Ralph Schackart

Ralph Schackart inquired about Dolby's expanded total addressable market (TAM) through new consumption models, specifically the video distribution program for content streamers and Dolby OptiView. He sought clarification on the origin of the video distribution patents, their contribution to the FY2026 guidance, and the expected revenue build-out. He also asked for details on the Imaging Patents' go-to-market strategy with content streamers and the timeline from signing licensees to revenue monetization.

Answer

CEO Kevin Yeaman explained that Dolby's expansion into consumption-based models, like Dolby OptiView for sports and iGaming, and the video distribution program for content streamers, represents a natural extension of their 60-year history of delivering value to the ecosystem. He confirmed the video distribution program leverages both existing Imaging Patents and GE Licensing patents, significantly expanding the addressable market. Yeaman noted that five licensees signed in H2 FY2025, with revenue recognition starting in FY2026, and that OptiView customers are in early scaling stages. He projected that these two programs could contribute approximately 10% of revenue from service provider customers within three years. Regarding monetization, Yeaman clarified that revenue is recognized upon receiving royalty reports from the patent pools after signing.

Ralph Schackart asked about the expansion of Dolby's Total Addressable Market (TAM) through new consumption models, specifically the video distribution program for streamers and Dolby OptiView. He inquired about the contribution of GE Licensing patents to the video distribution program, its impact on the FY2026 guidance, and the expected revenue build-out. He also sought clarification on the go-to-market strategy for imaging patents with content streamers and the timeline from signing new licensees to revenue monetization.

Answer

Kevin Yeaman, CEO, explained that Dolby is expanding its TAM by adding value to content streamers through personalized and interactive experiences, citing Dolby OptiView's success with NFL RedZone. He noted that the video distribution program, combining existing and GE Licensing patents, significantly expands the addressable market for imaging patents, contributing to the 15-20% growth confidence. He projected that these new service provider customers could account for 10% of revenue within three years. Yeaman clarified that patent pools approach customers, and revenue from new licensees (five signed in H2 FY2025) will begin in FY2026, recognized upon receiving royalty reports from the pools.

Ralph Schackart of William Blair asked how increasing certainty in trade agreements might affect the adoption of Dolby Atmos and Vision, and also inquired about the growth opportunity for Dolby Vision in the automotive sector beyond the current Chinese OEM adopters.

Answer

CEO Kevin Yeaman responded that while trade stability is welcome, the current environment still feels uncertain, but it has not affected the strong engagement and desire for Dolby experiences. Regarding automotive, he described Dolby Vision as a significant opportunity as in-car entertainment expands, noting that Dolby has active engagements with partners both within and outside of China.

Ralph Schackart of William Blair & Company inquired about OEM supply chain flexibility amid tariff concerns, sought clarification on the U.S. share of device revenue, and asked about the momentum of Dolby Vision and Atmos in the current economic climate.

Answer

CEO Kevin Yeaman explained that supply chain impacts vary, with TV manufacturing largely in tariff-exempt Mexico and mobile being less sensitive to short-term shipment changes. Both Yeaman and CFO Robert Park clarified that approximately 25% of Dolby's licensing revenue from consumer devices is tied to products sold in the U.S. Yeaman affirmed that partner engagement and momentum for key technologies like Dolby Atmos in automotive remain strong, citing recent wins with Porsche and Cadillac.

Ralph Schackart of William Blair requested a comparison of product momentum heading into 2025 versus 2024 and asked for an updated framing of the Dolby.io opportunity, particularly its potential for enterprise applications beyond the in-app environment.

Answer

CEO Kevin Yeaman stated that momentum is stronger now, citing a stabilized macro environment, a larger base and continued momentum in automotive, and progress in expanding into more TV price points. For Dolby.io, Yeaman highlighted the strategic pivot to serving companies, especially in sports, that require ultra-low latency streaming. He provided a specific enterprise use case with customer Paddy Power, which uses Dolby.io to reliably stream high-quality, low-latency race feeds to its 600 physical betting shops, suggesting a broader opportunity beyond digital-only experiences.

Ralph Schackart of William Blair asked for confirmation of the implied organic growth rate after normalizing for acquisitions and sought perspective on the potential for sustainable growth, given stabilizing Foundational revenue. He also asked about the growth profile of Dolby IO and when it might materially contribute to results.

Answer

CEO Kevin Yeaman confirmed that Dolby Atmos and Dolby Vision are expected to grow 15% organically. He reiterated the company's growth formula: low single-digit growth in Foundational revenue combined with 15-25% growth in Atmos, Vision, and imaging patents, aiming for double-digit overall growth. Regarding Dolby IO, Yeaman noted it is reported in the 'Products and services' line, is expected to see strong growth from a small base, and the focus is on customer expansion with the Theo acquisition.

Ralph Schackart asked for more details on EverQuote's strategic shift from a lead generation vendor to a multi-product provider, focusing on product innovation and the potential evolution of its commercial and revenue model.

Answer

Jayme Mendal (CEO, EverQuote) explained the strategy involves adding value-add technology, data, and services around core referrals for carriers (e.g., SmartCampaigns) and becoming a one-stop growth shop for local agents. He noted the goal is deeper relationships, more data sharing, and an evolving commercial model, including building recurring subscription revenue with local agents.

Ralph Schackart of William Blair questioned if competitive pressures in search marketing were typical or more pronounced and requested an update on progress in incremental traffic channels like social and video.

Answer

CEO Jayme Mendal described the competitive pressure as 'nothing out of the ordinary,' primarily in search channels. He explained that EverQuote is redirecting some ad spend to more stable channels like social and video, where the company is reactivating and rescaling efforts that were active before the recent industry downturn.

Ralph Schackart inquired about the adoption rate and potential impact of the Smart Campaigns product, and whether the strong auto recovery allows for a greater focus on the home and renters insurance opportunity.

Answer

Executive Jayme Mendal explained that the Smart Campaigns product, which leverages their ML bidding platform, is reaching critical mass adoption and consistently improves customer performance. Regarding the home and renters vertical, he stated it remains a focus despite muted Q1 growth from one-time factors. He expects a return to higher growth in Q2 and anticipates carrier demand will increase over the year as their underlying financials improve, following a similar path to the auto insurance recovery.

Ralph Schackart asked for more detail on new products planned for 2025, the role of AI, and for clarification on whether the guidance for 'EBITDA near current levels' referred to a percentage or an absolute dollar amount.

Answer

CEO Jayme Mendal highlighted product efforts focused on using AI/ML for efficient bidding and expanding services for agents to create a 'one-stop growth shop.' CFO Joseph Sanborn clarified that the guidance refers to maintaining the EBITDA margin percentage at or near current levels (around 12-13%) while increasing investments.

Ralph Schackart inquired about the feedback from agents and customers regarding the upcoming FCC changes compared to the company's initial expectations. He also asked about the management's philosophy on balancing margin expansion with reinvestment.

Answer

CEO Jayme Mendal stated that feedback has been very positive, with carriers and agents receptive to the data-backed plan for higher-quality, higher-priced leads. CFO Joseph Sanborn reiterated the long-term goals of 20%+ revenue growth and 20%+ adjusted EBITDA margins. He noted the significant margin expansion already achieved in 2024 and explained that while the company will remain disciplined, it will make investments in 2025 to drive returns in 2026 and beyond, after navigating the initial FCC impact.

Ralph Schackart asked about performance differences between SMB and enterprise customers, the breadth of the business stabilization, the tenor of employer conversations, and the impact of AI on hiring needs.

Answer

CEO Ian Siegel confirmed the stabilization and momentum are broad-based across both SMB and enterprise, citing three consecutive quarters of improving sequential revenue and paid employer growth. He noted that AI's impact on job postings remains minimal. President Dave Travers added that while employer uncertainty persists, healthcare remains a strong sector while education is weak year-over-year.

Ralph Schackart asked about the 'wait-and-see' attitude of employers, questioning if it was widespread across geographies and verticals, and what signs customers are looking for before increasing hiring.

Answer

Co-Founder and CEO Ian Siegel stated that while macroeconomic uncertainty is increasing, ZipRecruiter's internal data does not yet show a pullback in employer hiring activity. President David Travers added that customers seek certainty for major investment decisions and that their actual hiring behavior has remained consistent despite recent shifts in qualitative economic confidence.

Ralph Schackart inquired about the specific nature of the positive quarter-to-date trends, such as whether they were broad-based or concentrated in certain verticals, and asked if the Q1 margin guidance implies proactive investment ahead of an expected recovery.

Answer

CFO Tim Yarbrough confirmed the positive trends were widespread, noting a meaningful pickup in paid employers and account reactivations since late Q4, leading to a stronger Q1 sequential revenue outlook than in the prior two years. He affirmed that the lower Q1 margin guidance is a direct result of leaning into these favorable trends with increased sales and marketing investments. CEO Ian Siegel added that external indicators like the NFIB Small Business Optimism Index and internal feedback from sales teams corroborate this improved sentiment.

Ralph Schackart inquired about specific industry verticals, asking for any pockets of strength and an update on early-cycle verticals like technology that first showed softness. He also followed up on the performance of enterprise customers versus the cyclically challenged SMB segment.

Answer

Executive David Travers noted that healthcare remained relatively robust, while transportation, storage, and travel were weaker. He mentioned that early-downturn verticals like finance and technology were now performing in the middle of the pack. Executive Ian Siegel added that enterprise customers were more resilient than SMBs, with performance marketing revenue, driven by enterprise, ticking up to 22% of total revenue. This was attributed to strong execution and persistent hiring needs in sectors like healthcare.

Ralph Schackart of William Blair asked for perspective on how the digital landscape might evolve given that users from Large Language Models (LLMs) show higher intent. He also inquired about any early-stage monetization opportunities from this emerging channel.

Answer

CEO & Chairman of The Board, Tim Chen, stated that while it is very early, traffic from LLMs monetizes at a materially higher rate than other channels. He reasoned that users get preliminary questions answered by the LLM and arrive at NerdWallet with a higher intent to transact. Chen speculated that this trend could be a significant opportunity to activate more offline consumer demand and bring it online.

Ralph Schackart requested perspective on the progression of 'green shoot' areas like personal loans and mortgages through 2025, and also asked about the strategy for the new travel and rewards category.

Answer

Co-Founder and CEO Tim Chen explained that the return to growth in personal loans was driven by applying learnings from Insurance, such as improved personalization and lender matching. He sees similar potential in mortgages, though macro headwinds persist. Chen described the travel rewards initiative as a top-of-funnel strategy to build new audiences through content, podcasts, and social media.

Ralph Schackart questioned the level of conservatism in the financial guidance and asked for Tim Chen's perspective on navigating AI-driven changes in search engines like Google.

Answer

CFO Lauren St. Waugh stated the guidance represents their best estimates given current headwinds and market volatility, while maintaining disciplined spending. CEO Tim Chen explained that near-term search changes from AI are affecting non-commercial traffic but have not yet impacted more complex, monetizing pages. He expressed confidence that the ecosystem will eventually stabilize, which should favor NerdWallet's position.

Ralph Schackart requested more color on the returning appetite from credit card issuers and asked about the level of conservatism applied to the Q4 financial guidance.

Answer

CEO Tim Chen explained that issuer appetite is normalizing after a period of balance sheet conservatism post-SVB, with issuers no longer walking away from qualified borrowers. CFO Lauren St. Waugh stated that the Q4 guidance assumes normal seasonality, offset by search pressure in credit cards and continued strength in insurance. She confirmed the level of conservatism in the Q4 outlook is consistent with the approach taken for Q3.

Ralph Schackart of William Blair questioned if the sequential decline in Monthly Active Users (MAUs) was related to the social media campaign. He also asked why the new Chess product appears to be contributing earlier than other new subjects like Math and Music.

Answer

CFO Matt Skaruppa clarified that the company focuses on DAU growth over MAU growth and that the MAU trend was not a concern. CEO Luis von Ahn added that Q1's highly successful 'Dead Duo' campaign created a difficult sequential comparison. Regarding new products, von Ahn expressed excitement for all three but highlighted that Chess has grown exceptionally fast, surpassing Math and Music on iPhones (English UI) in less than a year. He cautioned that significant revenue contribution from these new subjects is still a few years away.

Ralph Schackart from William Blair inquired if the sequential decline in MAUs was linked to the social media campaign and asked why the new Chess product was being highlighted more than Math or Music, questioning if it could contribute to the business sooner.

Answer

CFO Matthew Skaruppa stated the company focuses on DAUs over MAUs and the trend was not concerning. CEO Luis von Ahn added that the Q1 MAU figure was inflated by the viral 'Dead Duo' campaign. Regarding new subjects, von Ahn expressed excitement for all three but noted Chess has grown exceptionally fast, already surpassing Math and Music on iPhones among English users. He cautioned that while this grows the user base, a significant revenue contribution from these new subjects is still a few years away.

Ralph Schackart of William Blair & Company asked about any observed macroeconomic softness and how Generative AI is being leveraged to accelerate product development and testing at scale.

Answer

CFO Matt Skaruppa stated that the company has not seen any change in trends due to the macro environment, citing the global nature of the business and its attractive value proposition. CEO Luis von Ahn detailed GenAI's impact in three areas: near-100% automated content creation, enabling new features like 'Video Call with Lilly', and boosting company-wide efficiencies.

Ralph Schackart inquired about the breadth of daily active user (DAU) growth, specifically how international performance compared to the overall rate, and asked if the temporary gross margin pressure from AI was structural.

Answer

CEO Luis von Ahn confirmed that DAU growth is broad-based across all regions and noted that growth rates are not correlated with market maturity, citing Latin America's rapid 80% YoY growth as an example. CFO Matt Skaruppa reiterated that the gross margin impact is temporary, expecting margins to normalize by the second half of the year as AI costs are optimized. He acknowledged a structural cost difference exists but believes it will become negligible over time.

Ralph Schackart questioned why Duolingo's discretionary business model has remained resilient amid macro pressures and asked about the company's framework for balancing margin expansion with reinvestment opportunities.

Answer

CEO Luis von Ahn Arellano attributed the resilience to a large TAM and strong DAU growth, with future contributions expected from Math and Music. CFO Matt Skaruppa added that the free entry point and low subscription cost also help. Skaruppa then explained that while the company has scaled profitability significantly, the priority remains reinvesting in R&D to drive growth, all while progressing towards their long-term adjusted EBITDA margin target of 30-35%.

Ralph Schackart asked for perspective on the potential scale and impact of the new self-serve platform and requested an update on the e-commerce business, including whether growth was constrained in the quarter.

Answer

Co-Founder, CEO & Chairperson Adam Foroughi stated that the self-serve platform, Axon Ads Manager, represents a massive opportunity for growth. He confirmed that growth was intentionally constrained in recent quarters to enhance the product, but the upcoming referral-based launch in Q4 is expected to significantly increase advertiser count and drive upside. He noted that while e-commerce remains around 10% of the business, it was limited by the onboarding pause, and he anticipates a substantial ramp-up in Q4 with the platform's expansion and the holiday season.

Ralph Schackart of William Blair asked for context on the potential impact of the new self-serve platform and sought an update on e-commerce's contribution to the business, questioning if growth was limited by the temporary halt in new e-commerce client onboarding.

Answer

CEO Adam Foroughi detailed that the self-serve platform's referral-based opening in Q4 will accelerate advertiser count, driving significant upside. He confirmed that constraining new e-commerce onboarding did limit growth, with the majority of Q2 growth coming from the core gaming business. He expects a substantial ramp-up in e-commerce during the Q4 holiday season as onboarding resumes and international markets open up.

Ralph Schackart of William Blair asked about the expected advertiser behavior upon the launch of the self-service model and whether the company's long-term growth algorithm of 20-30% remains appropriate.

Answer

Executive Adam Foroughi projected that advertisers will likely test the new self-service platform with smaller budgets before scaling, which is standard practice. Executive Matt Stumpf reaffirmed the 20-30% long-term growth framework, breaking it down into two parts: a stable 3-5% quarterly growth from the model's continuous reinforcement learning, and larger 'step function' increases from directed engineering enhancements, of which they expect at least one per year.

Ralph Schackart inquired about the extent to which AI model enhancements contributed to Q4 growth and sought an update on the expectation for e-commerce to become a material revenue contributor in 2025.

Answer

CEO Adam Foroughi explained that Q4 growth was driven by ongoing model learning and seasonality in both gaming and e-commerce, rather than a major step-function model upgrade. CFO Matt Stumpf and Foroughi reiterated their confidence that e-commerce will be a material contributor in 2025, while noting the timing is hard to predict. Foroughi framed the business as having a 20% baseline growth with significant, unpredictable upside from new model releases and e-commerce expansion.

Justin, on behalf of Ralph Schackart from William Blair, asked for an update on the macro environment for luxury home goods and whether any marginal changes have been observed since the start of the year.

Answer

CEO David Rosenblatt explained that the macro environment remains soft, citing weakness in the U.S. housing market and luxury home goods demand. However, Rosenblatt emphasized that based on syndicated credit card data, FirstDib has continued to gain market share over the past six quarters, demonstrating resilience despite the challenging conditions.

Ralph Schackart inquired about the sustainability of conversion rate gains, which have been positive for six straight quarters but are now moderating, and the outlook for the strong 70% organic traffic mix. He also asked for more context on seller churn, which is expected to normalize in Q2.

Answer

CEO David Rosenblatt explained that the company successfully restored organic traffic to growth in Q1 through product and engineering efforts, with plans to continue this momentum. He attributed the recent moderation in conversion to macroeconomic pressures, specifically in the consumer furniture vertical, which saw a drop-off from March to April. Regarding churn, Rosenblatt confirmed it was normalizing as the company moves past its subscription pricing changes, emphasizing that the primary focus, listings growth, remains on track.

Ralph Schackart of William Blair asked for an update on the expected normalization of seller churn in the first half of 2025 and sought clarification on whether the mentioned 'mid-single-digit revenue growth' was a forecast or the level needed for operating leverage.

Answer

CEO David Rosenblatt clarified that the Q4 seller churn spike was driven by the retirement of a free seller program, noting the churned cohort had a minimal GMV impact and that churn is expected to normalize in H1 2025. He also explained that the 'mid-single-digit revenue growth' figure is not a forecast, but rather the threshold at which the company's current expense structure is set to deliver operating leverage.

Ralph Schackart asked for the basis of confidence in accelerating order growth for Q4 and for a review of the factors that will lead to seller churn normalizing in the first half of 2025.

Answer

CEO David Rosenblatt clarified that order growth accelerated sequentially in Q3 but did not provide specific guidance for Q4 order growth. Regarding churn, he explained that it is temporarily elevated due to the termination of the 'Essential Seller' program. This process will conclude in Q4, leading to normalized churn rates in early 2025 with minimal impact on GMV or listings, as these sellers were less engaged.

Ralph Schackart from William Blair asked for clarification on the relative impact of consumer spending weakness versus competitive pressures on Q2 results. He also inquired if the better-than-expected margin performance in Europe could reshape the company's international expansion plans for 2026.

Answer

CFO Lawrence Fey suggested that while competitive intensity is the main factor, consumer softness likely contributed a headwind of a 'couple of hundred basis points,' citing declines in Las Vegas metrics as a proxy. CEO Stan Chia added that the company is pleased with its international progress, which is ahead of schedule on both country rollouts and contribution margin, and is willing to accelerate investment in this TAM-accretive area.

Ralph Schackart asked for context on the magnitude of the recent Google marketing channel changes compared to historical shifts and the expected timeline for the industry to adapt.

Answer

CFO Larry Fey described the change as a 'piling on' effect in an already hypercompetitive environment. He explained that while the industry has likely recalibrated from the specific 'glitch,' it remains difficult to discern if a competitor's continued gains are due to superior efficiency, higher spending for less profit, or a fundamental change in Google's algorithm. He did not provide a specific timeline for full clarity.

Ralph Schackart requested an update on the international expansion opportunity and its competitive landscape, and asked for more context on the growth potential of the Vegas.com cross-sell synergy.

Answer

CEO Stanley Chia confirmed the international launch is on track for year-end and described the international market as a large, less competitive opportunity where Vivid Seats' offering can compete effectively. Regarding Vegas.com, he highlighted the 1% of GOV from cross-listed inventory as a strong early result and emphasized the value of acquiring Vegas.com customers in their home markets as a 'free' and profitable acquisition channel.

Ralph Schackart asked about the primary drivers behind the strong net dealer additions in Q4 and sought clarity on the expected drivers for Marketplace revenue growth in 2025 given the tougher comparisons.

Answer

Sam Zales, President and COO, attributed the strong dealer growth to the company's established reputation for high ROI, differentiated data insights that help dealers optimize pricing and profits, and an enhanced account management process that builds stronger partnerships. Elisa Palazzo, CFO, added that while 2025 Marketplace growth is expected to remain strong, starting at 12-14% YoY in Q1, the growth rate will likely taper modestly as the year progresses against more demanding comps.

Ralph Schackart asked to identify the top one or two factors driving the strong advertising performance and sought clarification on the company's guidance philosophy mentioned in the shareholder letter.

Answer

CEO Anthony Wood reiterated the three key strategies: leveraging the home screen, integrating with third-party DSPs, and growing subscriptions. President of Roku Media Charlie Collier added that Roku's large inventory and ability to serve all parts of the demand curve are key strengths. An executive, likely CFO Dan Jedda, clarified the guidance philosophy, stating the company is providing its best internal view for the full year, not an overly conservative one.