diff --git a/lib_com/ivas_fb_mixer.c b/lib_com/ivas_fb_mixer.c
index f42e8bde74b034c7adea51658a258a5ca160ff98..511f6ed558cba165c2ff8bf555c45039ad6448b1 100644
--- a/lib_com/ivas_fb_mixer.c
+++ b/lib_com/ivas_fb_mixer.c
@@ -223,7 +223,11 @@ ivas_error ivas_FB_mixer_open(
     }
     else
     {
+#ifdef SBA_TD_RESIDUAL
+        num_chs_alloc = 1; /* only W channel processed for predicting YZX */
+#else
         num_chs_alloc = fb_cfg->num_out_chans;
+#endif
     }
 
     for ( i = 0; i < num_chs_alloc; i++ )
@@ -386,7 +390,11 @@ void ivas_FB_mixer_close(
     }
     else
     {
+#ifdef SBA_TD_RESIDUAL
+        num_chs_alloc = 1; /* only W channel processed for predicting YZX */
+#else
         num_chs_alloc = fb_cfg->num_out_chans;
+#endif
     }
 
     if ( hFbMixer != NULL )
@@ -502,7 +510,11 @@ void ivas_fb_mixer_pcm_ingest(
     }
     else
     {
+#ifdef SBA_TD_RESIDUAL
+        num_chs_ingest = 1; /* forward Filterbank MDFT only on W */
+#else
         num_chs_ingest = fb_cfg->num_out_chans;
+#endif
     }
 
     for ( i = 0; i < fb_cfg->num_in_chans; i++ )
@@ -768,7 +780,9 @@ void ivas_fb_mixer_get_in_out_mapping(
             for ( i = 1; i < fb_cfg->num_out_chans; i++ )
             {
                 in_out_mixer_map[i][0] = 1;
+#ifndef SBA_TD_RESIDUAL
                 in_out_mixer_map[i][order[i]] = 1;
+#endif
             }
         }
     }
diff --git a/lib_com/options.h b/lib_com/options.h
index b01e74a7a7a5316057188a57e68ff5be2bde8a2e..997eacb7da7acf64456abcaea69bda5d031b55dd 100644
--- a/lib_com/options.h
+++ b/lib_com/options.h
@@ -173,6 +173,7 @@
 
 #define EUALER2QUAT_FIX                                 /* Dlb :fix for issue 430 issue in euler2quat, sign of quat y is inverted */
 #define HR_METADATA                                     /* Nok: encode directional MASA metadata with more bits at 384k and 512k */
+#define SBA_TD_RESIDUAL                                 /* Dlb : Issue 426: SBA encoder complexity optimization */
 
 #define FIX_357_DTX_32K                                 /* Eri: issue 357 - Forced LP-CNG at 32k */   
 #define FIX_435_ISM_MERGE_BUG                           /* Eri: Merge bug fix for ISM NULL metadata and tcx_only cases */
diff --git a/lib_enc/ivas_spar_encoder.c b/lib_enc/ivas_spar_encoder.c
index 0484e2fb92dcdec73b6630aeb0b933a494207af7..b13bb4f20d0fd7aeb0d07d562bc1c3de74e2d3ed 100644
--- a/lib_enc/ivas_spar_encoder.c
+++ b/lib_enc/ivas_spar_encoder.c
@@ -405,7 +405,11 @@ static ivas_error ivas_spar_enc_process(
     IVAS_QMETADATA_HANDLE hQMetaData = st_ivas->hQMetaData;
     int16_t ts, l_ts, orig_dirac_bands, num_del_samples;
     float *ppIn_FR_real[IVAS_SPAR_MAX_CH], *ppIn_FR_imag[IVAS_SPAR_MAX_CH];
+#ifdef SBA_TD_RESIDUAL
+    float wyzx_del_buf[FOA_CHANNELS][IVAS_FB_1MS_48K_SAMP];
+#else
     float w_del_buf[IVAS_FB_1MS_48K_SAMP];
+#endif
     float dir[3], avg_dir[3];
     float energySum, vecLen;
 
@@ -447,7 +451,19 @@ static ivas_error ivas_spar_enc_process(
     }
     /* store previous input samples for W in local buffer */
     assert( num_del_samples <= IVAS_FB_1MS_48K_SAMP );
+#ifdef SBA_TD_RESIDUAL
+    if ( hSpar->hFbMixer->fb_cfg->active_w_mixing == 0 )
+    {
+        /* fill delay (1 ms) buffer for all Transport channels */
+        for ( i = 0; i < hSpar->hFbMixer->fb_cfg->num_out_chans; i++ )
+        {
+            int idx = hSpar->hFbMixer->fb_cfg->remix_order[i];
+            mvr2r( &hSpar->hFbMixer->ppFilterbank_prior_input[idx][hSpar->hFbMixer->fb_cfg->prior_input_length - num_del_samples], wyzx_del_buf[idx], num_del_samples );
+        }
+    }
+#else
     mvr2r( &hSpar->hFbMixer->ppFilterbank_prior_input[0][hSpar->hFbMixer->fb_cfg->prior_input_length - num_del_samples], w_del_buf, num_del_samples );
+#endif
 
     /*-----------------------------------------------------------------------------------------*
      * FB mixer ingest
@@ -789,14 +805,53 @@ static ivas_error ivas_spar_enc_process(
 #ifdef DEBUG_SBA_AUDIO_DUMP
     ivas_spar_dump_signal_wav( input_frame, p_pcm_tmp, NULL, nchan_transport, spar_foa_enc_wav[1], "ivas_fb_mixer_process()" );
 #endif
+#ifdef SBA_TD_RESIDUAL
+    if ( hSpar->hFbMixer->fb_cfg->active_w_mixing == 0 )
+    {
+        /* delayed W */
+        mvr2r( wyzx_del_buf[0], p_pcm_tmp[0], num_del_samples );
+        mvr2r( data_f[0], p_pcm_tmp[0] + num_del_samples, input_frame - num_del_samples );
+
+        for ( i = 1; i < hSpar->hFbMixer->fb_cfg->num_out_chans; i++ )
+        {
+            int idx = hSpar->hFbMixer->fb_cfg->remix_order[i];
 
+            /* delayed, reorderd and accumulated with (negative) prediction from W */
+            v_add( wyzx_del_buf[idx], p_pcm_tmp[i], p_pcm_tmp[i], num_del_samples );
+            v_add( data_f[idx], p_pcm_tmp[i] + num_del_samples, p_pcm_tmp[i] + num_del_samples, input_frame - num_del_samples );
+        }
+    }
+#else
     /* move delayed W into output buffer unless activeW operation*/
     if ( hSpar->hFbMixer->fb_cfg->active_w_mixing == 0 )
     {
         mvr2r( w_del_buf, p_pcm_tmp[0], num_del_samples );
         mvr2r( data_f[0], p_pcm_tmp[0] + num_del_samples, input_frame - num_del_samples );
     }
-
+#endif
+#if 0 /* SBA_TD_RESIDUAL */
+    {
+       static FILE *fid = 0;
+       static int samplesWritten = 0;
+       int s;
+       if (!fid)
+       {
+          fid = fopen("enc_pcm.txt", "wt");
+       }
+       if (samplesWritten < 8 * 48000)
+       {
+          for (s = 0; s < input_frame; s++)
+          {
+             for (i = 0; i < hSpar->hFbMixer->fb_cfg->num_out_chans; i++)
+             {
+                fprintf(fid, "%.8f ", p_pcm_tmp[i][s]);
+             }
+             fprintf(fid, "\n");
+          }
+          samplesWritten += input_frame;
+       }
+    }
+#endif
     /*-----------------------------------------------------------------------------------------*
      * PCA encoder
      *-----------------------------------------------------------------------------------------*/