Dolby Laboratories, Inc. 10-K

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Sensitivity As of September 26, 2025, we had cash and cash equivalents of $701.9 million, which consisted of cash and highly-liquid money market funds. In addition, we had short-term and long-term investments of $80.9 million, which primarily consisted of equity method investments and equity securities without a readily determinable value. Our investment policy is focused on the preservation of capital and support for our liquidity requirements. Under the policy, we invest in highly rated securities with a minimum credit rating of A- while limiting the amount of credit exposure to any one issuer other than the U.S. government. We do not invest in financial instruments for trading or speculative purposes, nor do we use leveraged financial instruments. We utilize external investment managers who adhere to the guidelines of our investment policy. The investments within our fixed-income portfolio are subject to fluctuations in interest rates, which could affect our financial position, and to a lesser extent, results of operations. Foreign Currency Exchange Risk We maintain business operations in foreign countries, most significantly in Australia, China, Germany, Ireland, Poland, and the United Kingdom ("U.K."). Additionally, a portion of our business is conducted outside of the U.S. through subsidiaries with functional currencies other than the U.S. dollar, most notably: • Australian Dollar • British Pound • Chinese Yuan • Euro • Polish Zloty 46 Table of Contents As a result, we face exposure to adverse movements in currency exchange rates as the financial results of our international operations are translated from local currency into U.S. dollars upon consolidation. The majority of our revenue generated from international markets is denominated in U.S. dollars, while the operating expenses of our foreign subsidiaries are predominantly denominated in local currencies. Therefore, our operating expenses will increase when the U.S. dollar weakens against the local currency and decrease when the U.S. dollar strengthens against the local currency. Additionally, foreign exchange rate fluctuations on transactions denominated in currencies other than the functional currency result in gains or losses that are reflected in our consolidated statements of operations. Our foreign operations are subject to the same risks present when conducting business internationally, including, but not limited to, changes in economic conditions and geopolitical climate, differing tax structures, foreign exchange rate volatility and other regulations and restrictions. We also enter into forward currency contracts exclusively designated as cash flow hedges, which have a maturity of thirteen months or less, to reduce the impact of currency volatility on U.S. dollar operating expenses. The gains and losses from the effective portions of cash flow hedges are recorded at fair value as a component of AOCI, until the hedged transaction affects earnings. In the period when the hedged transaction affects earnings, the corresponding gains or losses of the cash flow hedge are recognized in the same line item in our consolidated statements of operations. The pre-tax gain attributed to the effective portion of cash flow hedges recognized in AOCI was $1.0 million in fiscal 2025. The pre-tax loss attributed to the effective portion of cash flow hedges recognized in AOCI was $1.6 million in fiscal 2024. The pre-tax effective portion of the gain reclassified to the consolidated statements of operations in fiscal 2025 was not material, and the pre-tax effective portion of the gain reclassified to the consolidated statements of operations was $2.1 million in fiscal 2024. We also enter into foreign currency forward contracts to hedge against assets and liabilities for which we have foreign currency exchange rate exposure and selected anticipated expenses. The contracts hedging receivables and payables are carried at fair value with changes in the fair value recorded to other income, net, in our consolidated statements of operations. As of September 26, 2025 and September 27, 2024, the total notional amounts of outstanding contracts were $195.9 million and $111.7 million, respectively. For additional information related to our foreign currency forward contracts, see Note 2 " Summary of Significant Accounting Policies " to our consolidated financial statements. A sensitivity analysis was performed on all of our foreign currency forward contracts as of September 26, 2025. This sensitivity analysis was based on a modeling technique that measures the hypothetical market value resulting from a 10% shift in the value of exchange rates relative to the U.S. dollar. For these forward contracts, duration modeling was used where hypothetical changes were made to the spot rates of the currency. A 10% increase in the value of the U.S. dollar would lead to a decrease in the fair value of our financial instruments by $4.3 million. Conversely, a 10% decrease in the value of the U.S. dollar would result in an increase in the fair value of these financial instruments by $4.3 million. 47 Table of Contents ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS DOLBY LABORATORIES, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID: 185 ) 49 Consolidated Balance Sheets 51 Consolidated Statements of Operations 52 Consolidated Statements of Comprehensive Income 53 Consolidated Statements of Stockholders’ Equity 54 Consolidated Statements of Cash Flows 55 Notes to Consolidated Financial Statements 57 48 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors Dolby Laboratories, Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of Dolby Laboratories, Inc. and subsidiaries (the Company) as of September 26, 2025 and September 27, 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended September 26, 2025, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of September 26, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 26, 2025 and September 27, 2024, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended September 26, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 26, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable 49 Table of Contents assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Assessment of revenue estimate related to sales-based licensing arrangements As discussed in Note 3 to the consolidated financial statements, revenue is derived principally from the licensing of technologies and patents to various types of licensees. The Company recognized total licensing revenue of $1.2 billion for the fiscal year ended September 26, 2025. The Company estimates and records sales-based licensing revenue from its licensees’ shipments in the same period in which those shipments occur. After receiving the royalty statements from the licensees, which is generally in the quarter after those shipments have occurred, the Company will record an adjustment based on the difference between the estimated and actual sales-based licensing revenue. We identified the assessment of the revenue estimates related to the Company’s sales-based licensing arrangements as a critical audit matter. Auditor judgment was required to evaluate the Company’s estimation of sales-based licensing revenue, which included the use of historical data, industry estimates of expected shipments, market penetration, and average sales prices. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s sales-based licensing revenue estimation process. This included controls related to the review of (1) historical data, (2) third-party industry expectations for shipments of units, (3) the estimated percentage of market penetration, and (4) estimated average sales prices. We tested the Company’s process to develop the sales-based licensing revenue estimate. Specifically, we evaluated the sources of the historical data and assumptions that the Company used by considering their relevance and reliability. We performed sensitivity analyses over certain assumptions to assess the impact on the sales-based licensing revenue estimate of reasonably possible changes to the assumptions. In addition, we compared the Company’s historical sales-based licensing revenue estimates to actual sales-based licensing royalties received from licensees during the year, to assess the Company’s ability to accurately estimate. /s/ KPMG LLP We have served as the Company’s auditor since 2002. San Francisco, California November 18, 2025 50 Table of Contents DOLBY LABORATORIES, INC. CONSOLIDATED BALANCE SHEETS ( in thousands, except share and per share amounts ) September 26, 2025 September 27, 2024 ASSETS Current assets: Cash and cash equivalents $ 701,893 $ 482,047 Restricted cash 91,468 95,705 Short-term investments 703 — Accounts receivable, net of allowance for credit losses of $ 7,221 and $ 5,361 331,096 315,465 Contract assets, net of allowance for credit losses of $ 101 and $ 106 180,804 197,478 Inventories, net 30,424 33,728 Prepaid expenses and other current assets 51,873 69,994 Total current assets 1,388,261 1,194,417 Long-term investments 80,205 89,267 Property, plant, and equipment, net 470,608 479,109 Operating lease right-of-use assets 33,204 39,046 Intangible assets, net 397,057 434,514 Goodwill 529,900 533,208 Deferred taxes 214,361 219,758 Other non-current assets 114,164 120,609 Total assets $ 3,227,760 $ 3,109,928 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 17,840 $ 17,380 Accrued liabilities 369,256 347,529 Income taxes payable 8,928 9,045 Contract liabilities 31,382 31,644 Operating lease liabilities 10,384 12,238 Total current liabilities 437,790 417,836 Non-current contract liabilities 29,687 34,593 Non-current operating lease liabilities 28,494 34,754 Other non-current liabilities 99,843 135,852 Total liabilities 595,814 623,035 Commitments and Contingencies (See Note 14) Stockholders’ equity: Class A, $ 0.001 par value, one vote per share, 500,000,000 shares authorized: 60,802,616 shares issued and outstanding as of September 26, 2025 and 59,722,442 as of September 27, 2024 54 53 Class B, $ 0.001 par value, ten votes per share, 500,000,000 shares authorized: 34,660,045 shares issued and outstanding as of September 26, 2025 and 35,670,779 as of September 27, 2024 40 41 Retained earnings 2,634,980 2,496,255 Accumulated other comprehensive loss ( 12,517 ) ( 19,187 ) Total stockholders’ equity – Dolby Laboratories, Inc. 2,622,557 2,477,162 Noncontrolling interest 9,389 9,731 Total stockholders’ equity 2,631,946 2,486,893 Total liabilities and stockholders’ equity $ 3,227,760 $ 3,109,928 See accompanying notes to consolidated financial statements 51 Table of Contents DOLBY LABORATORIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS ( in thousands, except per share amounts ) Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Revenue: Licensing $ 1,248,017 $ 1,181,794 $ 1,197,930 Products and services 101,113 91,927 101,814 Total revenue 1,349,130 1,273,721 1,299,744 Cost of revenue: Cost of licensing 83,619 67,204 64,890 Cost of products and services 76,513 73,292 87,676 Total cost of revenue 160,132 140,496 152,566 Gross profit 1,188,998 1,133,225 1,147,178 Operating expenses: Research and development 261,792 263,663 271,523 Sales and marketing 360,711 334,460 354,364 General and administrative 286,529 270,392 258,477 Restructuring charges 15,007 6,384 47,061 Total operating expenses 924,039 874,899 931,425 Operating income 264,959 258,326 215,753 Other income/(expense): Interest income/(expense), net 15,376 34,077 28,086 Other income, net 23,150 20,076 6,214 Total other income 38,526 54,153 34,300 Income before income taxes 303,485 312,479 250,053 Provision for income taxes ( 46,993 ) ( 48,163 ) ( 48,409 ) Net income including noncontrolling interest 256,492 264,316 201,644 Less: net income attributable to noncontrolling interest ( 1,474 ) ( 2,491 ) ( 988 ) Net income attributable to Dolby Laboratories, Inc. $ 255,018 $ 261,825 $ 200,656 Net income per share: Basic $ 2.66 $ 2.74 $ 2.10 Diluted $ 2.62 $ 2.69 $ 2.05 Weighted-average shares outstanding: Basic 95,868 95,544 95,771 Diluted 97,479 97,325 97,733 Related party rent expense: Included in net income attributable to noncontrolling interest $ 283 $ 283 $ 292 Cash dividend declared per common share $ 1.32 $ 1.23 $ 1.11 Cash dividend paid per common share $ 1.32 $ 1.20 $ 1.08 See accompanying notes to consolidated financial statements 52 Table of Contents DOLBY LABORATORIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ( in thousands) Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Net income including noncontrolling interest $ 256,492 $ 264,316 $ 201,644 Other comprehensive income: Currency translation adjustments gains, net of tax benefit/(expense) of ($ 200 ), $ 65 , and $ 73 5,367 15,098 7,574 Unrealized gains on investments, net of tax benefit/(expense) of $ 0 , ($ 21 ), and $ 54 83 2,775 3,128 Unrealized gains on cash flow hedges, net of tax benefit/(expense) of ($ 106 ), ($ 344 ), and $ 85 1,251 197 4,286 Total other comprehensive income, net of tax 6,701 18,070 14,988 Total comprehensive income 263,193 282,386 216,632 Less: comprehensive income attributable to noncontrolling interest ( 1,505 ) ( 2,764 ) ( 1,319 ) Comprehensive income attributable to Dolby Laboratories, Inc. $ 261,688 $ 279,622 $ 215,313 See accompanying notes to consolidated financial statements 53 Table of Contents DOLBY LABORATORIES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY ( in thousands ) Dolby Laboratories, Inc. Class A Class B APIC Retained Earnings AOCI Total Stockholders’ Equity Noncontrolling Interest Total Shares Amount Shares Amount Balance as of September 30, 2022 59,799 $ 53 36,086 $ 41 $ — $ 2,297,730 $ ( 51,641 ) $ 2,246,183 $ 4,837 $ 2,251,020 Net income — — — — — 200,656 — 200,656 988 201,644 Other comprehensive income, net of tax — — — — — — 14,657 14,657 331 14,988 Distributions to noncontrolling interest — — — — — — — — ( 266 ) ( 266 ) Stock-based compensation expense — — — — 118,486 — — 118,486 — 118,486 Capitalized stock-based compensation expense — — — — 1,160 — — 1,160 — 1,160 Repurchase of common stock ( 1,892 ) ( 2 ) — — ( 146,285 ) ( 2,989 ) — ( 149,276 ) — ( 149,276 ) Cash dividends declared and paid on common stock — — — — — ( 103,407 ) — ( 103,407 ) — ( 103,407 ) Common stock issued under employee stock plans 2,189 2 — — 47,779 — — 47,781 — 47,781 Tax withholdings on vesting of restricted stock ( 422 ) — — — ( 31,144 ) — — ( 31,144 ) — ( 31,144 ) Equity issued in connection with business combination — — — — 10,004 — — 10,004 11,194 21,198 Balance as of September 29, 2023 59,674 $ 53 36,086 $ 41 $ — $ 2,391,990 $ ( 36,984 ) $ 2,355,100 $ 17,084 $ 2,372,184 Net income — — — — — 261,825 — 261,825 2,491 264,316 Other comprehensive income, net of tax — — — — — — 17,797 17,797 273 18,070 Distributions to noncontrolling interest — — — — — — — — ( 5,164 ) ( 5,164 ) Stock-based compensation expense — — — — 119,825 — — 119,825 — 119,825 Capitalized stock-based compensation expense — — — — 573 — — 573 — 573 Repurchase of common stock ( 1,936 ) ( 2 ) — — ( 116,341 ) ( 43,658 ) — ( 160,001 ) — ( 160,001 ) Excise tax on common stock repurchases — — — — ( 261 ) — — ( 261 ) — ( 261 ) Cash dividends declared and paid on common stock — — — — — ( 114,579 ) — ( 114,579 ) — ( 114,579 ) Common stock issued under employee stock plans 2,019 2 — — 40,201 — — 40,203 — 40,203 Tax withholdings on vesting of restricted stock ( 450 ) — — — ( 39,075 ) — — ( 39,075 ) — ( 39,075 ) Common stock transfers - Class B to Class A 415 — ( 415 ) — — — — — — — Purchase of non-controlling interest in business combinations — — — — ( 5,282 ) — — ( 5,282 ) ( 4,638 ) ( 9,920 ) Deconsolidation of subsidiary — — — — — 677 — 677 ( 677 ) — Equity issued in connection with business combination — — — — 360 — — 360 362 722 Balance as of September 27, 2024 59,722 53 35,671 41 — 2,496,255 ( 19,187 ) 2,477,162 9,731 2,486,893 Net income — — — — — 255,018 — 255,018 1,474 256,492 Other comprehensive income, net of tax — — — — — — 6,670 6,670 31 6,701 Distributions to noncontrolling interest — — — — — — — — ( 1,847 ) ( 1,847 ) Stock-based compensation expense — — — — 128,514 — — 128,514 — 128,514 Capitalized stock-based compensation expense — — — — 323 — — 323 — 323 Repurchase of common stock ( 1,620 ) ( 2 ) — — ( 135,296 ) 10,306 — ( 124,992 ) — ( 124,992 ) Cash dividends declared and paid on common stock — — — — — ( 126,599 ) — ( 126,599 ) — ( 126,599 ) Common stock issued under employee stock plans 2,163 2 — — 43,695 — — 43,697 — 43,697 Tax withholdings on vesting of restricted stock ( 473 ) — — — ( 37,236 ) — — ( 37,236 ) — ( 37,236 ) Common stock transfers - Class B to Class A 1,011 1 ( 1,011 ) ( 1 ) — — — — — — Balance as of September 26, 2025 60,803 $ 54 34,660 $ 40 $ — $ 2,634,980 $ ( 12,517 ) $ 2,622,557 $ 9,389 $ 2,631,946 See accompanying notes to consolidated financial statements 54 Table of Contents DOLBY LABORATORIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS ( in thousands ) Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Operating activities: Net income including noncontrolling interest $ 256,492 $ 264,316 $ 201,644 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 87,827 75,559 82,558 Stock-based compensation 128,514 119,825 118,486 Amortization of operating lease right-of-use assets 10,770 11,768 12,956 Amortization of premium on investments — ( 2,919 ) ( 860 ) Provision for/(benefit from) credit losses 2,434 ( 2,256 ) ( 793 ) Deferred income taxes 4,988 ( 21,612 ) ( 18,337 ) Impairment loss on internally developed software — — 16,225 Share of net income of equity method investees, net of cash distributions ( 707 ) ( 2,023 ) ( 60 ) Other non-cash items affecting net income ( 1,108 ) 3,305 2,346 Changes in operating assets and liabilities: Accounts receivable, net ( 18,463 ) ( 28,967 ) 47,779 Contract assets, net 16,680 ( 8,707 ) 347 Inventories 8,019 ( 2,654 ) ( 13,226 ) Operating lease right-of-use assets ( 4,505 ) ( 8,420 ) ( 8,817 ) Prepaid expenses and other assets 15,223 ( 2,013 ) ( 1,218 ) Accounts payable and accrued liabilities 22,851 ( 34,554 ) ( 52,315 ) Income taxes, net ( 42,829 ) ( 4,501 ) ( 8,722 ) Contract liabilities ( 5,079 ) ( 9,738 ) ( 8,379 ) Operating lease liabilities ( 8,503 ) ( 5,263 ) ( 5,818 ) Other non-current liabilities ( 406 ) ( 13,894 ) 3,285 Net cash provided by operating activities 472,198 327,252 367,081 Investing activities: Purchases of marketable securities — ( 160,198 ) ( 172,955 ) Proceeds from sales of marketable securities 15,911 234,061 54,964 Proceeds from maturities of marketable securities — 157,729 176,833 Proceeds from sale of assets held for sale 16,881 — — Purchases of property, plant, and equipment ( 36,348 ) ( 30,007 ) ( 30,339 ) Business combinations, net of cash and restricted cash acquired, and other related payments ( 1,362 ) ( 487,877 ) 25,703 Purchases of intangible assets ( 5,593 ) — — Purchases of other investments ( 75 ) — — Net cash provided by/(used in) investing activities ( 10,586 ) ( 286,292 ) 54,206 Financing activities: Proceeds from issuance of common stock 43,697 40,203 47,781 Repurchase of common stock ( 124,992 ) ( 160,001 ) ( 149,276 ) Payment of cash dividend ( 126,599 ) ( 114,579 ) ( 103,407 ) Distributions to noncontrolling interest ( 1,847 ) ( 5,164 ) ( 266 ) Payment of excise tax on repurchase of common stock ( 261 ) — — Purchase of noncontrolling interest in business combinations — ( 9,920 ) — Equity issued in connection with business combination — 722 — Shares repurchased for tax withholdings on vesting of restricted stock ( 37,236 ) ( 39,075 ) ( 31,144 ) Payment of deferred consideration for prior business combinations — — ( 500 ) Net cash used in financing activities ( 247,238 ) ( 287,814 ) ( 236,812 ) Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash 1,235 6,640 5,120 Net increase/(decrease) in cash, cash equivalents, and restricted cash 215,609 ( 240,214 ) 189,595 Cash, cash equivalents, and restricted cash at beginning of period 577,752 817,966 628,371 Cash, cash equivalents, and restricted cash at end of period $ 793,361 $ 577,752 $ 817,966 Supplemental disclosure: Cash paid for income taxes, net of refunds received $ 73,737 $ 63,217 $ 61,481 Non-cash investing and financing activities: Change in property, plant, and equipment purchased, unpaid at period-end $ ( 2,830 ) $ 8,711 $ 3,882 Accrual of unpaid stock repurchase excise tax — 261 — Equity issued in connection with business combination — — 21,198 55 Table of Contents See accompanying notes to consolidated financial statements 56 Table of Contents DOLBY LABORATORIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1 . Basis of Presentation Principles of Consolidation The consolidated financial statements include the accounts of Dolby Laboratories, Inc. and our wholly-owned and majority-owned subsidiaries. In addition, we have consolidated the financial results of jointly owned affiliated companies in which our principal stockholder or other entities have a noncontrolling interest. We report these noncontrolling interests as a separate line in our consolidated statements of operations as net income attributable to noncontrolling interest and in our consolidated balance sheets as a noncontrolling interest. We eliminate all intercompany accounts and transactions upon consolidation. Use of Estimates The preparation of our financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported and disclosed in our consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include estimated shipments by our licensees for which we are owed a sales-based royalty. These estimates 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. Our estimates of royalty-based revenue also take into consideration the macroeconomic effect of global events that may impact our licensees' supply chain activities as well as demand for shipments. Additional significant items subject to such estimates and assumptions include ESPs for performance obligations within revenue arrangements; allowance for credit losses for accounts receivable; carrying values of inventories and certain PP&E, goodwill and intangible assets; fair values of investments; accrued liabilities including unrecognized tax benefits, deferred income tax assets and liabilities, and contingent liabilities; and stock-based compensation. Actual results could differ from our estimates. Change in Presentation During fiscal 2025, we changed the presentation of our share of net income from equity method investees and cash distributions from equity method investees within the consolidated statements of cash flows. Our share of net income from equity method investees, previously presented in "other non-cash items affecting net income," and cash distributions from our equity method investees, previously presented within "changes in operating assets and liabilities," are now presented in "share of net income of equity method investees, net of cash distributions." As such, prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no impact of total net cash provided by operating activities. Fiscal Year Our fiscal year is a 52 or 53 week period ending on the last Friday in September. The fiscal years presented herein include the 52 week period ended September 26, 2025 (fiscal 2025), September 27, 2024 (fiscal 2024), and September 29, 2023 (fiscal 2023). Our fiscal year ending September 25, 2026 (fiscal 2026) will consist of 52 weeks. 2 . 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 57 Table of Contents 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 licensing revenue is generated from customers outside of the United States ("U.S."). We manage the credit risk posed by non-U.S. customers by performing regular evaluations of the creditworthiness of our licensing customers and recognize revenue in accordance with U.S. GAAP. In fiscal 2025, 2024 and 2023, we did not have any individual customers that accounted for 10% of our total revenue. Cash and Cash Equivalents We consider all short-term highly liquid investments with original maturities of 90 days or less from the date of purchase to be cash equivalents. Cash and cash equivalents primarily consist of funds held in general checking accounts and money market accounts. Restricted Cash Restricted cash on our consolidated balance sheets consists of royalties payable to third-party licensors through certain Via LA-administered patent pools. Restricted cash also consists of cash contributed by Dolby and third-party licensors to Via LA, our subsidiary, that may only be used for licensor enforcement actions or licensee compliance activities related to certain Via LA-administered patent pools, as well as to disperse costs associated with any audit of Via LA for the Wideband Code Division Multiple Access (W-CDMA) patent pool . Restricted cash may also consist of other amounts for which contractual conditions restrict the use of the cash for general operations. Investments Our investments primarily consist of our equity securities and our mutual fund investments held in our SERP, which are classified as trading securities. Investments that have an original maturity of 91 days or more at the date of purchase and a current maturity of less than one year are classified as short-term investments, while investments with a current maturity of more than one year are classified as long-term investments. AFS securities, if any, and trading securities held in our SERP are recorded at fair value in our consolidated balance sheets. Unrealized gains and losses on AFS securities are reported as a component of AOCI, while realized gains and losses and credit losses are reported as a component of net income. Upon sale, gains and losses are reclassified from AOCI into earnings, and are determined based on specific identification of securities sold. We evaluate our investment portfolio for impairment by comparing the fair value with the cost basis for each of our investment securities. If the fair value of the AFS securities, if any, is less than amortized cost, such securities are considered impaired. If we have the intent to sell the debt security, or if it is more likely than not that we will be required to sell the debt security before recovery of its amortized cost, the difference between the amortized cost (net of allowance, if any) and the fair value of the securities is reported as an impairment loss in net income. Impaired debt securities that we intend to hold are evaluated to determine whether we need to recognize an allowance for credit losses, limited to the difference between the fair value and amortized cost of the security. Equity Securities Equity securities for which we possess the ability to exercise significant influence, but not control, over operating and financing decisions are accounted for under the equity method. In applying the equity method, we record the investment at cost and subsequently increase or decrease the carrying amount of the investment by our proportionate share of the investee's net earnings or losses. We record dividends or other equity distributions as reductions in the carrying value of the investment. Our share of the equity method investee's net income or loss is included in other income/(expense), net in the consolidated statements of operations. Our equity method investments are included within long-term investments in our consolidated balance sheets. We also hold several investments in equity securities of privately-held companies without a readily determinable fair value, and equity securities of publicly traded companies with a readily determinable fair value. The equity securities without a readily determinable fair value are accounted for using the measurement alternative, which is cost, less any impairment, adjusted for changes in fair value resulting from observable transactions for identical or similar investments of the same issuer. We perform a qualitative assessment at each reporting date to determine whether there are triggering events for impairment. The equity securities with a readily determinable fair value are 58 Table of Contents measured at fair value, with any gains or losses recognized in other income, net on the consolidated statements of operations. These equity securities are included within short-term and long-term investments in our consolidated balance sheets. Allowance for Credit Losses We maintain a provision for estimated credit losses on receivables resulting from our customers' inability to make required payments. In determining the provision, we pool receivables with similar risk characteristics to evaluate the collectability of our receivables. Risk characteristics considered in creating these risk pools include assessing historical or expected loss patterns, credit ratings, current macroeconomic conditions that could impact collectability of cash flows, and structure of customer agreements. In cases where circumstances have changed such that specific customers no longer share similar risk characteristics, customers are excluded from their current pool and their risk profiles are evaluated separately. We recognize allowances for credit losses based on our actual historical loss information, the current business environment, and reasonable and supportable forecasts. Actual future losses from uncollectible accounts may differ from our estimates. Inventories Inventories are accounted for using the first-in, first-out method, and are valued at the lower of cost and net realizable value. We evaluate our ending inventories for estimated excess quantities and obsolescence. Our evaluation includes the analysis of future sales demand by product within specific time horizons. Inventories in excess of projected future demand are written down to their net realizable value. In addition, we assess the impact of changing technology on our inventory balances and write-off inventories that are considered obsolete. Write-downs and write-offs of inventory are recorded as a cost of products in our consolidated statements of operations. We classify inventory that we do not expect to sell within twelve months as other non-current assets in our consolidated balance sheets. Property, Plant, and Equipment PP&E is stated at cost less accumulated depreciation. Depreciation expense is recognized on a straight-line basis according to estimated useful lives assigned to each of our different categories of PP&E as summarized within the following table: PP&E Category Useful Life Computer equipment and software 3 to 5 years Machinery and equipment 3 to 8 years Furniture and fixtures 5 to 8 years Leasehold improvements Lesser of useful life or related lease term Equipment provided under operating leases 15 years Buildings and building improvements 20 to 40 years We may encounter scenarios where assets we acquire may deviate from the established standard useful life provided above. Such occurrences are evaluated on a case by case basis, and are assigned a useful life commensurate with the facts and circumstances associated with the specific PP&E being acquired. We capitalize certain costs incurred during the construction phase of a project or asset into construction-in-progress until the construction process is complete. Once the related asset is placed into service, we transfer its carrying value into the appropriate fixed asset category and begin depreciating the value over its useful life. Equipment Provided Under Operating Leases. In arrangements that we assess as operating leases, we recognize our equipment installed at third-party sites as PP&E and depreciate the asset on a straight-line basis. Internal-use Software. We capitalize qualifying internal-use software development costs, consisting primarily of external and internal labor, including stock based compensation, incurred during the application development stage. Costs incurred during the preliminary project and post-implementation stages are charged to expense. Capitalized costs are included in PP&E, net of accumulated amortization in our consolidated balance sheets. Our capitalized internal-use software costs are amortized on a straight-line basis over estimated useful lives of three years , unless another systematic and rational basis is more representative of the software’s useful life. Business Combinations For business combinations, we recognize the identifiable assets acquired, the liabilities assumed and any non-controlling interests in an acquiree, which are measured based on the acquisition date fair value. Goodwill is 59 Table of Contents measured as the excess of consideration transferred over the net amounts of the identifiable tangible and intangible assets acquired and the liabilities assumed at the acquisition date. We use significant estimates and assumptions to determine the fair value of assets acquired and liabilities assumed, any contractual obligations assumed, pre-acquisition contingencies, and contingent consideration, and the related useful lives of the acquired assets, when applicable, as of the acquisition date. These estimates and assumptions are inherently uncertain and may be subject to change as additional information is received and certain tax returns are finalized. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. After the measurement period, any subsequent adjustments are recorded in the consolidated statements of operations. Acquisition costs are recorded in general and administrative and sales and marketing expenses on the consolidated statements of operations, and are recognized as incurred. Goodwill, Intangible Assets, and Long-Lived Assets We perform an assessment of goodwill for potential impairment annually during our third fiscal quarter or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. For our annual goodwill test as of the fiscal quarter ended June 27, 2025, a qualitative assessment was performed and we concluded that it was more likely than not that its fair value was in excess of its carrying amount. Accordingly, no quantitative assessment was performed and no impairment was recorded. We did not incur any goodwill impairment losses in any of the periods presented. Intangible assets are stated at their original cost less accumulated amortization, and those with definite lives are amortized over their estimated useful lives. Our intangible assets principally consist of acquired technology, patents, customer relationships and contracts, the majority of which are amortized on a straight-line basis over their useful lives using a range from three to eighteen years . We review long-lived assets, including intangible assets, for impairment whenever events or a change in circumstances indicate an asset or asset group’s carrying value may not be recoverable. Recoverability of an asset or asset group is measured by comparing its carrying amount to the total future undiscounted cash flows that it is expected to generate. If it is determined that an asset or asset group is not recoverable, an impairment loss is recorded in the amount by which the carrying amount exceeds its estimated fair value. 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. For additional financial information and a summary of our accounting policy, refer to Note 3 "Revenue Recognition" to our consolidated financial statements. Cost of Revenue Cost of licensing. Cost of licensing primarily consists of amortization expenses associated with purchased intangible assets and intangible assets acquired in business combinations. Cost of licensing also includes IP royalty obligations to third parties, depreciation of our Dolby Cinema equipment provided under operating leases in collaborative arrangements, and direct fees incurred. Cost of products and services. Cost of products primarily consists of the cost of materials related to products sold, applied labor, and manufacturing overhead. Our cost of products also includes third party royalty obligations paid to license IP that we include in our products. Cost of services primarily consists of the personnel and personnel-related costs of employees performing our professional services, and those of outside consultants, and reimbursable expenses incurred on behalf of customers. 60 Table of Contents Stock-Based Compensation We measure expenses associated with all employee stock-based compensation awards using a fair-value method and record such expense in our consolidated financial statements on a straight-line basis over the requisite service period. Advertising and Promotional Costs Advertising and promotional costs are charged primarily to S&M expense as incurred. Our advertising and promotional costs were as follows (in thousands): Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Advertising and promotional costs $ 51,021 $ 57,338 $ 59,821 Foreign Currency Activities Foreign Currency Translation. We maintain business operations in foreign countries. We translate the assets and liabilities of our international subsidiaries, the majority of which are denominated in non-U.S. dollar functional currencies, into U.S. dollars using exchange rates in effect at the end of each period. Revenue and expenses of these subsidiaries are translated using the average rates for the period. Gains and losses from these translations are included in AOCI within stockholders’ equity. Foreign Currency Transactions. Certain of our foreign subsidiaries transact in currencies other than their functional currency. Therefore, we re-measure non-functional currency assets and liabilities of these subsidiaries using exchange rates at the end of each period. As a result, we recognize foreign currency transaction and re-measurement gains and losses, which are recorded within other income, net in our consolidated statements of operations. These gains and losses were as follows (in thousands): Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Foreign currency transaction gains $ 1,252 $ 1,800 $ 536 Non-designated Hedges. In an effort to reduce the risk that our earnings will be adversely affected by foreign currency exchange rate fluctuations, we enter into foreign currency forward contracts exclusively to hedge against assets and liabilities for which we have foreign currency exchange rate exposure. These derivative instruments are carried at fair value with changes in the fair value recorded to other income/(expense), net, in our consolidated statements of operations. While not designated as hedging instruments, these foreign currency forward contracts are used to reduce the exchange rate risk associated primarily with intercompany receivables and payables. These contracts do not subject us to material balance sheet risk due to exchange rate movements as gains and losses on these derivatives are intended to offset gains and losses on the related receivables and payables for which we have foreign currency exchange rate exposure. As of September 26, 2025 and September 27, 2024, the outstanding derivative instruments had maturities of equal to or less than 31 days, respectively, and the total notional amounts of outstanding contracts were $ 110.1 million and $ 106.3 million, respectively. The fair values of these contracts are included within accrued liabilities in our consolidated balance sheets. Cash Flow Hedges. We also enter into forward currency contracts exclusively designated as cash flow hedges, which have a maturity of thirteen months or less, to reduce the impact of currency volatility on U.S. dollar operating expenses. As of September 26, 2025 and September 27, 2024, the outstanding derivative instruments had maturities of equal to or less than 12 months, and the total notional amounts of outstanding contracts were $ 85.8 million and $ 5.5 million, respectively. The gains and losses from the effective portions of cash flow hedges are recorded at fair value as a component of AOCI, until the hedged item is subsequently reclassified into earnings in the same period in which the hedged transaction affects earnings, with the corresponding hedged item. Amounts reclassified are recorded to the same line item in the consolidated statements of operations as the impact of the hedge transaction, concurrently with the hedged costs. The pre-tax gain attributed to the effective portion of cash flow hedges recognized in AOCI was $ 1.0 million in fiscal 2025. The pre-tax loss attributed to the effective portion of cash flow hedges recognized in AOCI was $ 1.6 million in fiscal 2024. The pre-tax effective portion of the gains reclassified to the consolidated statements of 61 Table of Contents operations in fiscal 2025 was not material. The pre-tax effective portion of the gains reclassified to the consolidated statements of operations was $2.1 million in fiscal 2024. Income Taxes We use the asset and liability method, under which deferred income tax assets and liabilities are determined based upon the difference between the financial statement carrying amounts and the tax bases of assets and liabilities, and NOL carryforwards are measured using the enacted tax rate expected to apply to taxable income in the years in which the differences are expected to be reversed. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is additionally dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities and projected future taxable income in making this assessment, and we record a valuation allowance to reduce our deferred tax assets when it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. We record an unrecognized tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the tax authorities. We include interest and penalties related to gross unrecognized tax benefits within our provision for income taxes. To the extent accrued interest and penalties do not ultimately become payable, amounts accrued are reversed in the period that such determination is made and are reflected as a reduction of the overall income tax provision. Recently Issued Accounting Standards We continually assess any ASUs or other new accounting pronouncements issued by the FASB to determine their applicability and impact on us. Where it is determined that a new accounting pronouncement will result in a change to our financial reporting, we take the appropriate steps to ensure that such changes are properly reflected in our consolidated financial statements or notes thereto. Adopted Standards Segment Reporting. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances the disclosures required for operating segments by requiring disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, among other expanded disclosures. We adopted this standard during the fourth quarter of fiscal 2025 on a retrospective basis. The adoption did not have a material impact on consolidated financial statements. See Note 16, " Operating Segments and Geographic Information ," for more information. 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 standard is effective for Dolby beginning September 27, 2025 on a prospective basis. We are currently in the process of evaluating the impact of the standard's adoption on our consolidated financial statements and related disclosures. 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 clarified the effective date of ASU 2024-03. This standard will be effective for Dolby's annual period beginning September 25, 2027 and interim periods beginning September 30, 2028, with early adoption permitted. We are currently in the process of evaluating the impact of the standard's adoption on our consolidated financial statements and related disclosures. Intangibles. In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which eliminates references to the previous stage-based model, and requires capitalization of software costs when 62 Table of Contents management has committed to the software project and it is probable the software will be completed and perform its intended use. This standard is effective for Dolby beginning September 30, 2028, and may be applied prospectively, retrospectively, or using a modified transition approach, with early adoption permitted. We are currently in the process of evaluating the impact of the standard's adoption on our consolidated financial statements and related disclosures. 3. 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 customer’s 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 enhanced 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 provide various services to support theatrical and television production for cinema exhibition, broadcast, and home entertainment, including equipment training, mixing room alignment, equalization, as well as audio, color and light image calibration. We also offer solutions through our platform Dolby OptiView (previously named Dolby.io) to companies building real-time digital experiences that increase audience engagement. Our solution provides the capability to stream high quality audiovisual content in ultra-low latency which reduces the delay between the action and the viewer. • PCS. We provide PCS for products sold and for equipment leased, and we support the implementation of our licensing technologies in our licensees’ products. • Equipment Leases. We collaborate with established cinema exhibitors to offer Dolby Cinema, a branded premium cinema offering for movie audiences by leasing equipment and licensing our IP. • Licensing Administration Fees. We generate administrative fees for managing patent pools on behalf of third party patent owners through our subsidiary, Via LA. Some of our revenue arrangements include multiple performance obligations, such as hardware, software, support and maintenance, and extended warranty services. We evaluate whether promised products and services are distinct performance obligations. The majority of our arrangements with multiple performance obligations pertain to our digital cinema server and processor sales that include the following distinct performance obligations to which we allocate portions of the transaction price based on their stand-alone selling price: • Digital cinema server hardware and embedded software, which is dependent on and interrelated with the hardware. Accordingly, the hardware and embedded software represent a single performance obligation. • The right to support and maintenance, which is included with the purchase of the digital cinema server hardware, is a distinct performance obligation. 63 Table of Contents • The right to receive commissioning services is a distinct performance obligation within the sale of the Dolby Atmos Cinema Processor. These services consist of the review of venue designs specifying proposed speaker placement as well as calibration services performed for installed speakers to ensure optimal playback. C. Determination of Transaction Price for Performance Obligations in a Contract After identifying the distinct performance obligations, we determine the transaction price in accordance with the terms of the underlying executed contract which may include variable consideration such as discounts, rebates, refunds, rights of returns, and incentives. We assess and update, if necessary, the amount of variable consideration to which we are entitled for each reporting period. At the end of each reporting period, we estimate and accrue a liability for returns and adjustments as a reduction to revenue based on several factors, including past return history. With the exception of our sales-based royalties, we evaluate whether a significant financing component exists when we recognize revenue in advance of customer payments that occur over time. For example, some of our licensing arrangements include payment terms greater than one year from when we transfer control of our IP to a licensee and the receipt of the final payment for that IP. If a significant financing component exists, we classify a portion of the transaction price as interest income, instead of recognizing all of the transaction price as revenue. We do not adjust the transaction price for the effects of financing if, at contract inception, the period between the transfer of control to a customer and final payment is expected to be one year or less. D. Allocation of Transaction Price to Distinct Performance Obligations in a Contract For our sales-based royalties where the license is the predominant item to which the royalties relate, we present all revenue as licensing. For revenue arrangements that include multiple performance obligations, we determine the stand-alone selling price for each distinct performance obligation based on the actual selling prices made to customers. If the performance obligation is not sold separately, we estimate the stand-alone selling price. We do so by considering 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. Once the transaction price, including any variable consideration, has been determined, we allocate the transaction price to the performance obligations identified in the contract and recognize revenue as or when control is transferred for each distinct performance obligation. E. Revenue Recognition as Control is Transferred to a Customer We generate our licensing revenue by licensing our technologies and patents to various types of licensees, such as chip manufacturers ("implementation licensees"), consumer product manufacturers, software vendors, and communications service providers. Our revenue recognition policies for each of these arrangements are summarized below. Initial fees from implementation licensees. Implementation licensees incorporate our technologies into their chipsets that, once approved by Dolby, are available for purchase by OEMs for use in end-user products. Implementation licensees only pay us a nominal initial fee on contract execution as consideration for the ongoing services that we provide to assist in their implementation process. Revenue from these initial fees is recognized ratably over the contractual term as a component of licensing revenue. Sales-based licensing fees. In our royalty bearing licensing agreements with OEMs, control is transferred upon the later of contract execution or the contract’s effective date. We apply the royalty exception, which requires that we recognize sales-based royalties when the sales occur based on our estimates. These estimates 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 to which we expect our licensees to submit royalty statements within the following two quarters. Upon receipt of royalty statements from the licensees with the actual reporting of sales-based royalties that we estimated previously, we record a favorable or unfavorable adjustment based on the difference, if any, between estimated and actual sales. In the first and second quarters of fiscal 2025, we recorded favorable adjustments of approximately $ 17 million and $ 1 million, respectively. In the third and fourth quarters of fiscal 2025, we recorded unfavorable adjustments of approximately $ 4 million and $ 1 million, respectively. Each of these adjustments is 64 Table of Contents primarily related to shipments that occurred in the prior two quarters, and is largely based on actual royalty statements received from licensees that differed from our estimates. Fixed and guaranteed licensing fees. In certain cases, our arrangements require the licensee to pay fixed, non-refundable fees. In these cases, control is transferred and fees are recognized upon the later of contract execution or the effective date. Additionally and separate from initial fees from implementation licensees, our sales- and usage-based licensing agreements include a nominal fee, which is also recognized at a point in time in which control of the IP has been transferred. Revenue from these arrangements is included as a component of licensing revenue. Recoveries. Through compliance efforts, we identify misreported licensed activity related to non-current periods. We may record a favorable or unfavorable revenue adjustment in connection with the findings from these compliance efforts generally upon resolution with the licensee through agreement of the findings, or upon receipt of the licensee’s correction statement. Revenue from these arrangements is included as a component of licensing revenue. We undertake activities aimed at identifying potential unauthorized uses of our technologies, which, when successful, result in the recognition of revenue. Recoveries stem from third parties who agree to remit payments to us based on past use of our technology. In these scenarios, a legally binding contract did not exist at the time of use of our technology, and therefore, we recognize revenue recoveries upon execution of the agreement as that is the point in time at which a contract exists and control is transferred. This revenue is classified as licensing revenue. In general, we classify legal costs associated with activities aimed at identifying potential unauthorized uses of our technologies, auditing existing licensees, and on occasion, pursuing litigation as S&M in our consolidated statements of operations. We recognize licensing revenue gross of withholding taxes, which our licensees remit directly to their local tax authorities, and for which we receive a partial foreign tax credit in our income tax provision. In addition to our licensing arrangements, we also enter into arrangements to deliver products and services. Product Sales. Revenue from the sale of products is recognized when the customer obtains control of the promised good or service, which is generally upon shipment. Payments are generally made within 90 days of sale. Services. We provide various services, such as engineering services related to movie soundtrack print mastering, equipment training and maintenance, mixing room alignment, equalization, and image calibration, which we bill on a fixed fee and time and materials basis. Most of these services are of a short duration and are recognized as control of the performance obligations are transferred which is when the related services are performed. Cloud Services. We offer solutions through our Dolby OptiView platform as well as cloud encoding services, generally, on either a consumption or subscription basis. Revenue related to cloud services provided on a consumption basis is recognized when the customer utilizes the services, based on the quantity of services consumed. Revenue related to cloud services provided on a subscription basis is recognized ratably over the contract term as the customer receives and consumes the benefits of the cloud services. Collaborative Arrangements. We collaborate with established cinema exhibitors to offer Dolby Cinema, a branded premium cinema offering for movie audiences. Under such collaborations, Dolby and the exhibitor are both active participants, and share the risks and rewards associated with the business. Accordingly, these collaborations are governed by revenue sharing arrangements under which Dolby receives revenue based on box office receipts, in exchange for our proprietary designs and trademarks as well as for the use of our equipment at the exhibitor's venue. The use of our product solution meets the definition of a lease, and for the related portion of Dolby's share of revenue, we apply ASC 842, Leases , and recognize revenue based on monthly, or quarterly, box office reports from exhibitors. Our revenue share is recognized as licensing revenue in our consolidated statements of operations. In addition, we also enter into hybrid agreements where a portion of our revenue share involves guaranteed payments, which in some cases result in classifying the arrangement as a sales-type lease. In such arrangements, we consider control to transfer at the point in time to which we have installed and tested the equipment, at which point we record such guaranteed payments as product revenue. Licensing Administration Fee. We generate administrative fees for managing patent pools on behalf of third party patent owners through our subsidiary, Via LA. As an agent to licensors in the patent pool, Via LA receives a 65 Table of Contents share of the sales-based royalty that the patent pool licensors earn from licensees. As such, we apply the sales-based royalty exception as the service provided is directly related to the patent pool licensors’ provision of IP, which results in recognition based on estimates of the licensee’s quarter shipments that use the pool’s patents. In addition to sales-based royalties, Via LA also has contracts where the fees are fixed. The revenue share Via LA receives from licensors on fixed fee contracts is recognized over the term in which we are providing services associated with the fixed fee contract. We recognize our administrative fees net of the consideration paid to the patent licensors in the pool as licensing revenue. Deferred revenue, which is a component of contract liabilities, represents amounts that are ultimately expected to be recognized as revenue, but for which we have yet to satisfy the performance obligation. As of September 26, 2025, we had $ 61.1 million of remaining performance obligations, 53 % of which we expect to recognize as revenue in fiscal 2026, 20 % in fiscal 2027, and the balance of 27 % in fiscal years beyond 2027. F. Disaggregation of Revenue The following table presents a summary of the composition of our revenue for all periods presented (in thousands, except percentage amounts): Fiscal Year Ended Revenue September 26, 2025 September 27, 2024 September 29, 2023 Licensing $ 1,248,017 93 % $ 1,181,794 93 % $ 1,197,930 92 % Products and services 101,113 7 % 91,927 7 % 101,814 8 % Total revenue $ 1,349,130 100 % $ 1,273,721 100 % $ 1,299,744 100 % The following table presents the composition of our licensing revenue for all periods presented (in thousands, except percentage amounts): Fiscal Year Ended Market September 26, 2025 September 27, 2024 September 29, 2023 Broadcast $ 428,471 34 % $ 409,105 35 % $ 451,719 38 % Mobile 268,568 22 % 235,774 20 % 243,897 20 % CE 150,704 12 % 165,817 14 % 170,197 14 % PC 151,894 12 % 141,300 12 % 124,362 10 % Other 248,380 20 % 229,798 19 % 207,755 18 % Total licensing revenue $ 1,248,017 100 % $ 1,181,794 100 % $ 1,197,930 100 % 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 revenue is based on the location where services are performed. The following table presents the composition of our revenue by geographic location for all periods presented (in thousands, except percentage amounts): Fiscal Year Ended Geographic Location September 26, 2025 September 27, 2024 September 29, 2023 United States $ 496,990 37 % $ 450,265 35 % $ 466,030 36 % International 852,140 63 % 823,456 65 % 833,714 64 % Total revenue $ 1,349,130 100 % $ 1,273,721 100 % $ 1,299,744 100 % G. Contract Balances Our contract assets represent rights to consideration from licensees for the use of our IP that we have estimated in a given period in the absence of receiving actual royalty statements from licensees. These estimates reflect our best judgment at that time, and are developed using a number of inputs, including historical data, industry estimates of expected shipments, anticipated sales price and performance, and third party data supporting the percentage of markets using our technologies. In the event that our estimates differ from actual amounts reported, we record an adjustment in the quarter in which the royalty statement is received, which is typically the quarter following our estimate. Actual amounts reported are typically paid within 60 days following the end of the quarter of shipment. The main drivers for change in the contract assets account are variances in quarterly estimates, and to a lesser degree, timing of receipt of actual royalty statements. 66 Table of Contents Our contract liabilities consist of advance payments and billings in advance of performance, typically satisfied within one year. The non-current portion of contract liabilities is separately disclosed in our consolidated balance sheets. We present the net contract asset or liability when we have both contract assets and contract liabilities for a single contract. In fiscal 2025, we recognized $ 31.2 million from prior period deferred revenue. The following table presents a summary of the balances to which contract assets and liabilities related to revenue are recorded for all periods presented (in thousands, except percentage amounts): September 26, 2025 September 27, 2024 Change ($) Change (%) Accounts receivable, net $ 331,096 $ 315,465 $ 15,631 5 % Contract assets, net 180,804 197,478 ( 16,674 ) ( 8 ) % Contract liabilities - current 31,382 31,644 ( 262 ) ( 1 ) % Contract liabilities - non-current 29,687 34,593 ( 4,906 ) ( 14 ) % 4. Composition of Certain Financial Statement Captions The following tables present detailed information from our consolidated balance sheets as of September 26, 2025 and September 27, 2024 (in thousands). Accounts Receivable and Contract Assets Accounts Receivable and Contract Assets, net September 26, 2025 September 27, 2024 Trade accounts receivable $ 186,221 $ 170,574 Accounts receivable from patent administration program licensees 152,096 150,252 Contract assets 180,905 197,584 Accounts receivable and contract assets, gross 519,222 518,410 Less: allowance for credit losses on accounts receivable and contract assets ( 7,322 ) ( 5,467 ) Total accounts receivable and contract assets, net $ 511,900 $ 512,943 Accounts receivable as of September 26, 2025 and September 27, 2024, respectively, includes unbilled accounts receivable balances of $ 173.5 million and $ 173.8 million, related to amounts that are contractually owed. The unbilled balance represents our unconditional right to consideration related to fixed fee contracts which we are entitled to as a result of satisfying, or partially satisfying, performance obligations, as well as Via LA's unconditional right to consideration related to its patent administration programs. Allowance for Credit Losses Beginning Balance Charges/(Credits) to S&M and G&A Deductions Ending Balance For fiscal year ended: September 29, 2023 $ 14,405 $ ( 793 ) $ ( 2,643 ) $ 10,969 September 27, 2024 10,969 ( 2,256 ) ( 1,877 ) 6,836 September 26, 2025 6,836 2,434 ( 988 ) 8,282 Allowance for credit losses includes the provision for estimated credit losses on our sales-type leases, which was not material as of September 26, 2025 and September 27, 2024. Inventories September 26, 2025 September 27, 2024 Raw materials $ 4,254 $ 3,079 Work in process 4,187 4,791 Finished goods 21,983 25,858 Total inventories $ 30,424 $ 33,728 Inventories are stated at the lower of cost and net realizable value. Inventory with a consumption period expected to exceed twelve months is recorded within other non-current assets in our consolidated balance sheets. We have included $ 7.5 million and $ 10.4 million of inventory within non-current assets as of September 26, 2025 and September 27, 2024, respectively. Based on anticipated inventory consumption rates, and aside from existing write-downs due to excess inventory, we do not believe that material risk of obsolescence exists prior to ultimate sale. 67 Table of Contents Prepaid Expenses and Other Current Assets September 26, 2025 September 27, 2024 Prepaid expenses $ 28,006 $ 29,745 Other current assets 23,867 40,249 Total prepaid expenses and other current assets $ 51,873 $ 69,994 Other current assets included certain assets held for sale initially valued at $ 18.2 million as of September 27, 2024, and the estimated fair value of the assets was subsequently increased by $ 6.3 million for a total value of $ 24.5 million. During fiscal 2025, we sold $ 15.8 million of the assets classified as held for sale, and the remaining assets no longer met the criteria for held for sale, and as such, we reclassified $ 8.7 million in assets held for sale to short-term and long-term investments. Refer to Note 15 " Business Combinations " for more information. Accrued Liabilities September 26, 2025 September 27, 2024 Amounts payable to patent administration program partners $ 166,315 $ 156,472 Accrued compensation and benefits 106,579 97,179 Accrued professional fees 21,165 16,568 Unpaid property, plant, and equipment additions 3,439 17,055 Accrued customer refunds 4,218 2,988 Accrued market development funds 2,578 2,522 Other accrued liabilities 64,962 54,745 Total accrued liabilities $ 369,256 $ 347,529 Other Non-Current Liabilities September 26, 2025 September 27, 2024 Supplemental retirement plan obligations $ 5,315 $ 4,946 Non-current tax liabilities (1) 46,159 78,355 Other liabilities 48,369 52,551 Total other non-current liabilities $ 99,843 $ 135,852 (1) Refer to Note 12 " Income Taxes" for additional information related to our tax liabilities. 5. Investments and Fair Value Measurements In general, we use cash holdings to purchase investment-grade securities diversified among security types, industries, and issuers. Our cash equivalents consist of highly-liquid money market funds. Our mutual fund investments held in our SERP are classified as trading securities. Derivative contracts are used to hedge currency risk, and these are carried at fair value and classified as other current assets, other non-current assets, and accrued liabilities in the consolidated balance sheets. Our cash and investment portfolio consisted of the following (in thousands): 68 Table of Contents September 26, 2025 Cost Unrealized Estimated Fair Value Gains Losses Total Level 1 Level 2 Level 3 Cash and cash equivalents: Cash $ 529,422 $ — $ — $ 529,422 $ 529,422 $ — $ — Cash equivalents: Money market funds 172,471 — — 172,471 172,471 — — Cash and cash equivalents 701,893 — — 701,893 701,893 — — Short-term investments: Marketable equity securities 703 — — 703 703 — — Short-term investments 703 — — 703 703 — — Long-term investments: Other investments 80,205 — — 80,205 — — — Long-term investments 80,205 — — 80,205 — — — Total cash, cash equivalents, and investments $ 782,801 $ — $ — $ 782,801 $ 702,596 $ — $ — Investments held in supplemental retirement plan: Assets $ 5,413 $ — $ — $ 5,413 $ 5,413 $ — $ — Included in prepaid expenses and other current assets and other non-current assets Liabilities $ 5,413 $ — $ — $ 5,413 $ 5,413 $ — $ — Included in accrued liabilities and other non-current liabilities Currency derivatives as hedge instruments: Assets: Included in other current assets $ — $ 1,442 $ — $ 1,442 $ — $ 1,442 $ — Assets: included in other non-current assets — 111 — 111 — 111 — Liabilities: Included in other accrued liabilities — — ( 48 ) ( 48 ) — ( 48 ) — September 27, 2024 Cost Unrealized Estimated Fair Value Gains Losses Total Level 1 Level 2 Level 3 Cash and cash equivalents: Cash $ 482,047 $ — $ — $ 482,047 $ 482,047 $ — $ — Cash and cash equivalents 482,047 — — 482,047 482,047 — — Long-term investments: Other investments 89,267 — — 89,267 — — 76,000 Long-term investments 89,267 — — 89,267 — — 76,000 Total cash, cash equivalents, and investments $ 571,314 $ — $ — $ 571,314 $ 482,047 $ — $ 76,000 Investments held in supplemental retirement plan: Assets $ 5,044 $ — $ — $ 5,044 $ 5,044 $ — $ — Included in prepaid expenses and other current assets and other non-current assets Liabilities $ 5,044 $ — $ — $ 5,044 $ 5,044 $ — $ — Included in accrued liabilities and other non-current liabilities Currency derivatives as hedge instruments: Assets: Included in other current assets $ — $ 299 $ — $ 299 $ — $ 299 $ — Equity Securities Our equity securities primarily consist of our equity method investments, including our equity method investment in Access Advance, of $ 68.5 million and $ 84.3 million as of September 26, 2025 and September 27, 2024, 69 Table of Contents respectively, and equity securities without a readily determinable fair value, valued at $ 11.8 million and $ 5.0 million as of September 26, 2025 and September 27, 2024, respectively. The equity method investment and equity securities without a readily determinable value are recorded within long-term investments in our consolidated balance sheets. The equity method investments are regularly assessed for impairment, and in the case of an impairment, we adjust the carrying value of our investment. Our share of the equity method investee's net income or loss is included in other income/(expense), net on the consolidated statements of operations. Our share of the equity method investee's net income was $ 24.1 million, $ 14.2 million, and $ 5.1 million in fiscal 2025, fiscal 2024, and fiscal 2023, respectively. During fiscal 2025, we reclassified $ 8.7 million in assets held for sale to short-term and long-term investments. Refer to Note 15, " Business Combinations " for more information. Fair Value Hierarchy Fair value is the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. We minimize the use of unobservable inputs and use observable market data, if available, when determining fair value. We classify our inputs to measure fair value using the following three-level hierarchy: Level 1: Quoted prices in active markets at the measurement date for identical assets and liabilities. We base the fair value of our Level 1 financial instruments, which are traded in active markets, using quoted market prices for identical instruments. Level 2: Prices may be based upon quoted prices in active markets or inputs not quoted on active markets but are corroborated by market data. We obtain the fair value of our Level 2 financial instruments from a professional pricing service, which may use quoted market prices for identical or comparable instruments, or model driven valuations using observable market data or inputs corroborated by observable market data. To validate the fair value determination provided by our primary pricing service, we perform quality controls over values received which include comparing our pricing service provider’s assessment of the fair values of our investment securities against the fair values of our investment securities obtained from another independent source, reviewing the pricing movement in the context of overall market trends, and reviewing trading information from our investment managers. In addition, we assess the inputs and methods used in determining the fair value in order to determine the classification of securities in the fair value hierarchy. The fair value of the currency derivatives are calculated from market spot rates, forward rates, interest rates, and credit ratings at the end of the period. Level 3: Unobservable inputs are used when little or no market data is available and reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The following table describes the valuation techniques and inputs applicable to each class of security held within our investment portfolio: Asset Type Primary Source Update Frequency Fair Value Methodology Secondary Source Level 1 Money Market Funds Not Applicable Daily $1 per share Not Applicable As a part of the acquisition of GE Licensing in fiscal 2024, we acquired GE Licensing’s ownership interest in Access Advance, which increased our equity method investment by $ 76 million. This increase in our investment was classified as Level 3 within the fair value hierarchy, and measured using the discounted cash flows method, whereby the cash flows expected to be generated by the business are discounted to their present value using a rate of return that reflects the relative risk of the investment and the time value of money. Inputs used in the valuation were the prospective financial information, including projected revenue associated with the investment, and discount rate to reflect the risk of the equity investment compared to the main operating business of GE Licensing. In determining the discount rate, a risk assessment was performed, where revenue growth was assessed, among other factors, and as such, revenue growth and the discount rate are considered interrelated unobservable inputs. Securities In Gross Unrealized Loss Position 70 Table of Contents We periodically evaluate our investments for impairment by comparing the fair value with the cost basis for each of our investment securities. We had no securities that were in an unrealized loss position as of September 26, 2025 and September 27, 2024, respectively. Cash Equivalents Maturities The following table summarizes the amortized cost and estimated fair value of our cash equivalents as of September 26, 2025, which are recorded within cash and cash equivalents in our consolidated balance sheets (in thousands): Range of maturity Amortized Cost Fair Value Due within 1 year $ 172,471 $ 172,471 Due in 1 to 2 years — — Due in 2 to 5 years — — Total $ 172,471 $ 172,471 6. Property, Plant, and Equipment PP&E are recorded at cost, with depreciation expense included in cost of licensing, cost of products and services, R&D, S&M, and G&A expenses in our consolidated statements of operations. Depreciation expense was $ 42.5 million, $ 42.4 million, and $ 54.0 million in fiscal 2025, 2024, and 2023, respectively. As of September 26, 2025 and September 27, 2024, PP&E consisted of the following (in thousands): Property, Plant, and Equipment September 26, 2025 September 27, 2024 Land $ 42,021 $ 42,010 Buildings and building improvements 290,920 288,908 Leasehold improvements 84,605 86,613 Machinery and equipment 163,382 138,425 Computer equipment and software 195,521 240,930 Furniture and fixtures 31,476 31,581 Equipment provided under operating leases 234,426 244,327 Construction-in-progress 36,181 25,091 Property, plant, and equipment, gross 1,078,532 1,097,885 Less: accumulated depreciation ( 607,924 ) ( 618,776 ) Property, plant, and equipment, net $ 470,608 $ 479,109 7. 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. We determine if a contract contains a lease based on whether we have the right to obtain substantially all of the economic benefits from the use of an identified asset and whether we have the right to direct the use of an identified asset in exchange for consideration, which relates to an asset which we do not own. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets are recognized as the lease liability, adjusted for lease incentives received. Lease liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future lease payments is our IBR, because the interest rate implicit in our leases is not readily determinable. The IBR is a hypothetical rate based on our understanding of what our credit rating would be and resulting interest we would pay to borrow an amount equal to the lease payments in a similar economic environment over the lease term on a collateralized basis. Lease payments may be fixed or variable, however, only fixed payments are included in our lease liability calculation. Variable lease payments are recognized in operating expenses in the period in which the obligation for those payments is incurred. The lease term of operating leases vary from less than one year to 10 years. We have leases that include one or more options to extend the lease term for up to 5 years as well as options to terminate the lease within one year. Our 71 Table of Contents lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. The components of lease expense were as follows (in thousands): Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Lease cost Operating lease cost $ 13,075 $ 14,275 $ 14,860 Variable lease cost 2,015 1,947 1,424 Total lease cost $ 15,090 $ 16,222 $ 16,284 Supplemental cash flow information related to leases was as follows (in thousands): Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Other information Cash paid for amounts included in the measurement of operating lease liabilities $ 14,862 $ 15,602 $ 16,589 Right-of-use assets obtained in exchange for operating lease obligations 4,731 21,087 16,259 Supplemental balance sheet information related to leases was as follows: September 26, 2025 September 27, 2024 Operating Leases Weighted-average remaining lease term 4.8 years 5.3 years Weighted-average discount rate 6.0 % 5.4 % The following table presents the maturity analysis of lease liabilities (in thousands): September 26, 2025 Operating Leases Fiscal 2026 $ 12,306 Fiscal 2027 9,299 Fiscal 2028 8,071 Fiscal 2029 6,114 Fiscal 2030 3,400 Thereafter 5,595 Total undiscounted lease payments 44,785 Less: imputed interest ( 5,907 ) Total lease liabilities $ 38,878 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 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 leases are computed as shares of lessees' box office revenue and recognized to revenue in the period that box office sales occur. Lease incentive payments we make to lessees are amortized as a reduction in revenue over the lease term. The components of lease income were as follows (in thousands): 72 Table of Contents Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Operating Lease Income Variable operating lease income $ 36,828 $ 31,794 $ 33,921 Fixed operating lease income 4,294 3,570 3,253 If a lease is classified as a sales-type lease, the carrying amount of the asset is derecognized from property, plant, and equipment, net, and a net investment in the lease is recorded. The net investment in the lease is measured at commencement date as the sum of the lease receivable and the estimated residual value of the equipment. The unguaranteed residual value of the equipment is determined as the estimated carrying value of the asset at the end of the lease term had the asset been depreciated on a straight-line basis. The unguaranteed residual value of sales-type leases was $ 0.5 million and $ 0.9 million as of September 26, 2025 and September 27, 2024, respectively. Selling profit or loss arising from a sales-type lease is recorded at lease commencement and presented on a gross basis. Over the term of the lease, we recognize interest income on the net investment in the lease, and variable lease payments, which are not included in the net investment in the lease. The variable lease payments are not material. The following table presents the maturity analysis of fixed lease payments due to Dolby (in thousands): September 26, 2025 Operating Leases Sales-Type Leases Fiscal 2026 $ 932 $ 220 Fiscal 2027 — 220 Fiscal 2028 and thereafter — 220 Total undiscounted cash flows $ 932 660 Less: Carrying value of lease receivables — Difference $ 660 8. Goodwill and Intangible Assets Goodwill The following table outlines changes to the carrying amount of goodwill (in thousands): Goodwill Balance as of September 29, 2023 $ 408,409 Acquired goodwill (1) 120,667 Translation adjustments 4,132 Balance as of September 27, 2024 $ 533,208 Translation adjustments 1,757 Measurement period adjustments ( 5,065 ) Balance as of September 26, 2025 $ 529,900 (1) Refer to Note 15 " Business Combinations " for additional information related to our acquired goodwill. 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): September 26, 2025 September 27, 2024 Intangible Assets, Net Cost Accumulated Amortization Net Cost Accumulated Amortization Net Acquired patents and technology $ 587,743 $ ( 324,507 ) $ 263,236 $ 579,768 $ ( 293,389 ) $ 286,379 Customer relationships 221,007 ( 87,401 ) 133,606 220,200 ( 72,374 ) 147,826 Other intangible assets 23,171 ( 22,956 ) 215 23,125 ( 22,816 ) 309 Total $ 831,921 $ ( 434,864 ) $ 397,057 $ 823,093 $ ( 388,579 ) $ 434,514 During fiscal 2025, we purchased various patents for purchase consideration of $ 5.6 million and upon acquisition, these intangible assets had a weighted-average useful life of 14 years. During fiscal 2024, we acquired $ 274.2 million and $ 24.6 million of identifiable intangible assets in connection with the acquisitions of GE Licensing and THEO, respectively. Refer to Note 15 " Business Combinations " for additional information. 73 Table of Contents Amortization expense for our intangible assets is included in cost of licensing, cost of products and services, R&D, S&M, and G&A expenses in our consolidated statements of operations. Amortization expense was $ 45.3 million, $ 33.2 million, and $ 28.6 million in fiscal 2025, fiscal 2024, and fiscal 2023, respectively. As of September 26, 2025, expected amortization expense of our intangible assets in future fiscal periods was as follows (in thousands): Fiscal Year Amortization Expense 2026 $ 44,751 2027 44,051 2028 42,014 2029 41,889 2030 40,567 Thereafter 183,785 Total $ 397,057 9 . Stockholders' Equity and Stock-Based Compensation We provide stock-based awards as a form of compensation for employees, officers, and directors. We issue stock-based awards in the form of stock options and RSUs under our equity incentive plans, as well as shares under our ESPP. Common Stock - Class A and Class B Our Board of Directors has authorized two classes of common stock, Class A and Class B. As of September 26, 2025, we had authorized 500,000,000 Class A shares and 500,000,000 Class B shares. As of September 26, 2025, we had 60,802,616 shares of Class A common stock and 34,660,045 shares of Class B common stock issued and outstanding. Holders of our Class A and Class B common stock have identical rights, except that holders of our Class A common stock are entitled to one vote per share and holders of our Class B common stock are entitled to ten votes per share. Shares of Class B common stock can be converted to shares of Class A common stock at any time at the option of the stockholder and automatically convert upon sale or transfer, except for certain transfers specified in our amended and restated certificate of incorporation. Stock Incentive Plans Our 2020 Stock Plan originally was adopted by our Board of Directors and shareholders in 2005 (when the 2020 Stock Plan was called the 2005 Stock Plan). Our stockholders last approved amendments to the 2020 Stock Plan at our 2023 annual meeting of stockholders. Our 2020 Stock Plan, as amended and restated, provides for the ability to grant incentive stock options, non-qualified stock options, restricted stock, RSUs, stock appreciation rights, deferred stock units, performance units, performance bonus awards, and performance shares. A total of 64.0 million shares of our Class A common stock have been authorized for issuance under the 2020 Stock Plan in total since inception of the plan. Any shares subject to an award with a per share price less than the fair market value of our Class A common stock on the date of grant and any shares subject to an outstanding RSU award will be counted against the authorized share reserve as 1.6 shares for every one share subject to the award, and if returned to the 2020 Stock Plan, such shares will be counted as 1.6 shares for every one share returned. Stock Options. Stock options are granted at fair market value on the date of grant. Options generally vest over four years , with 25 % of the options becoming exercisable on the one-year anniversary of the date of grant and the balance of the shares vesting in equal monthly installments over the following 36 months. These options expire on the earlier of ten years after the date of grant or three months after termination of service. All options granted vest over the requisite service period and upon the exercise of stock options, we issue new shares of Class A common stock under the 2020 Stock Plan. Our 2020 Stock Plan also allows us to grant stock awards which vest based on the satisfaction of specific performance criteria. Performance-Based Stock Options. From fiscal 2016 through fiscal 2019, we granted PSOs to certain officers with shares of our Class A common stock underlying such options. The contractual term for the PSOs was seven years, with vesting contingent upon market-based performance conditions, representing the achievement of specified Dolby annualized TSR targets at the end of a three-year measurement period following the date of grant. Anywhere from 0 % to 125 % of the shares subject to a PSO vested based on achievement of the performance conditions at the end of the three-year performance period. In valuing the PSOs, which are recognized as compensation cost, we used a Monte Carlo valuation model. Aside from the use of an expected term for the PSOs commensurate with their shorter contractual term, the nature of 74 Table of Contents the valuation inputs used in the Monte Carlo valuation model were consistent with those used to value our non-performance based options granted under the 2020 Stock Plan. Compensation cost is being amortized on a straight-line basis over the requisite service period. As of September 26, 2025, an aggregate of 58,701 shares of PSOs were exercisable and outstanding. The following table summarizes information about stock options, including PSOs, issued under our 2020 Stock Plan: Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life Aggregate Intrinsic Value (1) (in thousands) (in years) (in thousands) Options outstanding as of September 27, 2024 3,470 $ 69.04 Grants 327 77.91 Exercises ( 538 ) 52.70 Options outstanding as of September 26, 2025 3,259 72.71 5.10 $ 15,355 Options vested and expected to vest as of September 26, 2025 3,129 72.60 5.03 15,353 Options exercisable as of September 26, 2025 2,553 71.02 4.25 15,228 (1) Aggregate intrinsic value is based on the closing stock price of our Class A common stock on September 26, 2025 of $ 72.39 and excludes the impact of options that were not in-the-money. Restricted Stock Units. In fiscal 2008, we began granting RSUs to certain directors, officers and employees. RSU awards granted to employees and officers generally vest over four years , with cliff-vesting. Awards granted to ongoing non-employee directors generally vest over approximately one year . Awards granted to new non-employee directors from fiscal 2014 onward vest on the earlier of the first anniversary of the award’s date of grant, or the day immediately preceding the date of the next annual meeting of stockholders that occurs after the award’s date of grant. At each vesting date, the holder of the award is issued shares of our Class A common stock. Compensation expense from these awards is equal to the adjusted fair market value of our Class A common stock on the date of grant, discounted to account for dividend payments forgone during the vesting period, and is recognized on a straight-line basis over the requisite service period. Certain grants may have other vesting conditions or other award terms as approved by the Compensation Committee of our Board of Directors. Our 2020 Stock Plan also allows us to grant RSUs that vest based on the satisfaction of specific performance criteria. Performance-Based Restricted Stock Units. In fiscal 2020, we began granting PSUs to certain officers with shares of our Class A common stock underlying such awards. The terms of the PSU Agreement adopted in the first quarter fiscal 2020 provide for the grant of PSUs to certain officers contingent on Dolby's achievement of annualized TSR targets measured against a comparator index over a three-year performance period following the date of grant. Anywhere from 0 % to 200 % of eligible restricted stock units may vest based on achievement of the performance conditions at the end of the three-year performance period. The value of the PSUs, which is recognized as compensation cost, is calculated using a Monte Carlo valuation model. Compensation cost is being amortized on a straight-line basis over the requisite service period. Certain grants may have other vesting conditions or other award terms as approved by the Compensation Committee of our Board of Directors. The following table summarizes information on PSUs granted to our officers that have not vested as of September 26, 2025: Aggregate Shares Granted Potential Shares at Vest Date (at 200% of Target) December 15, 2022 90,613 181,226 December 15, 2023 77,283 154,566 December 16, 2024 92,971 185,942 On December 16, 2019, we granted PSUs to our executive officers for an aggregate of 62,000 shares, which vested in December 2022 at 81 % of the target award amount. On December 15, 2020, we granted PSUs to our executive officers for an aggregate of 66,138 shares, which vested in December 2023 at 80 % of the target award amount. On December 15, 2021, we granted PSUs to our executive officers for an aggregate of 60,301 shares, which vested in December 2024 at 70 % of the target award amount. As of September 26, 2025, PSUs which would vest for an aggregate of 255,589 shares at the target award amount ( 511,178 shares at 200 % of the target award amount) were outstanding. 75 Table of Contents The following table summarizes information about RSUs, including PSUs, issued under our 2020 Stock Plan: Shares Weighted-Average Grant Date Fair Value (in thousands) Non-vested as of September 27, 2024 3,846 $ 80.33 Granted 1,937 74.56 Vested ( 1,373 ) 82.14 Forfeitures ( 280 ) 79.60 Non-vested as of September 26, 2025 4,130 $ 77.07 The fair value of vested RSUs (measured as of the vesting date) was as follows (in thousands): Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Restricted stock units - vest date fair value $ 108,069 $ 113,909 $ 92,843 Employee Stock Purchase Plan . Our ESPP originally was adopted by our Board of Directors and shareholders in 2005. Our stockholders last approved amendments to the ESPP at our 2023 annual meeting of stockholders. The ESPP allows eligible employees to have up to 10 percent of their eligible compensation withheld and used to purchase Class A common stock, subject to a maximum of $ 25,000 worth of stock purchased in a calendar year or no more than 1,000 shares in an offering period, whichever is less. An offering period consists of successive six-month purchase periods, with a look back feature to our stock price at the commencement of a one-year offering period. The plan provides for a discount equal to 15 percent of the lower of the closing price of our Class A common stock on the NYSE on the first day of the offering period and the last day of the purchase period. The plan also includes an automatic reset feature that provides for an offering period to be reset and recommenced to a new lower-priced offering if the offering price of a new offering period is less than that of the immediately preceding offering period. A total of 5.5 million shares of our Class A common stock have been authorized for issuance under the ESPP since inception of the plan. Stock Option Valuation Assumptions We use the Black-Scholes option pricing model to determine the estimated fair value of employee stock options at the date of the grant. The Black-Scholes model includes inputs that require us to make certain estimates and assumptions regarding the expected term of the award, as well as the future risk-free interest rate, and the volatility of our stock price over the expected term of the award. Expected Term. The expected term of an award represents the estimated period of time that options granted will remain outstanding, and is measured from the grant date to the date at which the option is either exercised or canceled. Our determination of the expected term involves an evaluation of historical terms and other factors such as the exercise and termination patterns of our employees who hold options to acquire our Class A common stock, and is based on certain assumptions made regarding the future exercise and termination behavior. Risk-Free Interest Rate. The risk-free interest rate is based on the yield curve of U.S. Treasury instruments in effect on the date of grant. In determining an estimate for the risk-free interest rate, we use average interest rates based on these instruments’ constant maturities with a term that approximates and corresponds with the expected term of our awards. Expected Stock Price Volatility. The expected volatility represents the estimated volatility in the price of our Class A common stock over a time period that approximates the expected term of the awards. The expected volatility has historically been determined using a blended combination of historical and implied volatility, but is currently being determined using historical volatility only. Historical volatility is representative of the historical trends in our stock price for periods preceding the measurement date for a period that is commensurate with the expected term. Implied volatility is based upon externally traded option contracts of our Class A common stock. Dividend Yield. The dividend yield is based on our anticipated dividend payout over the expected term of our option awards. Dividend declarations and the establishment of future record and payment dates 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. 76 Table of Contents The weighted-average assumptions used in the determination of the fair value of our stock options were as follows: Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Expected term (in years) 4.89 4.86 4.82 Risk-free interest rate 4.3 % 3.9 % 3.6 % Expected stock price volatility 29.5 % 29.3 % 29.4 % Dividend yield 1.7 % 1.4 % 1.6 % Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Stock options granted - weighted-average grant date fair value $ 21.61 $ 24.12 $ 19.15 Stock options exercised - intrinsic value 13,129 14,224 22,736 Stock-Based Compensation Expense Stock-based compensation expense for equity awards granted to employees is determined by estimating their fair value on the date of grant, and recognizing that value as an expense on a straight-line basis over the requisite service period in which our employees earn the awards. Compensation expense related to these equity awards is recognized net of estimated forfeitures, which reduce the expense recorded in the consolidated statements of operations. The selection of applicable estimated forfeiture rates is based on an evaluation of trends in our historical forfeiture data with consideration for other potential driving factors. If in subsequent periods actual forfeitures significantly differ from our initial estimates, we will revise such estimates accordingly. The estimated annual forfeiture rates used for awards granted were 8.62 %, 8.53 %, and 8.62 % in fiscal 2025, 2024, and 2023, respectively. The following two tables separately present stock-based compensation expense both by award type and classification in our consolidated statements of operations (in thousands): Expense - By Award Type Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Compensation expense Stock options $ 6,841 $ 6,726 $ 8,486 Restricted stock units (1) (2) 117,803 109,031 105,915 Employee stock purchase plan 3,870 4,068 4,085 Total stock-based compensation 128,514 119,825 118,486 Estimated benefit from income taxes ( 19,847 ) ( 17,290 ) ( 17,844 ) Total stock-based compensation, net of tax $ 108,667 $ 102,535 $ 100,642 (1) Stock-based compensation expense incurred by restricted stock units includes expense from PSUs. (2) Excludes $ 0.3 million, $ 0.6 million and $ 1.2 million of capitalized stock-based compensation related to internal-use software in fiscal 2025, fiscal 2024, and fiscal 2023, respectively. Expense - By Income Statement Line Item Classification Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Compensation expense Cost of products and services $ 1,747 $ 1,501 $ 1,697 Research and development 38,500 38,214 39,472 Sales and marketing 44,480 40,128 40,038 General and administrative 43,787 39,982 37,279 Total stock-based compensation 128,514 119,825 118,486 Estimated benefit from income taxes ( 19,847 ) ( 17,290 ) ( 17,844 ) Total stock-based compensation, net of tax $ 108,667 $ 102,535 $ 100,642 77 Table of Contents The tax benefit that we recognize from shares issued under our ESPP is excluded from the tables above. The tax benefit recognized was no t material in fiscal 2025, fiscal 2024, and fiscal 2023. Unrecognized Compensation Expense. As of September 26, 2025, total unrecognized compensation expense associated with employee stock options expected to vest was approximately $ 11.3 million, which is expected to be recognized over a weighted-average period of 2.5 years. As of September 26, 2025, total unrecognized compensation expense associated with RSUs expected to vest was approximately $ 200.7 million, which is expected to be recognized over a weighted-average period of 2.3 years. Common Stock Repurchase Program In November 2009, we announced a stock repurchase program, providing for the repurchase of our Class A common stock. The following table summarizes the initial amount of authorized repurchases as well as additional repurchases approved by our Board of Directors as of September 26, 2025 (in thousands): Date of Authorization Authorization Amount Fiscal 2010: November 2009 $ 250,000 Fiscal 2010: July 2010 300,000 Fiscal 2011: July 2011 250,000 Fiscal 2012: February 2012 100,000 Fiscal 2015: October 2014 200,000 Fiscal 2017: January 2017 200,000 Fiscal 2018: July 2018 350,000 Fiscal 2019: July 2019 350,000 Fiscal 2021: July 2021 350,000 Fiscal 2022: February 2022 250,000 Fiscal 2022: August 2022 350,000 Fiscal 2024: August 2024 350,000 Total $ 3,300,000 Stock repurchases under the 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. As of September 26, 2025, the remaining authorization to purchase additional shares was $ 276.6 million. The following table provides information regarding share repurchase activity under the program during fiscal 2025: Quarterly Repurchase Activity Shares Repurchased Cost (1) Average Price Paid Per Share (2) (in thousands) Q1 - Quarter ended December 27, 2024 186,322 $ 15,000 $ 80.51 Q2 - Quarter ended March 28, 2025 428,565 34,999 81.67 Q3 - Quarter ended June 27, 2025 526,033 39,991 76.02 Q4 - Quarter ended September 26, 2025 479,361 35,002 73.01 Total 1,620,281 $ 124,992 (1) Cost of share repurchases includes the price paid per share, and excludes commission costs. (2) Average price paid per share excludes commission costs. Dividend Program 78 Table of Contents The following table summarizes dividends declared under the program during fiscal 2025: Fiscal Period Announcement Date Record Date Payment Date Cash Dividend Per Common Share Dividend Payment Q1 - Quarter ended December 27, 2024 November 19, 2024 December 3, 2024 December 10, 2024 $ 0.33 $ 31.5 million Q2 - Quarter ended March 28, 2025 January 29, 2025 February 11, 2025 February 19, 2025 $ 0.33 $ 31.8 million Q3 - Quarter ended June 27, 2025 May 1, 2025 May 13, 2025 May 21, 2025 $ 0.33 $ 31.6 million Q4 - Quarter ended September 26, 2025 July 31, 2025 August 12, 2025 August 20, 2025 $ 0.33 $ 31.6 million On November 18, 2025, Dolby announced a cash dividend of $ 0.36 per share of Class A and Class B common stock, payable on December 10, 2025, to stockholders of record as of the close of business on December 2, 2025. The estimated dividend payment of $ 34.4 million related to this cash dividend is based on the number of shares of our Class A and Class B common stock that we estimate will be outstanding as of the Record Date. 10. Accumulated Other Comprehensive Loss Other comprehensive income/loss consists of three components: unrealized gains or losses on our AFS marketable investment securities, gains and losses on derivatives in cash flow hedge relationships not yet recognized in earnings, and the gains and losses from the translation of assets and liabilities denominated in non-U.S. dollar functional currencies. Until realized and reported as a component of net income, these comprehensive income items accumulate and are included within accumulated other comprehensive loss, a subsection within stockholders’ equity in our consolidated balance sheets. Unrealized gains and losses on our investment securities are reclassified from AOCI into earnings when realized upon sale, and are determined based on specific identification of securities sold. Unrealized gains and losses on our cash flow hedges are reclassified from AOCI into earnings when the hedged operating expenses are recognized, which is also when the gains and losses are realized. The following table summarizes the changes in the accumulated balances during the period, and includes information regarding the manner in which the reclassifications out of AOCI into earnings affect our consolidated statements of operations (in thousands): Fiscal Year Ended Fiscal Year Ended September 26, 2025 September 27, 2024 Investment Securities Cash Flow Hedges Currency Translation Adjustments Total Investment Securities Cash Flow Hedges Currency Translation Adjustments Total Beginning Balance $ ( 83 ) $ — $ ( 19,104 ) $ ( 19,187 ) $ ( 2,858 ) $ ( 197 ) $ ( 33,929 ) $ ( 36,984 ) Other comprehensive income before reclassifications: Unrealized gains/(losses) ( 55 ) 952 — 897 2,602 ( 1,567 ) — 1,035 Foreign currency translation gains (1) — — 5,536 5,536 — — 14,760 14,760 Income tax effect - benefit/(expense) — — ( 200 ) ( 200 ) — — 65 65 Net of tax ( 55 ) 952 5,336 6,233 2,602 ( 1,567 ) 14,825 15,860 Amounts reclassified from AOCI into earnings: Realized gains (2) 138 405 — 543 194 2,108 — 2,302 Income tax effect - expense (3) — ( 106 ) — ( 106 ) ( 21 ) ( 344 ) — ( 365 ) Net of tax 138 299 — 437 173 1,764 — 1,937 Net current-period other comprehensive income 83 1,251 5,336 6,670 2,775 197 14,825 17,797 Ending Balance $ — $ 1,251 $ ( 13,768 ) $ ( 12,517 ) $ ( 83 ) $ — $ ( 19,104 ) $ ( 19,187 ) (1) The foreign currency translation gains during fiscal 2025 and fiscal 2024 were primarily due to the strengthening of other foreign currencies as compared to the U.S. dollar. (2) Realized gains or losses, if any, from the sale of our AFS investment securities or from foreign currency translation adjustments are included within other income/(expense), net in our consolidated statements of operations . Realized gains or losses on foreign currency contracts designated as cash flow hedges are included in operating expenses in the consolidated statements of operations. (3) The income tax expense is included within provision for income taxes in our consolidated statements of operations. 11. Earnings Per Share Basic EPS is computed by dividing net income attributable to Dolby Laboratories, Inc. by the number of weighted-average shares of Class A and Class B common stock outstanding during the period. Through application of the treasury stock method, diluted EPS is computed in the same manner, except that the number of weighted-average 79 Table of Contents shares outstanding is increased by the number of potentially dilutive shares from employee incentive plans during the period. Basic and diluted EPS are computed independently for each fiscal quarter and year-to-date period, which involves the use of different weighted-average share count figures relating to quarterly and annual periods. As a result, and after factoring the effect of rounding to the nearest cent per share, the sum of all four quarter-to-date EPS figures may not equal year-to-date EPS. Potentially dilutive shares represent the hypothetical number of incremental shares issuable under the assumed exercise of outstanding stock options (both vested and unvested) and vesting of outstanding RSUs. The calculation of dilutive shares outstanding excludes securities that would have an antidilutive effect on EPS. The following table sets forth the computation of basic and diluted EPS attributable to Dolby Laboratories, Inc. (in thousands, except per share amounts): Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Numerator: Net income attributable to Dolby Laboratories, Inc. $ 255,018 $ 261,825 $ 200,656 Denominator: Weighted-average shares outstanding—basic 95,868 95,544 95,771 Potential common shares from options to purchase common stock 358 586 763 Potential common shares from restricted stock units 1,213 1,158 1,139 Potential common shares from employee stock purchase plan 40 37 60 Weighted-average shares outstanding—diluted 97,479 97,325 97,733 Net income per share attributable to Dolby Laboratories, Inc.: Basic $ 2.66 $ 2.74 $ 2.10 Diluted $ 2.62 $ 2.69 $ 2.05 Antidilutive awards excluded from calculation: Stock options 1,448 1,152 930 Restricted stock units 1 10 7 Employee stock purchase plan 1 3 2 12. 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. 80 Table of Contents Income Tax Provision The following two tables present the components of our income before provision for income taxes by geographic region and the portion of our provision for income taxes classified as current and deferred (in thousands): Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 United States $ 102,907 $ 89,505 $ 44,136 Foreign 200,578 222,974 205,917 Total income before income taxes $ 303,485 $ 312,479 $ 250,053 Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Current: Federal $ ( 35,095 ) $ 702 $ ( 1,053 ) State 581 1,124 1,023 Foreign 76,520 68,013 66,776 Total current 42,006 69,839 66,746 Deferred: Federal 4,369 ( 21,357 ) ( 16,949 ) State ( 25 ) 43 ( 356 ) Foreign 643 ( 362 ) ( 1,032 ) Total deferred 4,987 ( 21,676 ) ( 18,337 ) Provision for income taxes $ 46,993 $ 48,163 $ 48,409 Repatriation of Undistributed Foreign Earnings As a result of the Tax Cuts and Jobs Act ("Tax Act"), foreign accumulated earnings that were subject to the mandatory Transition Tax as of December 31, 2017, can be repatriated to the U.S. without incurring further U.S. federal tax. The Tax Act changed to a modified territorial tax system through the provision of a 100% dividend received deduction for the foreign-source portions of dividends received from controlled foreign subsidiaries. As a result, we have reevaluated our historical assertion and determined that we no longer consider a vast majority of these earnings to be indefinitely reinvested. During fiscal 2025, we repatriated $ 160 million of foreign subsidiary earnings which were exempt from foreign withholding tax. As of September 26, 2025, the total undistributed earnings of our foreign subsidiaries were approximately $ 420 million. The Company does not record any deferred tax liability on the portion of these foreign undistributed earnings considered indefinitely reinvested. Deferred Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, using enacted tax rates in effect for the year in which the differences are expected to reverse. A summary of the tax effects of the temporary differences were as follows (in thousands): 81 Table of Contents Fiscal Year Ended September 26, 2025 September 27, 2024 Deferred income tax assets: Investments $ 5,435 $ 7,410 Inventories 3,195 5,359 Net operating loss 1,426 2,294 Accrued expenses 14,427 13,245 Stock-based compensation 17,483 17,223 Revenue recognition 3,000 4,394 Depreciation and amortization 142,408 139,228 Lease liability 7,675 15,657 Research and development credits 42,488 47,830 Foreign tax credits 20,565 28,777 Deemed repatriated earnings tax benefit 14,587 9,881 Other 3,648 6,067 Total gross deferred income tax assets 276,337 297,365 Less: valuation allowance ( 51,015 ) ( 56,922 ) Total deferred income tax assets 225,322 240,443 Deferred income tax liabilities: Right of use asset ( 4,981 ) ( 15,889 ) Intangible assets ( 5,980 ) ( 4,796 ) Deferred income tax assets, net $ 214,361 $ 219,758 Net Operating Losses and Tax Credit Carryforwards As of September 26, 2025, the NOL carryforwards for U.S. federal and California were $ 0.9 million and $ 1.3 million, respectively, and will start to expire in fiscal 2034 and 2029, respectively. Additionally, we had foreign NOL carryforwards of $ 5.0 million as of September 26, 2025, which will carry forward indefinitely. As of September 26, 2025, we had foreign tax credit and federal R&D tax credit carryforwards of $ 20.7 million and $ 28.8 million, respectively, which will start to expire in fiscal 2029 and fiscal 2035, respectively. We had California R&D tax credits of $ 48.6 million and foreign R&D tax credits of $ 7.7 million, which will carry forward indefinitely. Valuation Allowance. As of September 26, 2025, a $ 36.2 million valuation allowance was recorded against California deferred tax assets, a $ 3.7 million valuation allowance was recorded against federal tax credit deferred tax assets, and a $ 11.1 million valuation allowance was recorded against foreign deferred tax assets for which ultimate realization of its future benefits is uncertain. Effective Tax Rate Each period, the combination of multiple different factors can impact our effective tax rate. These factors include both recurring items such as tax rates and the relative amount of income earned in foreign jurisdictions, as well as discrete items that may occur in, but are not necessarily consistent between periods. A reconciliation of the federal statutory tax rate to our effective tax rate on income from continuing operations was as follows: 82 Table of Contents Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Federal statutory rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal effect 0.2 0.2 0.3 Stock-based compensation 3.5 1.1 1.2 Research and development tax credits ( 5.1 ) ( 2.7 ) ( 2.7 ) Foreign-derived intangible income deduction ( 1.4 ) ( 1.3 ) ( 2.3 ) U.S. tax on foreign entities 1.3 1.3 1.3 Foreign rate differential ( 1.2 ) ( 2.1 ) ( 1.9 ) Increase (decrease) unrecognized tax benefit ( 2.7 ) 0.6 1.9 Tax Act of 2017 — ( 3.2 ) — Other ( 0.1 ) 0.5 0.6 Effective tax rate 15.5 % 15.4 % 19.4 % Our effective tax rate was 15.5 % in fiscal 2025, compared with our federal statutory rate of 21.0 %, and with our effective tax rate in fiscal 2024 of 15.4 %. The increase in our effective tax rate was primarily due to lower tax benefits related to settlement of stock-based awards and a non-recurring benefit related to the Transition Tax liability under the Tax Act recognized in fiscal 2024, partially offset by the recognition of tax benefits from previously unrecognized tax benefits due to the expiration of the statute of limitations and higher tax credits. Our effective tax rate was 15.4 % in fiscal 2024, compared with our effective tax rate in fiscal 2023 of 19.4 %. The decrease in our effective tax rate was primarily due to a tax benefit related to the Transition Tax liability under the Tax Act. Additionally, we recognized tax benefits from previously unrecognized tax benefits due to a lapse in the statute of limitations and reduced benefit from foreign operations. Uncertain Tax Positions 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. Our liability decreased from fiscal 2024 primarily due to releases from the expiration of the statute of limitations, partially offset by additional accruals in fiscal 2025. Our liability for unrecognized tax benefits is classified within other non-current liabilities in our consolidated balance sheet. Over the next twelve months, we estimate that this amount could be reduced by $1.5 million as a result of the expiration of certain statutes of limitations. Aggregate changes in the balance of gross unrecognized tax benefits, excluding interest and penalties, were as follows (in thousands): Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Beginning Balance $ 81,615 $ 76,304 $ 69,682 Gross increases - tax positions taken during prior years 15,687 2,346 219 Gross decreases - tax positions taken during prior years ( 1,946 ) — ( 1,143 ) Gross increases - tax positions taken during current year 7,514 10,626 7,546 Gross decreases - settlements with tax authorities during current year ( 116 ) ( 343 ) — Lapse of statute of limitations ( 19,088 ) ( 7,318 ) — Ending Balance $ 83,666 $ 81,615 $ 76,304 83 Table of Contents Classification of Interest and Penalties We include interest and penalties related to gross unrecognized tax benefits within our provision for income taxes. To the extent accrued interest and penalties do not ultimately become payable, amounts accrued are reduced in the period that such determination is made and are reflected as a reduction of the overall income tax provision. In fiscal 2025, our current tax provision was decreased by the release of accrued interest expense of $ 12.2 million, while in fiscal year 2024, our current tax provision was increased by interest expense of $ 3.3 million. Accrued interest and penalties are included within the related tax liability line item in our consolidated balance sheets. Our accrued interest and penalties on unrecognized tax benefits as of September 26, 2025 and September 27, 2024 were as follows (in thousands): Fiscal Year Ended September 26, 2025 September 27, 2024 Accrued interest $ 1,428 $ 13,597 Accrued penalties 98 225 Total $ 1,526 $ 13,822 We continue to monitor the progress of ongoing income tax controversies and the impact, if any, of the expected tolling of the statute of limitations in various taxing jurisdictions. We file income tax returns in the U.S. federal, states, and foreign jurisdictions. Our major tax jurisdictions are the U.S. federal, California, and Ireland. Our operations in certain jurisdictions remain subject to examination for fiscal 2013 to 2023, some of which are currently under audit or review. We are currently under audit by the IRS for our fiscal 2018 U.S. federal tax year. The resolution of these audits could have a material impact to our consolidated financial statements. We believe that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If resolution of any tax issues addressed in our current audits are inconsistent with management’s expectations, we may be required to adjust our tax provision for income taxes in the period such resolution occurs. The final U.S. foreign tax credit regulations, issued on January 4, 2022, introduced significant changes to foreign tax credit utilization. However, temporary relief was granted and extended to delay the effective date of the final regulations until further notice. These provisions may have a material adverse effect on our future tax provisions unless modified or withdrawn. The OECD published its model rules “Tax Challenges Arising From the Digitalisation of the Economy - Global Anti-Base Erosion Model Rules (Pillar Two)” which established a global minimum corporate tax rate of 15% for certain multinational enterprises. Many countries have implemented or are in the process of implementing the Pillar Two legislation, became applicable to Dolby beginning in fiscal 2025. Dolby recorded an immaterial amount in our fiscal 2025 consolidated financial statements. We continue to monitor the impact as countries implement legislation and the OECD provides additional guidance. In July 2025, the OBBBA was signed into law in the U.S. OBBBA contains several corporate income tax provisions, including the extension of many expiring provisions from the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework, and restores the ability to elect immediate expensing of domestic research and experimental expenditures under Section 174 and 100% bonus depreciation for qualified property placed in service on or after January 20, 2025. These provisions are generally effective beginning in fiscal 2026. OBBBA did not have a material impact on our income tax expense or financial statements for fiscal 2025. Dolby will continue to evaluate the effects of these provisions in future periods. 13. Restructuring Restructuring charges recorded as operating expenses in our 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 2025 Restructuring Events 84 Table of Contents In September 2025, we initiated restructuring actions in order to centralize teams into fewer locations to provide better access to talent pools, encourage multi-disciplinary collaboration, and simplify operations. In connection with this plan, we recorded expense in fiscal 2025 of $ 6.1 million in severance and other related benefits. The remaining components of this plan are expected to be completed by the end of the second quarter of fiscal 2026, resulting in an additional charge of approximately $ 10 million in severance and other termination benefits. Cash payment of the severance and other termination benefits are expected to be substantially completed by the end of the first 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 fiscal 2025 of $ 9.2 million in severance and other related benefits. The remaining components of this plan were substantially completed by the end of fiscal 2025. Cash payment of the severance and other termination benefits were substantially completed by the end of fiscal 2025. These activities resulted in estimated gross pre-tax operating income savings of approximately $ 20 million in fiscal 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. Fiscal 2024 Restructuring Events In April 2024, we initiated restructuring actions with the purpose of focusing our resources on our highest strategic priorities. In connection with this plan, we recorded an expense in fiscal 2024 of $ 4.6 million in severance and other related benefits. C ash payment of the severance and other termination benefits were substantially completed by the end of fiscal 2024. These activities resulted in gross pre-tax operating income savings of approximately $ 3 million in fiscal 2024 and resulted in savings of approximately $ 11 million within fiscal 2025, 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. Fiscal 2023 Restructuring Events In September 2023, we initiated a restructuring plan with the purpose of focusing our resources on our highest strategic priorities. In continuation with this plan, we recorded an expense in fiscal 2024 of $ 7.4 million in severance and other related benefits. Cash payment of the severance and other termination benefits were substantially completed by the end of fiscal 2024. These activities resulted in gross pre-tax operating income savings of approximately $ 40 million within fiscal 2024, which was consistent with our expectations. The impact of these savings on our operating expenses was offset by increased investment in our strategic priorities and the effects of inflation on our remaining expenses. In June 2023, we implemented a focused restructuring plan, primarily consisting of workforce reductions and facility consolidations to improve execution in alignment with our strategy and to reduce our cost structure through improved utilization of our global infrastructure. Actions and expenses related to this plan were substantially completed by the end of fiscal 2024. These activities resulted in gross pre-tax operating income savings of approximately $ 20 million in fiscal 2024, 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. The table presented below summarizes the changes in our restructuring accruals (in thousands): 85 Table of Contents Severance Leased facility exit costs and other costs Total Balance at September 29, 2023 $ 20,352 $ — $ 20,352 Restructuring charges 6,413 ( 29 ) 6,384 Cash payments and adjustments ( 24,000 ) 29 ( 23,971 ) Balance at September 27, 2024 2,765 — 2,765 Restructuring charges 11,624 3,383 15,007 Cash payments and adjustments ( 9,724 ) ( 3,383 ) ( 13,107 ) Balance at September 26, 2025 $ 4,665 $ — $ 4,665 Accruals for restructuring charges/(credits) incurred for the restructuring plans described above are included within accrued liabilities in our consolidated balance sheets, while restructuring charges are included within restructuring charges in our consolidated statements of operations. 14. 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 September 26, 2025 (in thousands): Payments Due By Fiscal Period Fiscal 2026 Fiscal 2027 Fiscal 2028 Fiscal 2029 Fiscal 2030 Thereafter Total Naming rights $ 13,472 $ 8,534 $ 8,642 $ 8,751 $ 8,862 $ 18,060 $ 66,321 Purchase obligations 36,917 31,663 19,681 19,208 19,208 — 126,677 Donation commitments 183 153 153 153 153 431 1,226 Total $ 50,572 $ 40,350 $ 28,476 $ 28,112 $ 28,223 $ 18,491 $ 194,224 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 the Dolby Theatre. We also hold the naming rights to Dolby Live at the Park MGM in Las Vegas, Nevada. Dolby Live is a fully integrated performance venue offering live concerts in Dolby Atmos. Purchase Obligations Purchase obligations primarily consist of our commitments made under agreements to purchase goods and services related to Dolby Cinema and for purposes that include information technology and telecommunications, marketing and professional services, and manufacturing and other R&D activities. Also included in purchase obligations are non-cancelable commitments to contract manufacturers, including potentially variable obligations related to inventory based on demand forecasts we provide to the contract manufacturers. Donation Commitments Our donation commitments relate to non-cancelable obligations that consist of maintenance services and installation of imaging and audio products in exchange for various marketing, branding, and publicity benefits. These donation agreements either transfer title of our audio and imaging products to the donees or offer use of the products free of charge for a specified period of time via a leasing arrangement. The recipients of these donations participate in or promote the cinema and entertainment industry and our commitments vary in length, lasting up to 15 years. Indemnification Clauses On a limited basis, our contractual agreements contain a clause under which we agree to provide indemnification to the counterparty, most commonly to licensees in connection with licensing arrangements that include our IP. We have also entered into indemnification agreements with our officers, directors, and certain 86 Table of Contents employees, and our certificate of incorporation and bylaws contain similar indemnification obligations. Additionally, and although not a contractual requirement, we have at times elected to defend our licensees from third party IP infringement claims. Since the terms and conditions of our contractual indemnification clauses do not explicitly specify our obligations, we are unable to reasonably estimate the maximum potential exposure for which we could be liable. 15. Business Combinations Fiscal 2025 There were no business combinations entered into during fiscal 2025. Fiscal 2024 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 Electric’s intellectual property 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 intellectual property 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 LA ( 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 Prior to the acquisition, GE Licensing held a noncontrolling interest in the Company’s majority owned subsidiary Via LA. The indirect acquisition of this noncontrolling interest was accounted for as a separate transaction under ASC 810. The difference between the fair value of the consideration paid of $ 9.9 million and the carrying amount of the noncontrolling interest acquired of $ 4.6 million was recognized as a $ 5.3 million adjustment to equity on the Company’s consolidated financial statements. 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 based on management’s estimates and assumptions. It is impracticable to provide historical supplemental pro forma financial information along with earnings during the period subsequent to the acquisition due to the lack of access to historical information. The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed (in thousands): 87 Table of Contents Recognized Identifiable Assets Acquired and Liabilities Assumed Purchase Price Allocation Cash and cash equivalents $ 2,232 Accounts receivable 20,171 Other current assets 9,636 Assets held for sale, current 24,494 Long-term investments 76,000 Intangible assets 274,197 Goodwill 75,387 Other non-current assets 3,503 Other current liabilities ( 15,370 ) Contingent liabilities ( 14,199 ) Other non-current liabilities ( 21,840 ) Purchase Consideration $ 434,211 We initially acquired certain assets valued at $ 18.2 million and increased the estimated fair value of the assets held for sale by $ 6.3 million for a total value of $ 24.5 million. These assets were classified as held for sale within prepaid expenses and other current assets on the consolidated balance sheets and are measured at fair value less cost to sell. During fiscal 2025, we sold $ 15.8 million of the assets classified as held for sale, and the remaining assets no longer met the criteria for held for sale, and as such, we reclassified $ 8.7 million in assets held for sale to short-term and long-term investments. Acquired contingencies relate to contingent payments due under an assumed agreement. The payments are contingent on the Company achieving certain revenue targets in the future and are based on a percentage of revenue that exceeds such targets. The Company determined that it is probable at the acquisition date that a liability has been incurred and the amount of the liability can be reasonably estimated in accordance with ASC 450. The Company recognized a contingent liability of $ 14.2 million on the acquisition date based on a discounted cash flow valuation technique. Goodwill is representative of our expectation of the benefits and synergies from the integration of GE Licensing operations and the associated assembled workforce, which does not qualify for separate recognition as an intangible asset. All of the goodwill recognized is expected to be deductible for income tax purposes. The following table summarizes the fair values allocated to the various intangible assets acquired and the weighted-average useful lives over which they will be amortized using the straight-line method: Purchase Price Allocation Weighted-Average Useful Life Intangible Assets Acquired (in thousands) (in years) Patents and technology – HEVC Codecs $ 261,697 11 Patents and technology – non-HEVC Codecs 12,500 11 Total $ 274,197 11 The value of acquired intangibles was determined based on the present value of estimated future cash flows using the multi-period excess earnings method with inputs such as projected revenue attributable to licensors in the patent pools, revenue retention rate, maintenance sales and marketing expenses, income tax rate, post-tax returns for contributory assets, and discount rate. Acquisition-related costs of $ 6.4 million were incurred during fiscal 2024. These acquisition-related costs were included in G&A expenses for $ 4.3 million and in S&M expenses for $ 2.1 million in the consolidated statements of operations. THEO Technologies On July 24, 2024, we completed the acquisition of all outstanding equity interests of THEO, a privately held company. THEO' s products enable high-quality online video experiences for customers across sports and entertainment. This acquisition expands on our suite of cloud solutions to provide seamless, synchronized viewer experiences in sports and entertainment. We have included the financial results of THEO in our consolidated financial statements from the date of acquisition, and these results were not material. Additionally, the transaction costs associated with the acquisition were not material. 88 Table of Contents The total purchase consideration of the acquisition was $ 58.7 million. We allocated $ 24.6 million in purchase consideration to identifiable intangible assets, which primarily consisted of customer relationships and developed technology, with estimated useful lives of 3 years to 13 years. We also recorded $ 39.9 million of goodwill, which is representative of our expectation of benefits and synergies from the integration of THEO technology with our existing technology and the assembled workforce of THEO. Fiscal 2023 MPEG LA On April 28, 2023, our wholly-owned subsidiary Via Licensing Corporation ("Via Corp") acquired 100 % of MPEG LA, L.L.C. ("MPEG LA"), a privately held patent pool administrator that managed several collaborative licensing programs in video imaging and other technologies. In connection with the transaction, Via Corp changed its structure and name to Via LA and became a majority owned subsidiary of Dolby. The acquisition is expected to strengthen Via LA's licensing capabilities, particularly in video, diversify its revenues, and reinforce its ability to develop new patent licensing programs. The total consideration for the acquisition was as follows (in thousands): Amount Cash $ 135,739 Noncontrolling interest in Via LA ( 24.8 million common equity units) 24,815 Total amount paid to sellers $ 160,554 Less: amount deemed post-acquisition expense ( 2,174 ) Total consideration paid to sellers $ 158,380 Assumed settlement of pre-existing relationships due to Dolby 61,313 Total consideration $ 219,693 Less: unrestricted cash acquired ( 80,633 ) Total consideration, net of unrestricted cash acquired $ 139,060 The noncontrolling interest in Via LA includes $ 3.6 million of cash held in escrow that was remitted to Dolby in exchange for Via LA common equity units 18 months after the transaction close date. The fair value of the noncontrolling interest was determined through the issuance of equity in lieu of cash. The assumed settlement of pre-existing relationships was determined based on the contractual amounts of payables and receivables between the parties as such amounts approximate fair value. We accounted for the taxable transaction under the acquisition method of accounting for business combinations, and the results of operations of MPEG LA have been included in the Company's consolidated statements of operations from the date of acquisition and were not material. Additionally, we 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 based on management’s estimates and assumptions, and any changes to these fair values were not material. As this acquisition was not significant to our reported operating results, pro forma results of operations are not provided. The following table summarizes the acquisition date fair values allocated to the net assets acquired (in thousands): Recognized Identifiable Assets Acquired and Liabilities Assumed Purchase Price Allocation Cash and cash equivalents $ 80,633 Restricted cash 143,564 Other current assets 73,556 Intangible assets 86,000 Goodwill 40,579 Other non-current assets 34,298 Amounts payable to patent administrative program partners ( 179,616 ) Other current liabilities ( 21,709 ) Non-current liabilities ( 37,612 ) Purchase Consideration $ 219,693 89 Table of Contents In connection with the preparation of our consolidated financial statements, we identified an immaterial error related to the acquisition date fair values allocated to net assets acquired, whereby we overstated certain accounts payable to patent administrative program partners and, as a consequence, correspondingly overstated goodwill as of the quarter ended June 30, 2023. We evaluated the error quantitatively and qualitatively, and determined that the related impact was not material to our condensed consolidated financial statements for the third quarter of fiscal 2023. Accordingly, we have revised the previously reported financial information for such immaterial error in the above table. The correction of this error resulted in a decrease to amounts payable to patent administrative program partners and a corresponding decrease to goodwill of $ 20.3 million, with no impact to total purchase consideration. Goodwill is representative of our expectation of the benefits and synergies from the integration of MPEG LA operations and the assembled workforce of MPEG LA, which does not qualify for separate recognition as an intangible asset. All of the goodwill recognized is expected to be deductible for income tax purposes. The following table summarizes the fair values allocated to the various intangible assets acquired and the weighted-average useful lives over which they will be amortized using the straight-line method: Purchase Price Allocation Weighted-Average Useful Life Intangible Assets Acquired (in thousands) (in years) Licensor Relationships – AVC and Other $ 36,000 13 Licensor Relationships - HEVC 31,000 10 Implementer Relationships – AVC and Other 12,000 13 Implementer Relationships - HEVC 7,000 10 Total $ 86,000 12 The value of acquired intangibles was determined based on the present value of estimated future cash flows using the following methodologies and inputs: • Licensor Relationships - the multi-period excess earnings method using inputs such as projected revenue attributable to licensors in the patent pools, revenue retention rate, maintenance sales and marketing expenses, income tax rate, post-tax returns for contributory assets, and discount rate. • Implementer Relationships - the distributor method using inputs such as projected revenue attributable to the existing implementers in the patent pools, distributor margin, income tax rate, and discount rate. Acquisition-related costs of $ 3.8 million were incurred during fiscal 2023. These acquisition-related costs were included in G&A expenses in the consolidated statements of operations. 16. Operating Segments and Geographic Information 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 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 and externally set expectations. Our CODM does not assess segment performance or make operating decisions using asset or liability information. 90 Table of Contents The following table presents selected financial information and significant segment expenses for the periods presented (in thousands): Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Total revenue $ 1,349,130 $ 1,273,721 $ 1,299,744 Less: Cost of licensing (1) 56,907 64,314 64,642 Cost of products and services (1) (2) 71,681 69,441 82,731 Research and development expense (1) (2) 223,292 225,449 231,798 Sales and marketing expense (1) (2) 314,466 291,508 311,189 General and administrative expense (1) (2) 235,254 222,922 218,028 Restructuring charges 15,007 6,384 47,061 Stock-based compensation 128,514 119,825 118,486 Amortization of acquisition-related intangibles 40,856 15,552 10,056 Interest (income)/expense, net ( 15,376 ) ( 34,077 ) ( 28,086 ) Equity method investees’ net income ( 24,065 ) ( 14,212 ) ( 5,145 ) Other income, net (1) (3) ( 891 ) ( 5,864 ) ( 1,069 ) Income tax expense 46,993 48,163 48,409 Net income including noncontrolling interest 256,492 264,316 201,644 Less: Net income attributable to noncontrolling interest ( 1,474 ) ( 2,491 ) ( 988 ) Net income attributable to Dolby Laboratories, Inc. $ 255,018 $ 261,825 $ 200,656 (1) Excludes amortization of acquisition-related intangibles presented separately. (2) Excludes stock-based compensation expense presented separately. (3) Excludes our proportional share of net income in our equity method investees presented separately. Geographic Information The methods to determine revenue by geographic region for each of the three categories included within total revenue in our consolidated statements of operations are described within the table presented below. Revenue Category Basis For Determining Geographic Location Licensing Region in which our licensees’ headquarters are located Products Destination to which our products are shipped Services Location in which the relevant services are performed The following tables present selected information regarding total revenue by geographic location (amounts presented in thousands). Revenue Composition—U.S . and International Fiscal Year Ended Location September 26, 2025 September 27, 2024 September 29, 2023 United States $ 496,990 $ 450,265 $ 466,030 International 852,140 823,456 833,714 Total revenue $ 1,349,130 $ 1,273,721 $ 1,299,744 Revenue Concentration—Significant Individual Geographic Regions Fiscal Year Ended Location September 26, 2025 September 27, 2024 September 29, 2023 United States 37 % 35 % 36 % South Korea 12 % 13 % 14 % China 26 % 22 % 22 % Japan 7 % 8 % 9 % Europe 9 % 12 % 10 % Other 9 % 10 % 9 % Total 100 % 100 % 100 % 91 Table of Contents Long-lived tangible assets, net of accumulated depreciation, by geographic region were as follows (in thousands): Location September 26, 2025 September 27, 2024 United States $ 374,683 $ 385,155 International 95,925 93,954 Total long-lived tangible assets, net of accumulated depreciation $ 470,608 $ 479,109 17. Legal Matters 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 consolidated financial statements, any such amounts are either immaterial, or it is not probable that a potential loss has been incurred or the amount of loss cannot be reasonably estimated. 18. Related Parties We maintain contractual agreements relating to certain entities affiliated with the Dolby family, who is considered a related party as our principal stockholder. These jointly-owned entities were established for the purpose of acquiring and leasing commercial property in the U.S. and U.K. primarily for our operational use. Although the entities affiliated with the Dolby family hold a majority economic interest in such jointly-owned entities, they have a noncontrolling interest since they are the limited member or LP in each of these entities. Therefore, we have consolidated the entities’ assets and liabilities and results of operations in our consolidated financial statements. The share of earnings and net assets of the entities attributable to the limited member or LP, as the case may be, is reflected as noncontrolling interest in our consolidated financial statements. As of September 26, 2025, we hold a 49.0 % minority ownership interest in Dolby Properties Burbank, LLC, which owns a facility in Burbank that we are leasing until 2030. We also own 10.0 % minority ownership interest in Dolby Properties, LP, which owns a facility in Wootton Bassett, England. We are no longer leasing the Wootton Bassett facility. We also leased from our principal stockholder a commercial office building located at 100 Potrero Avenue in San Francisco, California under a term that expired on October 31, 2024. Distributions Distributions made by the jointly-owned real estate entities to our principal stockholder were as follows (in thousands): Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Distributions to principal stockholder $ ( 250 ) $ ( 262 ) $ ( 266 ) 19. Retirement Plans We maintain a tax-qualified Section 401(k) retirement plan for employees in the U.S. and similar plans in foreign jurisdictions. Under the plan, employees are eligible to receive matching contributions and profit-sharing contributions. We also maintain a SERP, a non-qualified, employer-funded defined contribution retirement plan which was terminated in fiscal 2005. 92 Table of Contents Retirement plan expenses, which are included in cost of products and services, R&D, S&M, and G&A expense in our consolidated statements of operations, were as follows (in thousands): Fiscal Year Ended September 26, 2025 September 27, 2024 September 29, 2023 Retirement plan expenses $ 24,739 $ 24,558 $ 24,925 93 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None.