing examples of how Dolby Atmos can create unique experiences across a wide range would be the jobs.
This quarter, we tell examples of classical music from John Williams and recordings from the London for harmonic orchestra mixed in Dolby Atmos.
Empire and independent label began moving to the music in Dolby Atmos from artists like that Joe and you have any ball.
The music in Dolby experienced elevates, our engagement with partners and strengthens the value proposition for Dolby Atmos in existing device categories, such as mobile phones and creates new opportunities for us in areas, such as automotive and smart speakers.
Let me shift that sentiment.
During the quarter most instead of those remained close with a few region slowly beginning to reopen.
Those are instead of lives around the world that significantly reduced demand for selling the products.
We believe that then sort of do begin to reopen exhibitors, we'll look to highlight their premium offerings and consumers will seek out the best experience there is done better than Dolby cinema.
Last month, the first Dolby cinema in South Korea was open water partner Mega box.
We've also added our second partner that will bring Dolby cinema into Saudi Arabia, well. These are first cycle than just last week.
As we look ahead, we're excited by the unique opportunity that significantly problem. The content experience, we addressed with Dolby technologies.
During the quarter, we launched our developer platform Dolby Dot Io.
Well, we got Io enabled it enables developers to accept all the technology to raise the bar on the quality of the media in communications experiences within their apps and services using <unk>, yes.
Among our initial customers we have de application across a wide range of use cases, including podcasts E learning and Tele health.
Beginning a few weeks ago artist and optimize the quality of their music recordings mastery on selling calc powered by Dolbys platform.
We are excited by the initial reception Adobe diageo and by the potential to bring Dolby to the growing amount of media is medications content, but as part of our daily lives.
To wrap up Dolby has a solid foundation is strong business model and more than ever people want immersive entertainment and communications experiences.
The quality of these experiences matter.
We continue to focus on growing the number of devices that support Dolby vision and now boasts we will accelerate adoption and broaden the device categories that supports adobe experience by enabling new forms of content like music and gaming.
And we are excited by the opportunity to enable an even broader range of Dolby experiences. Most recently with the launch of building.
All of that reinforces our belief in the opportunities that are still ahead of us and give us confidence in our ability to drive revenue and earnings growth.
And with that I will turn it over to do it.
Thank you, ladies and gentlemen, if you wish to register a question for today's question and answer session. You may do so by pressing star what.
If you like to which are a question I started to if you're on a speakerphone. Please pick up your hands it before entering a request.
Please be sure to identify yourself and your from at the outset to be fair to all participants we ask that you limit yourself to one question and a follow up question. It's all participants have had a chance in the first round.
If time allows we will then come back to answer any remaining questions.
Please the first question.
Your first question.
Comes from Ralph Schackart with William Blair.
Good afternoon questions if I could.
Lewis I think the old guidance contemplate it down 15% to down 25% Street for units and other Q4 outlook on a blended basis talks about increase of 5% per units. So just curious if it gives a sense of improvement you might be saying, there and it puts anyway to sort of give us a an update to what was previously down 15.
Oh, I'm, sorry down 25, I just to get a sense for a you know how that improve but I'll, let me have improved.
Sure.
And first just to clarify for running the audience that original reference Ralph made to the down 15 or 25% was one of the comments. We made last quarter. We gave guidance that was in reference to let just say our expectation before Kobe 19 here that was not a sequential reference so relative to that reference Ralph we probably came in at the better end to that.
Range, which is what allowed US one reason that allowed us to get current quarter Q3 revenue into the upper end of our range. The 5% I mentioned is now more of an absolute value comparison, it's it's kinda, saying, okay from Q3 Q4, what do we see happening in units and like I said in all my caveats I want to me.
Sure and one understands that we don't have the normal crystal ball that we might normally expect to have put into context of all the data points that we assembled we're assuming you get from Q3 to Q4 that broadly across categories device volume picks about 5% that would probably need then that relative to the other reference you had been.
For the the decrease from previous expectation is probably a little bit better than that 15% to 25% for Q3, but we're trying to move away from that kind of gets harder and harder to make comparison as each quarter for grasses to what we originally thought of as peak of your 19. So I hope that explains how those two numbers work it isn't like we went for.
From minus 15 to 25 and that became a plus five those are two very different comparison point. So let me pause there to see if you had me think further to add to that that maybe I'd may or may not make Claire.
I'm going to my answer that thinks that's one megawatt heavier than they had one quick on for Kevin.
Yeah, I mean income tax you talked about 36 million benefits for certain items resolved the court any extra color you can add to that.
Yeah, no I'll take that first.
As with any company, we as you know, especially the size of our company. We do have uncertain tax positions from which we've not benefit in our opinion now and during the quarter. We had a couple items that were large enough to have been resolved this quarter by elas and statutes that and we took this quarter and those are discreet items and the reason it has to be taking that way because.
I really can't forecast I was in advance until you get passed to the final point at which that stature has has expired.
Okay, Great and then less from Kevin Kevin talked about some shift of new customer wins and revenue and prepared remarks I'm, assuming that's just due to co that perhaps for better or at least windows, but just want to sit in the extra color you could add those remarks.
Yeah, sure and I mean first of all else I of course lot of highlight that start with the fact that we have a lot of a great. When those sound bar will show knows others TV with me and a number of partners expanding their presence and yes.
As part of the.
Implications of coated they're artists or deals that we would hope to excite.
Two pushing out into next year, but often tends to be in some of the more things we're doing and yeah. There's also some of the absence of major events that are often drive a new went that adoption at let's take the Olympics. For example, historically that's been a very major moment for us and our partners.
But we are continuing to be very pleased with the engagement, we have and and like I said, we moved into a lot of great.
During the quarter.
Okay, Thanks, Kevin Texas.
Yep.
Next question will come from call Chung with JP Morgan.
Hi, guys. Thanks for taking my questions. So stopped broadcast you know you had a pretty big debt.
The third quarter do you do you see kind of a bounce back in Q4, you gonna be kind of the 5% sequentially unit increase that you're talking about and then you know are you seeing any different demand trends in different regions, then a follow up.
Yeah, when I start with that one outlet Kevin had any color if he chooses a first of all I'll point out that the broadcast it that you referred to that's in fact effectively baked into our guidance because notwithstanding those those numbers are revenue for the quarter good coming into the high end of our range and as I pointed out Tds was one of the areas that we saw.
Oh relative shrink everything here as in the context for the corporate banking environment, so relative strength.
And like I said it in my prepared comments, we have some elements of timing of revenue and also a difference in recoveries that might be thinking some of those comparisons and then.
Looking forward into the current into the Q4 outlook that I provided a we are currently assuming 5% roughly 5%, that's a plus or minus I know, it's tricky to be too precise in this environment, but roughly 5% plus or minus improvement Bobby across all categories, but I don't really have.
A breakdown for yet the broadcast level, that's not you know probably not a big enough number to try to start breaking the pieces, but we would anticipate that broadcast would be part of that story as well.
Okay, and then you know I've looked at your Opex you know your costs were down 11% pretty good, possibly maybe some lower discretionary costs like many companies in the quarter, but.
Looks like your costs are down year on year for Fourq, Hubert kind of at a slower pace.
Are there any got to do permanent cost saves you can carry over or is the site for Q kind of the new quarterly run rate, we could pick about I know you have the Bob.
Maybe next in the December quarter on some stock comp, but any thoughts there would be helpful.
Sure as we transition from Q3 Q4 first we have to acknowledge that the Q3 expenses were extraordinarily low virtually no travel I'm sure we're not that different from other companies, but virtually no travel very limited expenses from outside services and consultants or very low hiring.
I think these are things that to some degree will continue but I think as we transition into Q4 I want one highlight for US is that Q3 benefited from tightening of some of our discretionary programs. Paul. So your your high level question is is a chunk of our spending discrete and and variable yes, it isn't particularly in areas like.
Marketing, where we have a number of campaigns we plan in advanced for the full year and we've been signaled at the beginning of the here that we had some cool things playing for marketing. Some of those were moved into Q4 and actually something you out they're listening to this call me I've seen some of the cool things that are running right now that connect our our are critical technologies to some pretty big names and things going on.
Out there so I think there's the timing of some of those marketing programs that shifted from Q3, Q4, which causes almost like a double whammy to your question Paul because it makes the Q3 number bigger and in that that money now is being spent in Q4, we have some similar things going on in legal I think to a small degree we have we did actually have.
Although we've had a reduced level, we did have some hiring that we did in Q3. So the full impact that will be felt in Q4. So there's those are a handful of things, but net down I think we're still running as.
You know noticeably lower expense level now than we would have been thinking about pre told me that maybe doses of three or four thing to think about transitioning from Q3 to Q4 and timing of programs will be going marketing probably travel.
Expenditures not being so close to zero is like the word this quarter and some outside services and then a ripple effect of some personnel costs that affect us thinking for more than Q3.
That's a very helpful. Last question. So your free cash flow looks pretty good you know, it's up 70 million for the fiscal year. You know you had lower Capex you had some benefits from working cap timing are we on track to kind of exceed last year's level, even you know spike or weaker sales.
This year anything you want to call out during the quarter as well. Thank you.
Sure. It is fun Paul do you get a question in a quarter, where we did that well yeah. What you're seeing is something that I think both Jason I have committed to from the very beginning is once we lap six on snakes and some of the things that affected our balance sheet because of that you're seeing work its way through so yeah. The cash flow this quarter not even net.
Rational after capex and even cash from operations was very very favorable and some of that you saw was from us reducing some of our working capital getting on contract assets down and receivables pretty steady so going forward as I've, often said, our our businesses to this to two this topic is pretty straightforward to the extent that we think of our.
Ability to generate net earnings translating very heavily into the ability to generate cash flow. It's just that sometimes from a timing standpoint, he doesn't always lined up in a particular quarters with this quarter was a good affirmation of that ive that statement and going forward, yet, we'll continue to probably be a little bit more cautious about capex and we were before Cobiz 19 hit that.
Just naturally war in an environment, where we wouldn't want look carefully at all those investments that would make.
Thank you.
Your next question will come from Jim Goss with Barrington Research.
Thanks, I'm wondering there from the pandemic is providing when he.
Window recover for year to secure some additional Dolby cinema deals in the various markets.
To the extent that they'll be is.
Certain consumer facing well and that they may be benefiting such as some among some of the.
A number of companies that have done better than others and the downturn and I think you've held up well and the does this give you some.
Opportunity.
Domestically or internationally.
Well first of all Jim we are yeah, we do believe that once cinemas reopened that people are good I want to all the best experience Dolby cinema <unk> fault. We believe it's the best experience available I think in terms of opportunities to expand the footprint.
It really like now depends a lot region by region partner by partner and what their individual circumstances art.
I'm sure you won't be surprised to hear that many of them are.
You know currently holding back on how they form of.
Capital investment.
We did they said all our second partner in Saudi Arabia opened our first screen, all South Korea, which were excited about all of those opportunities.
All right now were.
Yeah, we're well keep in touch with our partners and what they're opening plans are like I said that really I. Just this is a point in time where more than ever.
I really can't generalize on that front, because it really depends on the individual circumstances.
Okay. That's it if you look at food mix issue.
And in terms of less than revenues.
Mogul certainly.
You know reigns Supreme and the quarter I'm wondering if and PC.
For the third they're relatively well because of the others are you thinking those sort of the types of trends you develop them this quarter would be sustainable in the fourth quarter or do you think or any other categories me.
Experienced better pick up that was the case and this quarter.
Well I'll, let no it's kinda <unk> comment on any trends about this quarter.
And the guidance, but I will say that mobile continues to be an area.
I was trying to focus for us and as you know.
We have Dolby vision, and Dolby Atmos included alter out apples ecosystem or the number of high end devices for Dolby Atmos.
On a number of Android devices and most of that it was on the initial bush from our presence in streaming or movies and television.
Big reason for that focus we have on initiatives like music content and as long as gaming content is to bring more experiences to those devices that they're going to types, where people are spending time.
And that will increase the value of the partners for the partners that have already adopted Dolby vision will be out most but we also think that that has the potential to bring it into a much broader category of devices.
She Aaron quantitative question, Jim to reiterate the P. assumption Weve made into scenario, we painted for Q4 is broadly speaking.
5% up tick in volume plus or minus across all categories. If we look back of what we saw in Q3 as maybe some some indicators of that I think I said that Pcs and mobile.
Where a lot better than say set top boxes and consumer electronics and there are some natural dynamics for that not the least of which is what kinds of things can people more easily or more readily by without having to go into a store because as we can see from all the news around does that shutdowns are still pretty prevalent in defense that there's not a lot of heavy traffic going into stores.
So that'll be something for you to think about that in your modeling as you look at Q4, and what you think about those factors, but but what we didn't break down to five so that's probably as much as I can add in terms of color I'm using your question about PC and mobile raining Supreme and whether those trends will continue.
Alright, thanks very much.
As a reminder, press star one maybe have a question.
That will conclude today's question answer session like a turn the conference call over to Kevin you came in for any additional closing remarks.
Well I want to thank everybody for joining us today.
And we look forward to keeping you updated our progress. Thank you.
I will conclude today's conference. Thank you for your participation you may now disconnect.
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