Mobile devices represented about 16% of licensing revenue in Q1. They were up more than 40% sequentially and also up 11% year-over-year as we benefited during the quarter from higher ATAC royalty screens due to timing under our contract with the licensee. Now this level won’t repeat in Q2 and therefore we anticipate that mobile will drop back down to around 12% of our total licensing in the second quarter. Revenues in other markets represented approximately 12% of total licensing in the first quarter. Revenues were up about 37% sequentially in Q1 and more than 40% year-over-year driven by higher revenues from gaming, Dolby Voice and automotive. Product and services revenue was $17.6 million in Q1 which was slightly below Q4 but down about $8 million year-over-year, this was lower than we had projected due to a combination of the following factors.
In early November we completed the acquisition of Doremi Labs and sales of Doremi products post-acquisition were below the original estimates as we worked our way through the first couple months of transition. In addition, market demand was a little softer than expected which impacted Dolby mature products. However, sales of Dolby Atmos products were on track with our original projections. Total gross margin in the first quarter was 91.7% on a GAAP basis and 93.0% on a non-GAAP basis. Product gross margins on a GAAP basis was 5.1% in the first quarter compared to 25% in Q4 and 23.8% in last year’s first quarter. And product gross margin on a non-GAAP basis was 17.2% in the first quarter compared to 31.9% in Q4 and 28.9% in last year’s Q1 and the decrease was primarily driven by excess in obsolete inventory charges.
Operating expenses in the first quarter on a GAAP basis were $161.3 million compared to $156.2 million in the fourth quarter and on a non-GAAP basis, operating expenses were $141.7 million in Q1 compared to $138.4 million in Q4. Operating income in the first quarter was $53.5 million on a GAAP basis or 22.9% revenue and $76.1 million on a non-GAAP basis or 32.5% revenue. The effective tax rate for the quarter was 22.8% on a GAAP basis and 23.1% on a non-GAAP basis. Our Q1 taxes benefited from a retroactive reinstatement for the 2014 R&D tax credit that was signed in that was signed into law during December. Net income in the first quarter was $41.4 million on a GAAP basis or 17.7% of revenue and was $58.5 million on a non-GAAP basis or 25% of revenue. Diluted earnings per share in the first quarter were $0.40 on a GAAP basis compared to $0.44 in the fourth quarter and $0.43 in Q1 of last year, and on a non-GAAP basis Q1 diluted earnings per share were $0.56 compared to $0.58 in Q4 and $0.59 in Q1 of last year.
Cash flow from operations was only a few millions, but that included about $68 million of minuses just from changes in receivables including liabilities, which was related mainly to timing issues specifically to Q1 and I don’t expect that every quarter, so we had some or all of that back to normalize that you get an operating cash flow that looks lot more typical for us. During the quarter, we repurchased about $17 million of our common stock and have $243 million of remaining stocks repurchase authorization and we also today declared a cash dividend of $0.10 per share similar to last quarter and this dividend will be paid on February 10, 2015 to shareholder record on February 2, 2015. As of the end of Q1 we had $939 million in total cash and investments which includes cash and cash equivalents as well as both short and long-term marketable securities.
