Vikram Kesavabhotla

Vikram Kesavabhotla asked for Dolby's latest observations on the macro environment, including potential impacts from tariffs and the state of the consumer, and how these factors were incorporated into the FY2026 outlook. He also inquired about the revenue cadence for the rest of FY2026, beyond the Q1 drivers. Lastly, he sought an update on Dolby's capital allocation strategy, particularly regarding share repurchase activity given the remaining authorization and strong balance sheet.

Answer

CEO Kevin Yeaman stated that Dolby has not seen specific identifiable impacts from tariffs in the past year, noting device partners' resilience despite a generally flat/sluggish overall device market. He mentioned foundational audio technology is stabilizing compared to previous declines and that Dolby Atmos, Dolby Vision, and Imaging Patents have grown at about 20% annually through these conditions. CFO Robert Park explained that quarterly results fluctuate due to true-ups, minimum volume commitments, and recoveries, and for FY2026, revenue is expected to be more evenly distributed between the first and second halves, unlike the previous year. Kevin Yeaman reiterated Dolby's capital allocation policy: offsetting dilution from equity compensation, a regular dividend (recently increased), and periodically doing more buybacks than necessary to offset dilution, with close board review each quarter.

Vikram Kesavabhotla asked about Dolby's observations on the current macro environment, including potential impacts from tariffs and consumer spending, and how these factors were incorporated into the FY2026 outlook. He also inquired about the expected revenue cadence for FY2026 beyond the Q1 drivers and sought an update on Dolby's capital allocation strategy, particularly regarding share repurchase activity given the remaining authorization and strong balance sheet.

Answer

Kevin Yeaman, CEO, stated no specific identifiable impact from tariffs, noting device partners' resilience. He described the overall device market as flattish/sluggish but stabilizing compared to previous strong purchasing years. He emphasized Dolby's focus on controllable growth drivers for Atmos, Vision, and imaging patents, which have grown ~20% through the macro environment. Robert Park, CFO, reiterated that quarterly revenue fluctuates due to true-ups and minimum volume commitments, with Q1 FY2026 facing tough comparisons, but expects a more even revenue distribution between the first and second halves of the year. Kevin Yeaman, CEO, confirmed over $270 million in share repurchase authorization, stating the policy is to offset dilution from equity compensation and maintain a regular dividend, with quarterly reviews for additional buybacks.

Vikram Kesavabhotla asked about TKO's initial reactions to the new WWE relationship with ESPN, specifically how the first few Premium Live Events (PLEs) performed relative to expectations and the perceived benefits of the partnership.

Answer

Mark Shapiro, President and COO of TKO Group Holdings Inc, expressed thrill with the start of the partnership, highlighting the successful launch of WrestlePalooza, a new event. He noted the extensive wall-to-wall coverage across all ESPN platforms, including prominent shows like College GameDay. Andrew Schleimer, CFO of TKO Group Holdings Inc, added that ESPN is an excellent marketing partner, a benefit TKO has seen firsthand with UFC. He emphasized the importance of monitoring ESPN's distribution partner deals to ensure broad authentication for free direct-to-consumer access.

Vikram Kesavabhotla asked for the rollout timeline and initial feedback for the 'Ask Arrow' agentic tool, and requested more specific timing on the expected return to total customer growth.

Answer

CEO Aman Bhutani revealed that 'Ask Arrow' is already being tested on the site with positive user interaction, with more agentic capabilities to be added over the next quarter. CFO Mark McCaffrey reiterated the focus on high-intent customers and noted positive signals in customer count over the last two months, but did not provide a specific quarter for the return to overall growth, citing residual pressure from migrations.

Vikram Kesavabhotla asked for more detail on the vision for Agentic AI within Airo and for specifics on where the pricing and bundling initiative is seeing the most success, given it delivered ahead of expectations.

Answer

CEO Aman Bhutani explained that Agentic AI represents the next evolution for Airo, moving beyond deterministic automation to deploy personalized agents that can perform complex jobs across multiple products on a customer's behalf. On pricing and bundling, he stated the multiyear initiative is performing well, with ongoing tests of new bundles, including third-party products, setting the stage for future growth by enhancing the value of GoDaddy's one-stop-shop solution.

Vikram Kesavabhotla asked for more details on GoDaddy's 2025 pricing and bundling strategy, its focus on presence and hosting products, and the drivers for the expected return to customer growth.

Answer

CEO Aman Bhutani explained the strategy is evolving from a product-centric view to a customer cohort-based approach, starting with the hosting business, and has a material target for 2025. CFO Mark McCaffrey added that customer growth will be driven by a focus on high-value customers as headwinds from divestitures and the end of deep discounting abate.

Vikram Kesavabhotla inquired about the outlook for Applications & Commerce (A&C) bookings growth in Q4 and the relationship between strong bookings and future revenue, questioning if the segment's long-term growth targets are now conservative.

Answer

CFO Mark McCaffrey acknowledged that accelerating bookings are a tailwind for revenue but highlighted that the conversion timing is complex due to varied product terms. He affirmed the company's comfort with its long-term 6-8% overall growth target, noting that A&C strength is expected to drive total bookings growth about two points ahead of revenue for the full year.

Vikram Kesavabhotla asked if the current 5-7% industry growth rate is the 'new normal' for pharma digital marketing, or if it could accelerate, and what customers would need to see for that to happen.

Answer

CFO Anna Bryson explained that while an acceleration is possible because pharma's digital spend (30-35%) is still heavily under-indexed compared to other industries (70%+), they are not seeing it happen yet due to generalized macro uncertainty. She stated that the timing for a potential re-acceleration is unknown.

Asked about the drivers for the sequential decrease in Q4 incentive fees and the outlook for them in 2024. Also inquired about the current trends in payer reimbursement timelines.

Answer

The Q4 incentive fee decrease was expected due to onetime items in Q3. For 2024, incentive fees are expected to be stable and consistent with 2023 levels. This is because payer reimbursement timelines, which stabilized in 2023 with only modest improvement, are not expected to change significantly in 2024.