Align Technology (ALGN) 26 Jul 232023 Q2 Earnings call transcript

Greetings, welcome to the Align Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded.

I will now turn the conference over to your host, Shirley Stacy, with Align Technology.

begin. may You

afternoon, Shirley Good Investor you joining for Thank Vice and President I'm Stacy, and of us. you. thank Corporate Relations. Communications

and our CFO. for Joe via XXXX Business me call is CEO; investor.aligntech.com. today President and available which on Joining financial results John at issued We today's Morici, Wire, second website quarter Hogan, is

access available X:XX month. and with callers should our International website on Eastern conference Today's dial A replay X:XX Time be telephone will same p.m. call approximately dial telephone XXXXXX. is To on being archived domestic today will code. through using Time August (XXX)-XXX-XXXX XX-XXX-XXX-XXXX be approximately callers code should p.m. access audio one by replay webcast Eastern access for the Xth. the

reminder, will provided statements a and the including statements, events, today outlook. Align's forward-looking discussed about and include future products information As

statements These and vary website are detail sec.gov. may in significantly, more are and uncertainties filed Actual no expressly and and and the predictions most for reports that reconciliation, second forward-looking detailed reconciliations, on statements. to including applicable, on assumes corresponding obligation historical more involve to under quarterly including results our described Commission website periodic if available with our only our to in at risks Align quarter recent our Exchange non-GAAP files financial information. our refer forward-looking posted and XXXX these the conference GAAP slides statements, Securities update We've any call Please results.

call and Joe CEO, turn With that, President I'd Hogan. like over to Technology's the Align to Joe?

performance and aligners. provide of system third comment two today, on XXXX views and our quarter the joining services highlights from segments, financial and I'll overview our and our an our more our discuss and afternoon, On few for overall. call Good Shirley. clear QX on will thanks a Thanks, second for detail John quarter results operating provide us.

to open and and that, a Following points, call I'll few summarize the key questions. we'll come back

regions, quarter better-than-expected utilization patient operating driven with our and results another that exceeded report First. from as QX to pleased in and guidance. growth by margins both as across continued well and younger QX I'm submitters Overall, strength revenues teen trends Invisalign in improving momentum volumes, reflect

portion segment, case annual the million which starts, year-over-year, kids represents X% XXX,XXX and In XX aligners second increase segment the highest with started rate Invisalign largest sequentially in the quarter. XX% of of teens the growth annual since Teen and orthodontic during the XXXX. reflecting the An clear teen treatment

year-over-year. and second revenues $XXX.X slightly very Services, X% & down XX.X% Systems quarter of sequentially For were million up

scanner certified higher and we services increases For systems and or and reflecting increased subscription volumes revenues, QX, revenues. sequential reflects pre-owned regions sales revenues, higher call CPO in what of and increased across services the non-system scanners

large in revenues a a On higher increased primarily number services QX the basis, year-over-year subscription due of from iTero field. scanners to revenues

We higher scanner scanner our related leasing our also and non-system again to and programs. had revenues CPOs certified rental pre-owned

reflecting aligner clear sequentially like regions. monthly our for is cases three QX, of aligner-related X.X% program. DSP, QX aligner historical and For non-case all products. And Vivera retainers sales Doctor and consumables, continued Program, whitening year-over-year, or Invisalign were and up X.X% and XX% subscription-based cleaning and growth Commerce Subscription from growth aligner reflects QX and sequentially up X.X% with sequential million at clear our average $XXX.X rate revenue growth year total million across revenues $XX revenues consistent year-over-year.

cases convenient and DSP flexible, or a with patients better provide aligner is It Invisalign opportunity clear their for has simple important subscription-based retention them experience. to DSP doctors our offer to reach doctors. and new experienced successful growing enables patients a in and superior, that first enables an treat overall been doctors program addressing solution. flexibilities touch-up

and and United of in We the second launch we'll it in Spain year. We DSP the XXXX. this Kingdom the in QX to half Canada XXXX, United in the expanded and France in and States DSP Nordic introduced countries

value subscription recognize extended DSO who partners our of We Invisalign to aligner have put DSP also the model.

QX Over cases the has to past stage two typically years, growth in ramp drove and continued cases five touch-up in volume strong subscription DSP our XX program of to aligners.

'XX, we and America, For than QX year. shipped XX,XXX DSP case QX the in double over in XX,XXX cases 'XX QX last touch-up from up in 'XX North more volume

my success overall DSP year, growth included commentary and touch my Given for this and specified its case continued clear and in include Otherwise, DSP metrics volumes up cases do contribution in are our remarks, touch-up our aligners. not to cases.

QX and X% up up year-over-year. clear For up sequentially X.X% aligner and clear DSP QX, up were cases, including year-over-year. aligner volumes, X% touch-up were total volumes sequentially X.X%

Americas, the ortho First across dentist and growth increase GP by teen from the and sequential adult momentum aligner Invisalign both clear channel. case an channels, For starts region QX patients from dentist driven volumes from in GP reflect the increased

adoption In America, growth. North three three of product Comprehensive volume the and drove sequential Invisalign

was utilization 'XX slides. cases. a down fraction utilization touch-up QX year-over-year sequentially year-over-year, North earnings ortho up DSP including For sequentially American up was both noted QX QX, American our in and ortho and North as

our by were For and was region case of Invisalign Comprehensive Turkey. Moderate, adoption Italy, reflecting products sequentially sequentially EMEA, an well Invisalign as clear basis, led by and as teen Teen On three driven volumes year-over-year, in Iberia, continued year-over-year aligner up and starts, and sequential QX clear Invisalign and increase DACH, three Invisalign packs. and case new the growth which a growth aligner grew First across

utilization, APAC reflect and year-over-year, clear up China QX results increased driven Korea which APAC, enter season key QX. is Invisalign Invisalign volumes aligner channel, like other in were well as improving up also the China team for from orthodontic in India. Taiwan, as sequentially the trends especially especially Japan, important First markets by growth in and reflecting we as For teen patients, higher submitters and QX

Invisalign growth the increased sequentially higher in and reflect also results year-over-year. channel GP APAC utilization and QX with submitters

available to Invisalign is Hong and Korea, continued QX. Invisalign three India. plan in it three we Comprehensive China Taiwan, QX, out Kong, APAC, in now During in roll in three product launch and three where to the and We

also allowing more comprehensive, Invisalign are our cases where and majority three within with customers the adoption additional the APAC, of We treated product product doctor the are pleased three of portfolio. in flexibility

June, Invisalign countries in and the journey. showcased it we a highlighting hosted XXXX clinic Invisalign how recent XX Summit innovations, and with together brought staff Digital Summit digital nearly APAC the from also the practitioners, orthodontists Pacific region. and doctors' general products, transformation, patient X,XXX the platform Singapore Align Asia In across and dentists while experience and iTero and and upcoming treatment improves The our

exploring our shaping orthodontic today's younger digital planning largest worldwide joined of segment orthodontic practices. clear Attendees treatment on digitally Orthos. essential optimizing efficiency, workflows, is for of the patients unique the sales the Teen opportunity sessions aspect driven and in expert largest treatment needs aligner enhancing addressing market to teens represents focused the orthodontic and

the and We teen-specific product to continue on from to features programs system. focus gaining sales unique marketing metal braces and share through Invisalign traditional

teenagers across For sequentially the clear cases aligner and regions. X% QX, total reflecting were improving for up trends X.X% year-over-year,

sequential orthodontic the by the and was increased TNK submitters on increased the EMEA in a driven growth APAC the channel. starts driven were submitters by regions in and and submitters in utilization, by EMEA increased APAC region, in region, a On driven basis, both year-over-year basis.

in States Last year, launched France, in United the in and we Canada, Case Iberia. introduced QX, and Scandinavia them QX, we Teen Packs the and

across Invisalign increased sequentially strength among in continues to regions year-over-year of and adoption First also Invisalign treatment patients. by Case year-over-year, Packs For the sequentially young up was and Teen EMEA. and all drive quarter, driven

case are orthodontic making designed growing starts. First up of typically children aligners treatment, XX years Invisalign X about for XX% old, Phase in six to

Americas dental ramping doctors region. the pricing customers, rate For subscription clear service increased the our of brings or DSO from clear for from their Overall, flexibility aligner growth are regarding doctors volumes and organizations, up continues DSO as and outpace the aligner doctors primarily program patients. nicely cases DSO understand touch-up the to QX DST sequentially value non-DSO

trusted most doctors Invisalign among is industry patients. the orthodontic globally and one both brands in of the

On as top influencers the young increase we in to such invest awareness QX Instagram Invisalign brand educate YouTube, impressions we $XX.X TikTok, platforms social billion media website markets well of as across million benefits teams in to about 'XX. our continue front, all and and parents had adults, key consumer media To and Snapchat, visits brand, marketing XX.X ambassadors. the as delivered

with reaching the with well through young their Invisalign creator-centric with adults partnering Martin, our campaigns leading Jeremy focused creators on of transform Rally Invisalign Shaw, chose as and parents as their influencer smile why Each Americas, Lin. personal Marshall and including aligners. teens experiences and these and smile their we they In to creators, squad shared treatment

representing interest States, quarter social consumers platform media in showcases Americas XX% a treatment. with school websites we the of Invisalign visiting throughout closely million work sports remained high our time, over in the United region, strong growth the athletes year-on-year. benefits with that the X.X Brand Additionally,

campaigns across including we In we influencers adults treatment who XX the In to share and TikTok and new how new Invisalign young EMEA reach platforms, and region, chose their partnered consumers testimonial it stories lives. teens media highlighting Meta. of they with why Germany, social impacted launched

and delivered visitors to X.X impressions billion than campaigns X.X media website. million consumer Our our more

a to and as India unique interest We region our across increased XX% consumer increase impression. evidenced with over visitors Meta consumers expanded like continue to $X.X our in [indiscernible]. and brand than We partner XXX% in YouTube. via increase in year-over-year advertising the in billion websites We APAC our to TikTok, and in in resulting year-over-year more by key XX We invest and Japan. visitors region, Japan influencers saw in website India million

XXX,XXX a with practice practice spent patient increase also with increase. than using photos and XX,XXX app over used continue uploaded in users, Invisalign active this time downloads and X.X Adoption increasing Uses million digital to modifying update by set. and is XX%. QX consumer XX% in ClinCheck who Invisalign via XXX,XXX doctors other live the continued app tools treatment more apps on and adoption doctors of of monthly reducing year-over-year growth. were Invisalign actively was by XX,XXX are cases, date to million My X.X to

I'll that, the to over turn With John. call

Thanks, Joe.

foreign basis, $X.XXX sequentially. corresponding were the X.X% approximately second approximately QX unfavorably prior X.X% year-over-year impacted by Now And approximately financial favorable currency million On $XX.X or million QX billion Total of from X.X%. quarter exchange approximately year the a up constant impacted X.X% for or were quarter 'XX and for revenues a ago. up results. $X.X the revenues our quarter by from

volumes, volumes. higher $XXX.X to aligner clear ASPs. ASPs, revenues from and On sequentially, higher up higher of non-case were a X.X% basis, primarily non-case higher revenues revenues QX aligners primarily QX X.X%, year-over-year higher Clear were higher and revenues up due million

larger shift, price For ASPs comprehensive larger reflect QX, and year-over-year. ASPs increase sequentially foreign partially product basis, price products in to Invisalign discounts down reflect and for sequential On partially treatment a aligners, offset year-over-year by ASPs product On offset additional higher by were increases lower-priced discounts unfavorable mix a comprehensive increases. exchange. and shift the mix basis, up and

QX, a and aligners, sequential mix unfavorable ASPs foreign by up exchange. non-comprehensive ASPs sequentially for higher higher were non-comprehensive Invisalign partially price On price and For reflect favorable larger year-over-year product Aligners, increase reflect exchange. lower increases, On year-over-year. in treatment and additional the additional discounts a the ASPs offset increases foreign shift, basis, increase in basis, and discounts,

'XX, markets, we in and QX treatment with more at end of date, of end the of mentioned. additional continued we treatment and have and the Invisalign three comprehensive three markets, three treatment date within XXXX with most products launched Invisalign In additional Comprehensive included configuration doctor into customers, aligners unlimited The three offers Invisalign three the our comprehensive price. aligners our as expand years three previously years product five instead to

average, have doctors two we to time, or treatment additional complete a on comprehensive with learn Invisalign Invisalign aligners. that Over come fewer

shorter time, Comprehensive grow, We recognize to Invisalign it the with upfront revenue are the traditional being adoption compared our and flexibility to continued that and will providing three of product of deferred they over us with a product. recognized to anticipate desire revenue continue and comprehensive doctors three allowing Invisalign the more pleased period

you ancillary account shipments As revenues to for of that case some lesser from of are growth. retainers, focus to globally, our a subscriptions, overall continue the products only on and percentage expected metrics grow historical slides, we which to shipment, added will clear of per our overall that case our we strategy. earnings have aligner our growth revenue In more indicative see financial and release total measure be believe

sequentially approximately from and unfavorably revenues clear revenues impacted on increased approximately by million the or approximately million or up of $XX.X aligner or million favorable were of will basis, X.X% balance exchange 'XX sequentially. On be are X% year-over-year or sheet the QX $X.X approximately foreign deferred additional recognized Clear impacted million aligner as foreign aligner a aligners year-over-year and up revenues exchange X.X%. $XX $XXX.X shipped. clear XX.X%

of revenue preowned partially services scanner our of base higher certified and ASPs. mostly revenues larger program services offset from revenue scanners million 'XX higher up to QX and $XXX.X unfavorable systems our higher due were XX.X% from sequentially, by volume, sold,

services X%, services our On offset from of ASPs, a scanners sold and basis, lower systems and programs. unfavorable leasing base year-over-year and to down from were QX volume revenue revenues 'XX primarily by scanner our partially due rental higher higher and CPO revenues larger

QX foreign and of X.X% revenue exchange or 'XX or approximately million million impacted basis, services approximately systems a exchange services On approximately from revenue by foreign impacted of X.X%. approximately systems unfavorably sequentially. and were favorable were year-over-year $X.X $X.X

deferral revenues scanner the recognized with scanner purchase, $X.X in period. be decrease the included our to sales, million the over and down X.X% X.X% the was primarily of million or revenues included due on $X.X scanner deferred our purchase in service the sequentially, sheet increase with will Services service deferral ratably primarily service balance and Systems the up which or due of revenues and year-over-year, to

introduced scanner our for to the markets. and expands, upgrade, provide and for trade-ins, products, certain portfolio customers opportunities As increased we we scanners refurbished make new

model such, our is changing. As

meet We a and the units customers purchase our transformation natural -- to the CPO continue is Developing new capital desire. a for base digital selling DSO our large customer of and way sold. expect of growing customers our as partners, offering for equipment with programs growing needs and scanner to our our equipment business progression and opportunities the

Moving on margin. gross to

points was was to due impacted year-over-year. X.X for X.X Clear up and Second aligners, X.X lower the by basis. quarter higher points of on exchange XX.X%, overall unfavorably variances up favorable points ASPs. foreign margin X.X primarily was and aligner the gross approximately margin Overall year-over-year a quarter mix manufacturing of gross up gross additional margin sequentially points XX.X%, sequentially, second

facility was primarily as additional higher Clear Poland of partially the to quarter and offset spend freight. to aligner volume, down ASPs second increased up our manufacturing we in year-over-year, due aligner continue operations and gross at a ramp points margin X.X manufacturing for new higher by mix lower

gross lower up for margin partially for services partially offset and and the primarily ASPs. quarter gross from points Services lower points service offset primarily and service was and lower year-over-year, the sequentially, freight ASPs. Systems freight margin was second up from Systems by revenue, costs, second and Services X.X X.X XX.X%, costs lower by higher quarter

basis, year-over-year. were by investments R&D $XX.X and sequentially Year-over-year, controlled from continued to higher expenses spend expenses primarily X.X% offset QX consumer up advertising million, primarily of partially $XX.X to due compensation on X.X% million, proactively compensation. were part increased up $XXX.X costs. operating and up marketing higher million, efforts and as marketing and On sequential sales incentive a operating our higher activities, our manage and in by operating incentive spending expenses

operating and partially and On a related compensation, other amortization year-over-year. stock-based and $XXX non-GAAP restructuring intangibles of X.X% excluding X.X% charges, certain basis, acquisitions, to acquired expenses sequentially up up by offset million were

XX.X% points. as from X.X favorable investments attributed foreign operating in technology, sequential exchange impact impact our foreign to as in year-over-year resulted in million well margin, $XXX.X of and to increase income sequentially in The an X.X well primarily up margin operating go-to-market points teams is operating down approximately as points exchange attributed X.X gross is by as higher margin quarter from The unfavorable year-over-year. and points. second of decrease X Our operating margin of primarily

related X certain points charges, non-GAAP excludes and basis, a to of XX.X%, up margin which for the by sequentially stock-based was restructuring and quarter points amortization compensation, intangibles offset operating year-over-year. other second down On acquisitions, X.X

and and of loss in a to tax was income due a exchange. an to with XX.X%, income first million year. ago, the The and rate year in was rate tax of million the primarily GAAP foreign quarter effective the of the net quarter $X.X $X.X loss the second quarter quarter expense million for other and in the XX% first effective for second prior XX.X% consistent quarter $XX.X a Interest compared of second quarter second the of

As the to to previously from tax effect changed non-GAAP a projected and our and computation effective in we methodology rate of given new a reported rate the methodology X, reminder, XXXX, results our quarterly XXXX, January QX long-term recast have XXXX. for tax in

tax change effective the XX%, was rate reflecting non-GAAP in Our quarter our second in methodology. the

quarter up $X.XX Second the sequentially diluted per up compared was $X.XX, prior and share to net income $X.XX year.

on was sequential unfavorably due $X.XX $X.XX Our exchange. basis impacted by year-over-year basis by a EPS unfavorably and impacted on to a foreign

change per up Note $X.XX rate. the quarter, a On and tax our per for the sequentially up non-GAAP XXXX basis, QX year-over-year. net income non-GAAP share share prior effective second methodology for of our $X.XX the reflects was that non-GAAP the computation year year prior income diluted XXXX in in non-GAAP XXXX net diluted our $X.XX

on to Moving the balance sheet.

equivalents million and XX, short-term, cash, was balance XXXX, our sequentially held and entities. billion Of million were was June international year-over-year. million U.S. of As $XXX.X long-term $XXX.X billion securities up up held $XX.X $XXX.X million and our and by the in cash marketable $XXX.X $XXX.X

QX, completed Heartland and In Dental million equity DSO across in $XX ortho multi-disciplinary U.S. a with a investment GP we the practices

XXXX, QX Board billion the Currently, program. XXXX a succeed available Directors billion $X new billion stock for repurchase of our program. program billion remains repurchase repurchase the stock we $X During under that XXXX $X $X announced authorized to

million, receivable sequentially. $XXX.X balance accounts up was QX

approximately was four was quarter the approximately flow days, overall days sales from to QX expenditures days year. and two XX outstanding second million. investments from Our for days cash as down capacity primarily expenditures as capital increase were $XX.X amounted $XXX.X our flow quarter defined Free manufacturing in million, to cash million. second related less to the sequentially $XXX.X continued operations down flow, operations Cash last Capital compared aligner for to facilities.

Now turning to our outlook.

are pleased QX mentioned our As results. earlier, with Joe we

signals environment seen the environment remains influence our still outlook. have operating the consumer we improvements in and While demand the that macroeconomic uncertain,

revenue anticipate worldwide be XXXX, the of at in year-over-year to midpoint. $XXX QX our million approximately to $X.XX range the billion, up we For XX%

expect to XXXX up operating prioritize go-to-market our from drive as QX our GAAP We slightly we be growth. non-GAAP investments QX and XXXX to activities in R&D strategically to margin continue and

our we XXXX, up midpoint. billion $X.XX at that For circumstances $X.XX beyond control, assuming the to in anticipate XXXX X% occur year-over-year approximately be to no our billion, of full-year range revenue are the worldwide

guidance April We our point GAAP XX% slightly margin we be XXXX to operating above provided slightly a also from full-year in and margin expect XX%, X above to XXXX operating the non-GAAP be our of XXXX. improvement

For Capital to primarily $XXX expenditures as to building in continued well to expected relate XXXX, improvements in million. expenditures capital international capacity investments be of expansion. are manufacturing we approximately our expect construction as support

With turn back over it final that, Joe comments. I'll to for Joe?

growth At continued demonstrate slowdown despite the results QX our environment. economic adaptability. resilience and in uncertain our

we we're While economic execute cannot future initiatives. ability conditions, and focus our predict strategic in our to growth confident on

seamless As suite end-to-end of digital digital for make provides which we a digital the a offer in powerful innovative tools leader experience and patients. their a doctors digital transformation, aligned that up platform,

ClinCheck Innovations two last as of enables plans. update weeks doctors patient real plans in minutes. treatment over treatment XD take improving include also time, year that to the launched for little reducing to Improving Invisalign to as used productivity This generate live modifications quality modified while controls. the practice

efficiently. Invisalign single a streamlines planning combining treatment plans by plans alignment allows aligner and tooth desired restorative their Plan, helps process comprehensive achieve treatment treatment to consistently general Personal and integrate clear dentists platform. therapy and the planning doctors or IPP Smile into their Architect in Invisalign more

as has planning monitoring doctors Invisalign visualize with workflows. new artificial patient's computed assisted capabilities being part digital to of or that intelligence tomography streamline solution a the their Virtual treatment enables generation process. to remote the Care, CVCT, roots next Cowen equips doctor

intraoral and new visualize photo iTero technology truly of simulation, personalized look. to that their how professionals their Invisalign simulator structure ClinCheck treatment patient's adds teeth. the Align's view a software, a Outcome and visualization smile and Itero-exocad with external XD the camera NIRI with dental of a and will images Connector Simulator company's of DentalCAD expand integrates Invisalign of outcome combines internal creating X.X face, exocad benefit allows Pro, in-face tool the existing

time you to to elevate these continued the positive in addition for to speaking how a lead improve to market coming continue forward X, you digital clinical years, our look platform build and orthodontic where uniquely Day add we'll with In and the continue digital other is new Align share at industry. Thank to outcomes patient and practice your drive capabilities you to to incredible on opportunity We September the our to and views incredible today. the we'll and the growth transformation positioned innovations Investor we patient about upcoming experience of experiences. have

Now questions. over the operator turn call Operator? to I'll for the

question-and-answer [Operator Instructions]. this you. be conducting Thank time, a we'll session. At

Our comes Johnson the Jeff first of question Baird. with go from ahead. line Please

back long-term But Thank really that's on focus Good congrats back quarter your a nice Hey you. market. the in I first in of look it wanted all year-over-year to quarter bounce here. start that year-over-year last the Joe, I teens. when Obviously, on afternoon teen X.X% time growth, year, growth where negative guys. on we long business. was a

a a bit although, comp year. you fantastic 'XX an So obviously, had of easy there, was

expecting trying to do over back just about to something the comps that kind X%, get I'm so like normalized? out of in think I there, relative that's that you So of this when were on when we that? your that. 'XX growth nice few think where tough, Are from out to is XX% like this where be to years to next views a competition would upper about teens, still improvement economy, expect I mid, I think teen you I guess figure

majority Jeff, script how about I and the market those is XX talked of XX% being like that XX%, teen mean the us, case of the million you know I important to teen. in starts

I in being positive. So that at growth look teens is really sequential

to number like compare good you did said. against, we Now have a

our it world three grow continues line that and the product doing the that First Invisalign But throughout have. and phenomenally all we in well how in is highlighted regions to product when I -- overall,

helps really teen Our business or packs different piece, put models with too. we that that together, plans

of well technology when those you things, also. really the kinds at improvements teen targeted with products and and they're Jeff, coming market look our So

marketplace, we'll that mentioned marketplace. in the about penetration numbers growth line the and that in in potential and investments where think So our go with we you

really But let's get struggle board. the move be honest, almost Invisalign exclusively top teens. our to to on But it's been orthodontists docs -- are that's a across

within practices the new and but I infuse with it Our outcomes. made job that this out, with doctors, progress technology they're is area. clinical comfortable so also bring comfortable feel And work to really the good in well we've

That's season then helpful. kind would be an China. quarter feedback maybe tends an of there, China Thank from teen Obviously, economic we're also a as And like standpoint. update but big you. on whole just to on third overall seeing some mixed macro a

and Or comp but back were beginning down easy of all again. there China? should this back of before kind in we opening China? of what's kind of be us we just got third last Thanks. the shutdowns quarter that, in to in where an how things And tenor bad in So business the of just things China, lose year they current just up COVID quarter shut remind track third were year

now. we from China, good Yes. -- quarter, too. have right in everybody watch closely a as we is to start but it does, had Jeff, that as obviously, take it an the We standpoint, a first we quarter. good it's And had economic too,

momentum, business good sense And sequential an so overall. improvement in we're that in seeing the

the closely. feel But on in see and more too. script, it. China there can't good and we what you with stands huge positioning confident our we you our we're in when is quarter really feel market watch into that, And of teen we've all there now. know the the quarter, but can. any third where economic sense a very we We look stock know about activity mentioned in quarter Obviously, future in what the third we at on second third, you mean, good China, as the going accuracy the I than comment right I I experienced

you. Thank

you, Jeff. Thank

you. Thank

Our next go Block the ahead. line of Stifel. Jon with comes from question Please

Hi, Jon.

think really afternoon. the when Joe. into one innovation Joe, of the year 'XX, start about called of Good in terms the on going biggest company's prepared you for history. that end I'll Hi, remarks, of At is And out was we Align this the helpful. innovation.

next you a I the out of terms limited that date. with can the are give wave? you rollout the a if U.S., in say of you details the when And to timing in elaborate with little You in maybe next can expansion handful Where laid any innovations. wave, bit paddle on Canada

we term, into i.e., is some longer-term my more anything else come And of near three months maybe play XX to before then printing? there follow-up. direct that aspirations I'll on expect next those ask should And

obviously, has Palate Expander the way. Jon, Invisalign a long come

and that at probably When line. You investor into stands, where detailed coming -- feedback that discussion get good we recently some four in on it. and sense product Canada our had ways more a we'll the look you we've give much we'll product conference how the up, commercialize of obviously

But we overall, what I'd it. tell you, John, know how make to

doesn't scale it that to you've our though, making to this mean million. anything, business with makes got just process it. have a Remember, We thing

area focus to look is but this our obviously have too, development, can how that. qualifications draw we new now almost and out. each what product you you There's our between meet I lot a when that's a scale, with that line the device, then regulatory how you of because Jon, software it's so a right roll well, know we we talked piece. And is we in the about this feel about of good And the production software

It's right? new actually before. a we those, and planning, haven't of XD-printed new both represents kind launched but software IPE it's treatment Obviously, device that of

have X, details more we see just in on you. when the about mode, for but we'll September So you scale-up many think

you with you helpful. the and of XxX elaborate believe quarter because you, my the I ASP Q-over-Q? to I That's think as price on sort down can on had the then second confused Okay. start one And two maybe have would it little Q-over-Q, question, was comprehensive for comprehensive. increase of John, you full those partners. the the famous said

maybe right, have can if that Q-over-Q. it would you got I've tease why if out So down been

with you And our cases the build some the the And then, better-than-expected the give for back around maybe I've those on it Was implied estimate. regions? have outperformance can gave packing guide of relative Joe, Was really Thanks details seems maybe international International to it to the upside guys. do more you for Jeff's to question, EMEA? you to the the results driver been U.S. Where where line essentially XQ. it that cases, see upside. got China? just XX,XXX was? specific in the I'm

Yes.

down the have a had Just of mix some first we the well slightly, ASP, as Jon. decrease. partially the of product that Yes, comprehensive the discounts offset as of some were that on reflection price we by just

we basis ordinary saw the increase mix. for was But of the a on non-comp. there, an comprehensive more actually out nothing So just sequential

to too. you're when yes, EMEA Really Nordic mean, script, look board is APAC had excited well. and you the did things. me those mentioned U.K. side, areas, We're back at about we The regional I stood different like DSP and out. well. my standpoint, did I just Iberia from a mean right. EMEA, in Jon, I in introduced -- across

and So then was the teen overall across -- growth good. there those geographies

think strong just mean, I So -- I just good it's performance.

Jon, the any consumer around of the think a there year think their improvement that. but when And Europeans standpoint, hasn't the some was with uncertainty countries, too. have Ukraine solidified better, and then that lot European EMEA we're from just economy, you I last seeing mean about gotten too, I And sentiment a situation economies

numbers So our also. in that's reflected

in On mentioned. Asia, I APAC, with very was actually Korea, for us, too, along of Japan good parts obviously, strong China different as year-on-year. was

improvements really that also in good segment both teen mentioned. that broadly by I those country So in it's regions specifically of still and

good So from Jon, improvement we're sequential seeing standpoint. a

please. question Next

from line comes question Nathan go next Sachs. Please ahead. Rich the Goldman with of Our

your is back the back relative guess, are a of Hey how a of XQ? especially teen you're versus that feel reflect continuation half. that markets kind And saw either are Does specifically, business the Great, cases or slightly, you the adult of any bit environment the expectations, but could that in adult you Joe, the good improved guidance swing down you to I half? hey talk how that there certain just still factors biggest swing think of part impact the kind big performed questions. watching Thanks in you afternoon. for thinking little factors I in year-over-year. the revenue just And maybe John. about about could

When in reflects that. take trends we that that us shows also into in Nate. guidance the at quarter. gives John. our year. total confidence the it gave, up QX, to we And see second We look and a you that commentary went This improving the saw to one, we It results. for the is I'll Yes, the as guide talk

we've things that. indices factored how with in at us of that's the normal that in kind and looking help metrics So

to continue QX. teen, good and season results as as far expect We saw versus As said, we in in that now. adult QX, we teen

that said, we've a U.S. in QX, big continue. And market, us, China important and is we to market expect As too. for big adults

into general and wanting come able We capabilities be to to lot them to our treatment those provide try of might work orthodontists. have to to go be as dentists those able a help where for be and adults as to well

year. we teen So good efforts about go that through this adult improve try both we we the to feel as and have to

a just then And great. clarification on cases. the Okay, touch-up

sense sounds ortho been up sense look in it shift kind have year-over-year. those of cases that's it like cases of you so prior might -- like? what North the of been out, DSP touch-up pressuring XX,XXX past would the your just touch metric. would just we get include get utilization to of what up, curious be of have I'd that in back kind or view if portion to But America that a your So

Yes.

on. the as see X the our give of show cases, the stage, adoption this in is low about terms how mentioned cases to the some touch-up on X that them are have side and as DSP prepared becoming been we in remarks, we those And would we with kind but the the XX,XXX, those been would from program, had that range, great year-over-year, of doubled So stages. sequential we but probably XX, this to wanted of last the big products year. those in more XX, to up discussion and so touch-up We the that have our and it maybe to in commentary that about lower-stage X those talked --

Investor our we're how it are doctors more it a for comprehensive in And the cases going that's But but I'll a think those seen -- stage those we drives the what low because going Those volume for September, going incremental more where see DSP see, cases retention. where at doctors as do forward include and program, means these touch-up forward. And continue we came more important we've doctors. of us. good to in we detail as it's that also doing thing all it from, kind well we cases cases and in end, about to Day give these become lot see

you. thank Great,

Nate. Thanks,

Thank you.

William go Our Please Vazquez of next the Blair. with line from question ahead. comes Brandon

Hi, Brandon.

for I we're in program. first increase actually program. DSP the most, like Hello, just question. all is correctly, follow-up the from volumes on seems the not the coming if to it doing wanted taking thanks case of year-over-year our DSP math If

eventually they case So And you to maybe at think you where of can seeing kind volumes? one, base mix is about correct? if point of volumes talk to two, have that accretive DSP? accounts you DSP what switch into And as it normal would the DSP? is is, goes are your been do doing this kind Or

We're actually seeing accretive. as DSP

So making also we're Aligners cases, either -- the switching them to they're -- going comprehensive ways who or lab the making us giving or to other seeing doctors fundamentally, and actually cases. us were but seeing of not over we're DSP themselves give continuing those then seeing we're now

have by basis. the have us these to we're would it retention it is said, XX,XXX would of we've a Remember, that about helped cases of on an overall most subset is that what I like DSP then -- about of and also it's touch-up majority DSPs, But retention, points commented so. or X.X providing. And the and

about up volumes our X.X%. reported we So

that up And they would points been have to X.X%. X.X on

it's So because a or accretive look us. additional from It's straightforward is anything how of cost it's liners There's no that at standpoint portfolio margin certainly from the and it very generates. highest it, product our we the no serve that matter accretive for the have to margin generating some we of else.

So ship without additional related we recognize all the revenue as aligners to soon we that. as

on...... other Okay. one then And second

put whether not, clarification on DSP were or Other year-over-year our in question up we your was numbers. you

it. Got

not sure go sequentially So ahead. --

question next teens. helpful. it. is The on just Got That's

accounts -- had Joe, that deeper to hurdles there's of within can I little teen about frank just a existing are the has XX pushing a think, kind you what said guys a little the next about you in on earlier, talk market little get you a kind share forward? the to and of into of six incremental teen are tougher right share And been market? the top hurdles that Thanks. share Why little what push it focused to get months to guys in bit the now? kind

challenge. right digitized not of in Brandon, when sense in you a and wires with versus in what they of just kind They you're and Hey can material look bracket and brackets their general, X.Xx. completely make cycle they if are Invisalign wire the on orthodontists side, workflows, money a at do like now orthodontic costs they're because the feel down more with raw

your and obviously, Now with if money more you you're fully digitized workflows else, Invisalign. make everything

say wires to over the because versus to the of community we exception to that. just more they're think aligner I First with to be it's workflow the kind orthodontic these brackets. times, what I used difficult move an to economic seems in But and clear can Invisalign piece of just have challenging

But of sense interest constant before. a see I the we with look Phase on lot when kind how going I patients First in at That's in thought the not more a Phase Invisalign what's you In than treated. are we of orthodontic industry.

in ask much no clinical that's us span that think what In We workflow, in of workflow lesions, not issues obviously they're whole biggest be spot are, those a thing. than things. for breaker there's and practice. future, going faster to no all the six us doubt basically aligners anymore. know clear to confidence of the future, kind about a patients. in white I the help this to months the normal It's a for orthodontic treatment, easier When sense you

you. Thank

from question comes go next ISI. ahead. Anderson of line the Evercore Please Our Elizabeth with

the sort what the into the to end or last much and this markets see you wanted I'm the Congrats Hi this guide. complete macro to of What guys your -- of picture your on longer a One, because we've time guide, guidance. in was question. happy move -- in on as what guys. results full-year this quarterly did of ask quarter of thanks right in very so I sort the like was have couple of made -- to of sort kind visibility time had that don't for we the this that the from -- take the quarters

ground we you from to mean, to and is a that At confident just on I'll give point, I'll we able based with But can be said, the over second that like whatever. the see I continued Elizabeth understand too, to quarter. the economic had the qualifiers it the standpoint we we fourth what and now, situation through quarter Yes, call third a feel cyclical we we high-level John, quarter, turn for view, obviously, thing. see feel good we to

the sense, going just mean particularly second we're But you're talked up. about give in we quarter sequential we very uncertain so times with what difficult and we're a going you, And felt way times. it look, like to improvement, make economic out still it I to with in of and the to

give the can give have. John might we But best we So guess more. you

to turning We've can't Yes good of kind much stability now It's to behind trends. more We've look, be got improving I couple to a that. a position add quarters in. us. seen good

see We into quarter. continue that third to the

but has an it's said, it's standpoint. Joe As economic not better overall been than it great, from

so order total translate of and looking, And the to based that things felt as well. we year trends QX on how about kind and are comfortable

flatlined. from then of And earlier that are a guys know like of or as in I sales you been of a either sometimes reps. any like, sort ramping have year? versus focus taking perspective to the a just sort you so follow-up, sort different And personnel approach had guys it. Got

wanted like thinking of just balance up of into the and for we year how sort about understand to go XXXX? I you're sort So of as the set that

in different we different salespeople, and products our call. say general We market. salespeople split just same dynamic the the practices We in because sales and areas. to consistent I'd up Elizabeth, of kind different are obviously it's offer those of we number salespeople train orthodontics way, salespeople how go a they a sense in the specifically dentistry have, of consistent how

our force big And go approach missing be in I we no how the some no, market. So the works but a market. iTero I'd sense sales going I'd there's question, number areas. standpoint closely But say, sales from say, on changes salespeople material and might and really there's way your specifically as change obviously, a salespeople, Invisalign we force overlaps of the in to with of the sales

Okay, thank you guys.

Thank you.

Bank Our go line Please next question comes America. of from of ahead. with Ryskin the Michael

the safe back usual going you're in of but volatile Is our seasonality seems the a been it XQ of should for the taking quick we're related. got the of it well, approach say question. related case your is that, results, the couple and to no is just seen it's say that to for years, XQ of that kind little just Thanks back of -- XQ Is sort sort forward? safe or yes outlook you've historically, a last actually ones. to setting One kind questions. it One be that a like I for couple to of base to routine.

what think I of QX seasonality is of to is flat QX. typical up slightly see in to QX from guide, our to a more that we terms Well, QX

forward. going how So that's goes -- that that is that

to completely I short given we're we we But seasonality. the that commentary see overall reflects in back what that. uncertainty, given gave just term that say the normal ready the macro think to that the that. not we've in We're here guidance

the Okay. is, Analyst I have what of Analyst the on time mean, Day. into to is now pieces the second goes be process the thought One then right Day. And you one the there. a couple could would just that

back. There's fully pretty markets you not say is uncertain. visibility are some still As still volatility,

be then kind modeling going just start addressing as that, thinking we what something that So And related about goes to to of from XXXX into is guide, that you're decision? forward going there? long-term and the

about it's about a We that investor marketplace. think algorithm the that, time out, how years. we And standpoint just reinitiate years, to the sophisticated the but investing, lot about sense every figure a that to two this of have just in it's of asked. we questions a the really good use we're Michael. for usually do every just two It been And we is base from summary see the of of where too,

Got it.

one Is sorry. there question? more Yes,

comes from Piper line with Bednar Please the of question Sandler. next go ahead. Jason Our

Hi, Jason.

Good international utilization on Thanks. my ship the that APAC? see don't shipped are come to increase you in across channels markets. to specify and the see American good your us the -- wanted again, out directionally, afternoon. granularity on or as increase you just anymore combination I higher users guys. U.S. questions provide well? Or to channels I North across in the Maybe in a coming few expansion EMEA things an for online doctor back together. But I guess, serve first, doctors to quarter. Thanks and sequential of did know China taking stood exclusive to increase whether to touch in you always that channels in that just doctors combination able plus the a you all you in is

related in right. APAC it we to give in to saw level you're more said, that Yes, regions don't as Jason, you We doctors of but China, detail, other saw well. we ship that we as and

well, being be reflection of And on to a of and as are we with good that basis up utilization do a to. products. well. It's number shipping metric So is pleased the our to we're doctors as they a want then what able

North to follow-up maybe not John, Can America or increase you saw in I there, real GPs both? Orthos in quick. or just confirm whether you Okay. that or guess

improvement America Yes, as North we well. for saw

Great. right. and throughout markets, if China. some got details I just trends July. in Okay, guess on here then monthly wondering U.S. maybe good quarter know can including But cadence we your I some all you of APAC And about talk even of the

the a maybe case were more that elaborate trends that was April could in how and Thank mix June, you in Some pretty work guess just how your you. you there's trends then And seeing for quarter the of region? if quarter? in EMEA, wondering on shows throughout May shipment drives I strong. we've what the done just that unfolded bit same question

-- really want activity. really into not We're like get -- the Yes. don't to giving month-by-month I

standpoint where I But it give without to been Jason, give a results they and reflects think kind detail. difficult level region by well. a little guidance into the country that as also show of and were, of able it what kind and getting months on, we've gets of to from then so

on and what have kind what the we means see the for of QX the a talked results able improvement were it quarter-over-quarter speak to about think I we've and to that. and basis sequential But for that what how guidance we

Thanks. Okay, fair enough.

Jason. Thanks,

go the Couillard question Brandon next of from Our line with comes Jefferies. Please ahead.

Hey thanks guys.

Hi, Brandon.

competitive a as segment terms intensifying, guy just sequentially ASPs environment you and scanner and be could pressure margin Thanks. year-over-year. pricing whether mentioned you're your in just would helpful. talk view gross the of seeing there macro You about bad Joe,

Yes, I wouldn't call it, a bad guy.

feel to a and communicate think line premier standpoint. Plus and tried a to was, a for from I able we XD it's product upper-end mix prices have what good we the XD in marketplace. the price get there about in and that's scanner a our Flex We we're

in a in I right as side. expenditures office dental there's orthodontic of As in you dental mean, in know, certain capital the before marketplace and you kind sensitivity the the about lot now a of a challenged and economics these when mentioned are

So we see that.

could around. see But numbers you good that, really turned despite we

obviously, that we you you imaging that look we like end. we lower when the to would market are pretty the allow -- the have marketplace, lead at go to. have on fight to us scanners, CPOs us certified what help the CPOs call -- Our if it's preowned the down with. confocal if And

And like that -- we proposition, good our quarter the past But value and and I this try whatever our feel low the end there's they capability, products reflect and in Metadata whatever. numbers think take then I our feel about too. to

[indiscernible]. I'm just line, iTero Invisalign a stream saying have standpoint competitive and a superior value integration then feel the good have I we a product a from not environment. offer not through of there's So that we and then with we

tailwind year-over-year to gross And Great. a down mentioned margins. coming positive freight costs you as John,

a first in I time while. think

any Do sustainable over quarters? year that's half to next think the expect several base? the been the to the And how XQ you should be I that of in relative we about color gross case. on margins second

our material that think and just it's it's and manage of inputs. reflection some see inflationary as We others But we the seeing in we the to And business trying We're pressure material/freight input and to manage that productivity. to and and come of improve less saw I always of And continue freight, driving it. kind we're gross margin always some things, pressures, pressure both a costs manage our productivity. maybe that of of pricing raw for our other pricing from continues. some but the we'll the be down those improvements, aligner clear work scanner services.

Very good. you. Thank

will session. the we And our you. Stacy now the I hand to Thank end reached over closing have question-and-answer Shirley back call of for remarks.

industry Joe and And meetings. Align you joining Day, conferences is as to forward Las speaking in Vegas. thank We September you and everyone, for you, Investor look XXXX at X Thank financial again mentioned, any hosting us. to its

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this may This concludes your today's and you. Thank time. Thank you you lines now your at disconnect conference, for participation.