Third quarter revenue was $247 million, compared to $352 million in Q2, and $302 million in Q3 of last year.
Our Q3 revenue guidance coming into the quarter was a range of $225 million to $250 million.
Products and services were at the high-end of the range, but remember that we had lowered our expectations by 70% to 80%, because of the significant impact of COVID-19 shutdowns on the cinema industry.
Now looking at total company quarter-over-quarter, revenue was down by about $105 million from Q2, roughly half of that was driven by timing of revenue under contracts, as well as lower recoveries, and roughly the other half of that was attributable to the impact from COVID-19, which includes lower royalties from unit shipments across a variety of devices, lower sales of cinema products and services and lower revenue from box office share at Dolby Cinemas.
Now looking at total company year-over-year, revenue was down by about $55 million versus last year's Q3, and that was predominantly attributable to COVID-19, and similar to what I said a minute ago, lower unit shipments, lower products and services and lower Dolby Cinema revenue.
The composition of Q3 revenue was $235 million in licensing; and $12 million in products and services.
Broadcast represented about 38% of total licensing in the third quarter.
Broadcast revenues were down about 34% year-over-year, and that was driven by lower recoveries and lower unit volume due to the pandemic, despite the fact that adoption of Dolby Vision and Dolby Atmos into TVs and set-top boxes is higher than last year.
On a sequential basis, Broadcast was down by about 31% due to lower recoveries and lower unit volume.
Mobile represented approximately 33% of total licensing in Q3.
Mobile was up by about 65% over last year, due to higher recoveries and revenues from our patent programs, offset partially by unit volume impact from the pandemic.
On a sequential basis, Mobile was up by about 3%, driven by recoveries offset partially by unit volume impact from the pandemic.
PC represented about 10% of total licensing in the third quarter.
PC was down by about 4% year-over-year, due to lower recoveries and lower unit volume, although, its worth noting that adoption of Dolby Vision and Dolby Atmos of the PCs has increased since last year.
And sequentially PC was down nearly 50%, due to timing of revenue under contracts and also lower recoveries.
Consumer electronics represented about 9% of total licensing in the third quarter and on a year-over-year basis CE licensing was down by about 29%, driven by lower volume and lower recoveries.
On a sequential basis, CE was down by nearly 60%, due to timing of revenue under contracts, as well as lower unit volume.
Other markets represented about 10% of total licensing in the third quarter.
They were down by about 34% year-over-year due to significantly lower revenues from Dolby Cinema, because nearly all of those screens were closed for the quarter and lower revenues from gaming due to console life cycles.
On a sequential basis, Other Markets was down by about 16% driven by lower revenue from Dolby Cinema and from via admin fees and those are the fees in the patent pool program that we administer.
Beyond licensing our products and services revenue was $11.8 million in Q3, compared to $23 million in Q2, and $30.3 million in last year's Q3.
Total gross margin in the third quarter was 87.9% on a GAAP basis, and 89% on a non-GAAP basis.
Products and services gross margin on a GAAP basis was minus $5.5 million in the third quarter, due to fixed cost not fully covered by the lower volume that we ran.
And as a reminder, the guidance I gave at the beginning of the quarter was for GAAP gross product margin to range from minus $6 million to minus $9 million.
Products and services gross margin on a non-GAAP basis was minus $3.5 million in the third quarter for the same reasons as I just went over in the GAAP discussion, and there as a reminder, our guidance for non-GAAP product gross margin was minus $5 million to minus $8 million.
Operating expenses in the third quarter on a GAAP basis were $182.9 million, compared to $209 million in Q2.
Operating expenses in Q3 were about $8 million less than the low end of the range we've guided, mostly driven by timing of certain marketing programs that were pushed into Q4, lower legal expenses and lower travel and outside services.
Operating expenses in the third quarter on a non-GAAP basis were $159.2 million, compared to $188.4 million in the second quarter.
Operating income in the third quarter was $34.1 million on a GAAP basis, or 13.8% of revenue, compared to $34.3 million or 11.3% of revenue in Q3 of last year.
And last year's Q3 included a $30 million charge for restructuring mostly associated with an early exit from a leased facility.
Operating income in the third quarter on a non-GAAP basis was $60.5 million, or 24.5% of revenue, compared to $85.9 million or 28.4% of revenue in Q3 of last year.
Income tax was a $27.4 million benefit in Q3 on a GAAP basis, and a $21.2 million benefit on the non-GAAP basis.
The Q3 income tax amounts include approximately $36 million of discrete benefits for a specific item that were resolved during the quarter.
Net income on a GAAP basis in the third quarter was $67.3 million, or $0.66 per diluted share, compared to $39.6 million or $0.38 per diluted share in last year's Q3.
Net income on a non-GAAP basis in the third quarter was $87.5 million or $0.86 per diluted share, compared to $79.3 million, or $0.76 per diluted share in Q3 of last year.
During the third quarter, we generated about $134 million in cash from operations, which compares to about $91 million generated in last year's third quarter, and we ended the third quarter with a little over $1.1 billion in cash and investments.
During Q3, we bought back about 500,000 shares of our common stock and ended the quarter with about $230 million of stock repurchase authorization still available.
We also announced today a cash dividend of $0.22 per share, which will be payable on August 26, 2020 to shareholders of record on August 17th, 2020.
We estimate that products and services revenue in Q4 could range from $10 million to $15 million.
We estimate that licensing revenue in Q4 could range from $215 million to $240 million, that's in comparison to the $235 million that we had in Q3.
Our Q4 scenario assumes that there will roughly be a 5% improvement in unit shipments plus or minus blended across all device categories.
So to summarize, our scenario for total revenue in Q4 is a range of $225 million to $255 million.
If I compare that to last year's Q4 actual revenue of $299 million, the majority of the potential decline would be attributable to the economic ripple effect of the pandemic, and the remainder would largely be due to lower recoveries.
Gross margin for Q4 on a GAAP basis is estimated to range from 85% to 86%; and non-GAAP gross margin is estimated to be about 1 percentage point higher than the GAAP number.
At the revenue range in the outlook I provided, products and services gross margin on a GAAP basis could range from minus $6 million to minus $9 million in Q4; and on a non-GAAP basis, it could range from minus $5 million to minus $8 million.
Operating expenses in Q4 are estimated to range from $187 million to $197 million on a GAAP basis; and from $167 million to $177 million on a non-GAAP basis.
Other income is projected to range from $2 million to $3 million for the quarter; and our income tax rate for the fourth quarter is projected to range from 19% to 21% on both the GAAP and non-GAAP basis.
Based on a combination of the factors I just reviewed, we estimate the Q4 diluted earnings per share on the GAAP basis could range from five -- from about $0.05 to about $0.20; and then on a non-GAAP basis, we estimate, it would range from about $0.22 to $0.37.
And as for the full-year, if you do the math, that would mean that our FY '20 revenue for the full-year could range from $1,115 million to $1,145 million; GAAP diluted earnings per share could range from $2.04 to $2.19; and non-GAAP diluted earnings per share could range from $2.76 to $2.91.
Apple, which supports Dolby Vision and Dolby Atmos across most of their devices, announced that AirPods Pro will support Dolby Atmos with the release of iOS 14.
In FY '19, Dolby Vision was included on about 10% of 4K TV shipments, and we are on track to materially increase that adoption rate for fiscal '20 with a significant growth opportunity still ahead of us.

Summary:
Net income on a GAAP basis in the third quarter was $67.3 million, or $0.66 per diluted share, compared to $39.6 million or $0.38 per diluted share in last year's Q3.
Net income on a non-GAAP basis in the third quarter was $87.5 million or $0.86 per diluted share, compared to $79.3 million, or $0.76 per diluted share in Q3 of last year.
So to summarize, our scenario for total revenue in Q4 is a range of $225 million to $255 million.
Based on a combination of the factors I just reviewed, we estimate the Q4 diluted earnings per share on the GAAP basis could range from five -- from about $0.05 to about $0.20; and then on a non-GAAP basis, we estimate, it would range from about $0.22 to $0.37.
And as for the full-year, if you do the math, that would mean that our FY '20 revenue for the full-year could range from $1,115 million to $1,145 million; GAAP diluted earnings per share could range from $2.04 to $2.19; and non-GAAP diluted earnings per share could range from $2.76 to $2.91.