Align Technology (ALGN) 31 Jan 242023 Q4 Earnings call transcript

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

Joining me for today's call is Joe Hogan, President and CEO; and John Morici, CFO. We issued fourth quarter and full year 2023 financial results today via Business Wire, which is available on our website at investor.aligntech.com. Today's conference call is being audio webcast and will be archived on our website for approximately 1 month.

information statements discussed and about the forward-looking will product reminder, including statements, Align's a provided today and include outlook. As future events and available in statements that filed most with forward-looking are and predictions website reports involve These Exchange and Securities Commission sec.gov. only recent periodic are our detail more risks described the in on our and uncertainties at any and may expressly assumes update vary to significantly, Align forward-looking results Actual obligation statements. no

GAAP the Hogan. We year reconciliation, that, to these Align have information. With on I'll detailed our President historical quarterly reconciliations, posted to CEO, fourth XXXX full Please for under results. to slides non-GAAP Technology and including applicable, and corresponding turn Joe? our statements, call and our the if website more over Joe files refer including financial quarter conference call

our Shirley. an financial full Thanks, I'll and few today, joining afternoon, performance quarter for XXXX. John our Services and on views will fourth and from more thanks for operating Good our a detail results QX our provide us. call On on and Clear and X overview discuss segments, Aligners. our comment Systems, of provide highlights

come a points open to few call and that, and revenues pleased back results report to key questions. I'm with quarter Following the fourth better-than-expected I'll earnings. summarize and

margin achieved outlook, sold. operating XXXX scanners -- exceeded our the X iTero revenues million plus the delivered teens, major and above As cases Invisalign of milestones, XX%. over year we fiscal including for we XXX,XXX fiscal of million X.X patients total full several Vivera QX, end including prior treated, non-GAAP XXXX, XX million And and year Retainer

under international increased teens Invisalign were services Doctor program, up and Clear Strength DSP. as touch-up growth as or subscription For QX, continued and well Aligner cases, revenues. Invisalign systems from volumes revenues year-over-year, our in X.X% reflecting for doctors total

year-over-year preowned were and leasing scanner nonsystems the rental programs primarily increased revenues, up certified and were Our region. due slightly and and regions volumes clear down shipments lower Clear total EMEA revenues year-over-year, for were the aligner to scanner On aligner including QX for and were Systems up basis, a sales. and Services QX services, CAD/CAM Americas APAC year-over-year.

proving XX,XXX America, QX, increase cases, include the touch-up U.S. of DSP Nordics approximately in available as their and We're Canada, U.K. patients more Aligner an shipments in and doctors expand currently year-over-year and from program. continue 'XX. North DSP the we than is primarily is most Invisalign our the continues Iberia by well be For and helpful customers and XX% excited that Clear QX recently, to received to DSP to

For fiscal DSP year-over-year. XX,XXX, cases XXXX, XX% touch-up total up were shipped Invisalign

and the sequentially. brand. XXX,XXX And shows and and sequentially Americas than an region. were for starts practice clear kids. practices case for It and Aligner QX to slightly orthodontic with of among December was the and across sequentially, along Invisalign aligner XX.X% as for aligner data total up U.S. number gauge the teen were seasonally total year-over-year sequential from U.S. slightly, tool region. volumes down cases compared were revenues Canada basis, reflecting Systems, well fewer volumes and a in continued cases EMEA Aligner brackets noncomprehensive sequential stronger system increased new volume as particularly better the total X% and younger a Invisalign historical well China reported decline starts, seasonality, and decline APAC to lower the approximately record X,XXX and unfavorable and shipped year-over-year, year-over-year anticipated from in from basis, year-over-year QX. clear The from segment Vivera a starts consistent treatment down QX, seasonally EMEA with analysis QX in a were QX Canada a were Aligner in Clear total non-case starts up For ortho shipments wires total DSP QX started exams compared teen aligner down consolidates up regions starts, primarily were adults channel increase teens Clear for with as growth primarily X.X%, North On patients offset Invisalign also patients, for by and Retainers collects teen prior as services with somewhat that to teens the revenues lower primarily the teens case starts revenues. On and in foreign for retainer exchange fourth revenues, and quarters. due Clear especially America and teens

fiscal total up cases, reached of clear for made Aligner prior the XXX,XXX a total shipments. Clear up and Invisalign shipments X% of XX% patients total teens and For XXXX, to aligner year compared younger

an mandibular have patients in and skeletal, QX. doctors advancement in basis skeletal, received years. provides and regulatory teens and Invisalign case of we treatment Phase United New Zealand During their currently we Administration we addition recently clearance availability States, growing. orthodontic and Essentially, about starts growing Together Expander Aligners, growing IPEs States. is a First also XXX(k) system, applicability, FDA expander during intervention pallet IPE, the call phase of growing United teenage provide Invisalign as solution balances Pilot options treatments anticipate we patient and commercialization for more digital for QX, the Jon adults. is Invisalign announced such for we a features correction the the or dental bite most makes year with U.S. the and interceptive treat for IP commercial Food Australia Canada and aligners each that early early for limited The Drug where including solution children, to broad dental common Invisalign cleared clearance up XX% their set with children. The malocclusions on and to Invisalign the now in of every treatment, doctors treatment. it Full in is with I and available treating

which patient is with acceptance. face, can Itera their smile treatment confidence applicable of launching the and be for the inter-oral ClinCheck also patients Invisalign software. all the potential talk video and is improve doctor's help who is ClinCheck We're short new based doctors We expect and the regulatory simulates designed doctors Smile new practice pending IP This scanners and planning ClinCheck and tool next app treatment. approvals. plan Invisalign that and smile other to to video, AI-assisted video with digitalization on in treatment a of to use available into markets lead higher a visualize be ClinCheck of ClinCheck plan treatment Invisalign available treatment generation to they expected patients' future and in video understanding smile, to helps patient's a

the We expect QX by North America 'XX to and roll out ClinCheck Smile followed later video in EMEA, APAC in year. in

iTero inter-oral scanner. been complex very patients, inter-oral with Lumina patient and of the available the the To chairside visualization Lumina and inter-oral experience. turn captures with family as and scanning of for and especially capture and exceptionally practices innovation more I photorealistic in altogether. scanning, by With and for related introduced scanning eliminate scanned their scan faster practices to and more is call a workflows with while has the Today, scanning is greater scanners. process. kids. Initial offering believe John efficiency. from field iTero doctors in capture data and visualization clinical February comfortable early simplifying now accurately dentition turn more scanner iTero the Lumina standard that, the for be of I I Doctors for data a has Xx scanner scanning in detail offering XX% customer on scanning today's of XX. by field unparalleled better alumina orthodontic unveil alumina capabilities and iTero filed second attendees breakthrough the slides for well by multi-angled XX quality communications over over The GP regions fourth open expect superior one distance, to global and users is accuracy imaging will faster, our financial our speed the visualization Alumina greater iTero inter-oral in link for Registration translates that while feedback the their in XXXX that review, we our images quarter need want half effortly dental John. capture the oral the wide is will less restorative for needs press of although to patients the team that with workflows, to experience capture, to practice they throughout can provide care the wider from at smaller new latest higher release. With smaller technology can detailed and now [indiscernible] of members. a over a patent doctor to February Before technology. I'll easily has delivering alumina X date, delivers has set now of to and to for twice potential patients photos iTero covering broadcast iTero positive, A been as call meaning The information and provided Inter-oral large iTero and iTero much iTero exciting and can news. the insights invasive planned technology. financial we quickly, scanner noting The more benefit applications capture Lumina available that Align share inter-oral meet designed the new clear, superior and scanner

Thanks, Joe.

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

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

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

price price net deferrals, offset by were from mix sequential the treatment and a noncomprehensive ASP and X, global reflect a higher by quarter, X% discounts. Last effective shift increase products ASPs lower mix from foreign and shift impact markets increase the offset the the we some additional higher to reflect in most in favorable and is a X Invisalign Korea, partially up for exchange, exchange announced certain most and markets Invisalign increases, a On to and aligners, in Comprehensive products January for year-over-year. unfavorable Taiwan. basis, ASPs price lower America revenue impact foreign product discounts. sequentially about recently down a and and decline and QX, North in across On higher lower For China, XXXX. Hong products partially ASP launching increases basis, product Kong ASPs a year-over-year We X product available APAC, in EMEA

We X.X% will are period On it $XX.X 'XX revenues by of revenue anticipate Comprehensive increase, approximately of over continued sequentially. Invisalign the upfront and shorter Invisalign doctors and the deferred the impacted adoption a impacted our to to with higher services revenue recognize to with comprehensive by X allowing compared product. QX more represent mostly exchange foreign up revenue, due million business. nonsystem approximately programs they us QX recognized million providing revenues continue sequential. or million revenue service due X.X% were million were revenues over primarily want by the from revenues X.X% traditional the on were basis, favorably year-over-year, sequentially revenues revenues our for deferred partially pleased approximately recognition year-over-year, X.X% Clear $X.X approximately unfavorably X.X% $XX.X basis, ASPs larger and of and of and exchange by approximately to 'XX and year-over-year impacted or and revenues of volumes up impacted Services down leasing were our foreign of sold which a X.X% million $XX.X to and and offset or services the revenues the down were lower unfavorable approximately $X.X balance scanner and Services Aligner foreign Systems and recognized increased flexibility Clear Systems million be X ASPs and up Services products an approximately were or were revenue of On by or in sheet period. offset are Clear recognized base X.X%. X.X% balance CPO of X.X%. QX sequentially million and year-over-year scanners sheet or and of Aligner services due and to rental or shipped. lower our volume. CAD/CAM exchange were primarily million is as 'XX $XX.X sequentially CAD/CAM on will X.X% foreign to primarily services Systems XX% approximately increased related a approximately and Systems $XXX.X QX by Aligner Services favorably systems million exchange increase and $XX and services year-over-year ratably higher revenues aligners being additional the deferred $X.X

and the trade-ins certain and portfolio digital business partners scanner we for our products, we progression markets. base upgrade, of and our expands of DSO large natural preowned new equipment our for to transformation customers purchase increased scanners new developing capital As a customers growing meet opportunities opportunities in make introduce a sold. equipment the with needs scanners to is and certified

gross X.X to freight points unfavorably gross margin X.X approximately favorably up primarily gross to fourth was exchange gross lower costs. year-over-year. margin sequentially was foreign higher on was due exchange, and by was up to was partially efficiencies X.X by a points year-over-year year-over-year, due due due margin. Fourth on Moving sequentially XX.X% X.X points by spend, and and impacted primarily sequentially gross was quarter Overall, quarter X.X manufacturing points favorable gross the and impacted up was points manufacturing year-over-year. costs. sequentially offset print and ASPs manufacturing foreign up Aligner to offset and margin year-over-year sequentially up basis. Systems points foreign by partially higher points margin gross QX margin points up margin fourth service fourth approximately offset X.X for X.X margin quarter offset points overall for the and Services points for up favorable by to Systems by XX%, XX.X% Clear quarter by freight the higher partially quarter spend XX.X%, X.X X.X Aligner Services higher gross for ASPs, and and higher fourth exchange, X up ASPs. partially improved Clear lower costs. the non-GAAP

marketing million to operating due advertising expenses primarily part as X.X% efforts by higher to X.X% decreased note expenses costs, go and post-employment and restructuring controlled that I by 'XX, million slightly certain Before the details, $X.X into $XX other related a to down acquisitions, stock-based and charges. incurred costs to to benefits. manage restructuring QX I QX of primarily during of total and our want operating a on we charges, expenses On were X.X restructuring Year-over-year, of restructuring employee-related offset proactively and offset flat to expenses sequentially sequential of basis, other spend due were On primarily operating $XXX sequentially and acquired compensation. amortization $XXX.X and a slightly excluding other million, charges intangibles related million, up down down non-GAAP year-over-year. charges, and due roughly by year-over-year. points were employee compensation, basis, operating lower partially

Our The X.X Operating primarily The X.X to $X.X tax stock-based higher excludes income and other X.X net million operating year-over-year. primarily charges, than to third X.X favorable quarter X.X $X.X basis, leverage the related unfavorably of XX.X%, impact for primarily the points loss and rate XX.X% XXXX, favorable operating approximately and effective tax in third rate for an the our margin as to issued year-over-year X sequentially and the exchange in than acquisition, tax U.S. in foreign up well of income margin million which and $X.X fourth points by GAAP intangibles XX.X% proactively costs GAAP due the QX, tax operating of to compensation onetime earnings was effective up effective in of fourth a higher benefit third points the million XX.X%, up in non-GAAP points quarter Interest compared fourth was income operating points. On amortization the quarter other the lower attributed is and of and by an expense and sequentially effective operating margin by guidance impacted was than effective XX.X%, million as fourth in the and points was up from to driven quarter restructuring to rate year-over-year. certain tax offset margin of fourth quarter income a prior was on QX. exchange. for approximately resulted due The $XXX.X foreign related lower quarter quarter QX primarily exchange. of foreign taxes of rate foreign tax fourth managing rate quarter by partially sequentially year. increase quarter in

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

for Our in quarter XX%, net up and sequentially prior up non-GAAP compared change was fourth effective $X.XX income to rate quarter was the tax year. reflecting the the per our $X.XX $X.XX, share methodology. Fourth

a Our $X.XX foreign up and $X.XX non-GAAP $X.XX year-over-year impacted sequential $X.XX a income diluted impacted EPS unfavorably the on on and a favorably basis was net up was per share quarter, basis, by due exchange. sequentially On $X.XX to fourth for year-over-year. basis by

sheet. balance on to Moving the

Of under and purchased of entities. As held in repurchase a our $XXX.X were $XXX.X both program. In we our $XXX per international down at $XXX million XX, average price equivalents million, purchased by short sequentially $XXX.XX marketable $XXX.X current through of held $XXX.X long million share in of approximately and October XXXX, common million million was market share open Align's term XXXX, share balance, price cash, through $XX.X the down shares securities purchase, million December billion $XXX.X and stock a December an November and X million cash $X million in U.S. year-over-year. stock And approximately at was XXXX, shares per of $XXX.XX stock common of average million repurchase. except our we XXX,XXX an our

for million million, our $XXX available of stock down under repurchase remaining repurchase program. QX sequentially. this was have We slightly $XXX.X common accounts receivable stock balance

expenditures, from Cash in days were our for cash fourth related days, increase Our defined $XX.X was flow, expenditures sequentially from year-over-year. operations capacity to capital aligner sales amounted to million. fourth flow was flow operations million, XX investments primarily $XX.X quarter the manufacturing to outstanding Free and quarter Capital overall million, cash facilities. the less continued flat $XX.X as for

Now turning to outlook. our

Assuming QX framework we provide our XXXX. no for and control, beyond the fiscal circumstances following occur

we our be million, up million revenues expect $XXX XXXX, from range QX to For of the to worldwide $XXX XXXX. in QX of slightly

expect Clear ASPs We volume to and Aligner sequentially. up be slightly

the We QX than the expect the in given iTero Systems slightly revenue down decline, XXXX. to be launch although for less historical and ortho Services seasonal workflows sequentially, of Lumina

We QX above operating margin, XXXX margin GAAP non-GAAP GAAP be and QX and XXXX expect slightly non-GAAP margin to margin operating operating our operating respectively.

revenues XXXX. total be digits year, full up mid-single to expect XXXX we For fiscal over

expect We to and range Clear in as fiscal Services revenues. grow the XXXX Systems and revenues XXXX approximate our Aligner total year-over-year same

clear year-over-year mix higher offset XXXX exchange, and slightly to by up due ASPs noncomprehensive a price aligner partially fiscal of primarily be lower ASPs. to expect increases foreign favorable which We have products,

and operating and the to respectively. fiscal above be XXXX margin margin GAAP expect non-GAAP operating We margin GAAP margin, operating XXXX non-GAAP operating slightly

for especially and pleased I of our am am I continued well the road pipeline. in of as million. fourth focused XXXX improvements fiscal map as approximately to continued proud We capital Capital expect our investments relate our innovation expenditures summary, our support are manufacturing to execution to and with capacity fiscal of results, our construction primarily be and building product and $XXX expected expansion. In expenditures in XXXX quarter

strategic orthodontist innovation further of delivering next extend differentiate are believe into of demand, I Joe well large smile beautiful back to in of us dentist introducing for and starts we market aligners. With patient allow annual dentistry. on GP consumers our Joe? the an million that, wave comments. from digital growth to additional final to and expansion, utilization to continue untapped orthodontics our of are and I'll XXX that who orthodontic turn that leadership committed drivers XX to opportunity We our align the healthy, treatment international as as clear increase a the it share using could benefit million case Invisalign will market

innovations wave closing, the excited I'm and to that continue I I market results fourth Thanks, that spoke start are while and scanning bring dental John. to our and a about the to about XXXX I'm In with you year more year, quarter planning orthodontic ago, to to next we and Align XD When direct of revolutionize growth the software we industry in discussed pleased innovation even drivers. our better-than-expected and printing.

that are delivering on We promise.

in Building comfort are Lumina more also XX introduction inter-oral to achieve of digital that the and forefront clinical visualization in multidirect research of powered iTero scanner the elevates enhancing combination is of and Lumina overall years at development support Lumina dentistry. of offer efficiency. boundaries treatment patients imaging a scanning outcomes of years The of can we revolutionizing expertise what the scanner experiences. technologies, pushing iTero to digital standard practice on scanners and technology, by iTero do. capture clinical iTero than doctors, decisions increased With their the exceptional is the while capabilities

acquisition configurations are printed the more for manufacturing, of of additive closing direct create solutions. a we generation to sustainable aligners and XD printing With helping for the CubiCure, more unique that products, pioneer next polymer enable efficient solutions XD of also will of our

which we starts. achieve years. the of to nearly couple next an materials IPE, The it includes IPE capabilities direct XD to direct we XXX% our of system expect other with products have case lead printed which of applicability to our hope the aligners, for system. the product Invisalign of to ability eventually and pilot printing goal now the extend Invisalign Invisalign also And the in the with to printed the We manufacturing XD of printed clear introduction portfolio, XD will clinical expanded direct scale print, and expander orthodontic

specialists, dentistry regulated most a per the by doctor-directed billion where worldwide Aligner some company, doctor in industry. disruptive $X trained year bring the consists and of A orthodontics direct digital in competitive highly technology innovation, scale of we to customized patients of to that X,XXX a Clear force multifaceted million sales parts every a because in As center and day. advantage, model has manufacturing invest deliver XX we highly global R&D importance million the care, up over a and market of understand to in brand products millions Align $XXX trusted to

We are extremely commercialization customers with better innovations pleased our latest to doctor their our and and serve of patients. products

is Our belief business overall in the future unwavering.

U.S. QX to help to to orthodontist who the Invisalign who in recommend those treatment. other treatments. their a select patients. a introduced Before help have the cost strongly seeking an markets, licensed Vivera the call operator, and doctor-centered for I off and from model is up a dentists. we turn seek industry. impacted former regarding we're beautiful finish support over or want treatment for our matter in in a achieve helping address patients, additional in patients DTC the or by to the including DTC patients a XX% to important Align any to healthy believed directed consumer that aligners clear Invisalign always safest always orthodontic case submission has and looking news everyone providers that consumers to these has create many DTC practices, work company for as To bankruptcy needs, advice are they led support DTC to individuals providers this address of their of with new smile and we smiles Retention and their to We unmet out matter, reach better offset help to a the want doctors program for incomplete clear better Invisalign regarding offering to ways Recent aligner

you practices. With today. call. you look time forward always Our questions your available our help thank answer I'll to earnings next concierge connect team with is We that, and updating for to Invisalign consumers on

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

[Operator Instructions].

Elizabeth question first from ISI. comes Our Anderson Evercore with

I'm progress. like improvement walk can got that? Clear thinking and was that -- sort components I of if think about least at mid-single-digit like pacing of clarify ASP it's of of would growth. way think to guess currently, wondering of right what the maybe do else Is like range. about the of the I the for you -- year mid-single-digit the sort And how low to I Systems and through case understand single-digit the of Aligners guide. and It else you Like in I XXXX. us be like Services you same sort it? you just that what could seems that. to how to low anything sort then on there can you is expect about sort said

this Elizabeth, John. Yes. is

haven't We're looking and the increase. at of the right ASPs framed up You mid-single then segments digits way. price because the

the the impact have, some and lower offset have due lower-stage expect some would of products to on. a we little We that then touch-ups bit including DSP ASP so you that year-over-year. of

as maybe the you That And comment. first so how into progressing has quarter volume makes quarter and of in separately, in far sense. it. market can Got sort then been China fourth the across the

year, XXXX good our a Joe. about about we there, But market China predictable favorable years. more because competitive But performance -- comparisons had COVID about think and year. about move seen the as I we it's shuts felt because into we not that really, the in position overhead that over remember, really is overall, we've down there year-over-year that several we good last little our we We there over it's the feel as were last, good last with China a the felt COVID year. Elizabeth, of exited

it. Got

it year, the of guidance year? a of of one steps operating up you has the sort how of then that first rest first I the in the you maybe us the across sort dip last why sorry, remind sort and different quarter just for one perspective quarter for understand gave XQ than of margins me. just the the but And year, the Can

Yes.

the certain give that leverage as you that you that you get go taxes you the initially at right you we the things year So on that of make through have beginning prior expenses payroll wanted investments prior other when that the because to year, then in you incur start to year. and year, incur you some

things position last we year how similar from So in to XXXX.

question Jeff next Johnson Baird. from with Our comes

proceed. may You

I maybe follow the -- just I'll on to beyond there Elizabeth's question XQ. margin John, up want

this a from Let's kind be you up year years X guidance row is your nominally say, hit in range. of XXXX operating level. low margin that mid-XX% to It'd on in

years but your things What's with you Cubicure XX% going should or back take in you've coming a feels get little range It increases price that, invest you're think continuing moving bit. in down those up taken a now towards pre-COVID, that. I aggressively, know to margins were to like pre-COVID out, those row. [indiscernible] to X so. R&D like it and be Obviously, Lumina is I out, the

help see could just from maybe to path settled a a they've when So back those last few years? up margins points we getting towards few the in understand start us where

Yes, is get John. looking drive start set you really benefit really that leverage where in you'll showing manufacturing we And have of numbers. as it's as as through some up to that and our leverage, Really, you volume some some go to get see benefit can volume quarters of we're year, year you well as saw get went having the see our as and up when that we Jeff, benefit numbers. shows should in the that's the but really start we some leverage, much to through that drive you try last this of to we that that to volume what more positioned of And that volume see growth. when our once organization we we that

is enough. All talked think Fair now years a competitive carved then, we've many out for Joe, position. And I commanding strong such a how iTero right.

does that of their or time the getting, don't one, that of much close life to especially see? over that product feels matter and product smaller in like kind too, some their big get or been or I'm kick They're iTero factor, multiyear docs, and the I actually sold years want down form that know, there, a things can kind useful just first docs technology size. things thinking to end ton put probably is of back You've and the to to this Lumina off with go finally of the to the a last really that of just to would like iTeros all so. we've X that iTero cause better just on things of of so. it like sure I this X, path waiting that, got kind these upgrade to this, I the could don't rid strategy this say, that, But

it's Jeff, a the mean brand-new and easy is I just answer answer yes. quick platform. the

upgradable Now by we've out one about I there is out. Lumina. those units the up script XXX,XXX so This switch in designed far. pluses, my of which we that way we've X/X we just set XG About are mentioned are sold have --

so Also, better aggressively that EX part's to between it And easy. we've kind position our for out there too really base move. this upgrading and EX of been installed a

and mind exactly you in Lumina, So develop what good a do had we position we we in just as we're questioned, think that. to

that hey, bought no you [indiscernible] you you Lumina, switch It's from this the always Lumina? charge there, could not that knowing like, a at the out X to if And to right? upgrade fee is there

charity [ at will start Align. There no There's here be [indiscernible] ]. a

capitalism. to God I'd hear like that. bless

Block with comes Stifel. Our John from next question

might Video maybe a team, Joe, the common 'XX you. have but this longer markets in for term with little a one's take bit of wait-and-see more XQ IPE So some docs approach. IP should today,

quantify innovation in that that like about a maybe the to the more is like we in step guide? talked even a Or way your a further, there of on out scanner. slope in you 'XX the think John, trying innovation coming new to or about the more that the You And I'm of ramp ramp sort opinion, 'XX? of new just what the is for of attribute seeing In this board impact the 'XX the for revenue is to are hitting? 'XX, products to XX%? take you, that is can growth, these in mid-single-digit

you feel It's the way really like up. product we I ramp, play these John, is. But good that it can with a offense that we set lines.

Now scale IP. we still to have

a process. through described a itself that. we'll and really get in a is of set that part the The feel technology is outside Lumina overall, to of as through kind different great have of Obviously, you XXXX thought scale foundation good beginning that about We ramp the that this we good marketplace. it how is the think But a scale, the itself. new of for I way computer team is sell knows we one of completely

in just any to to And Is quantify current the guide tease that no? way from difficult what's there out? or too

just is to. really It

Okay.

Okay.

million year. is I one more second $XXX So maybe and in the really surprised was CapEx, that was $XXX about $XXX initiatives. It's maybe a think just multipart. surprised direct low I how 'XX, number the first mean million, on million fabrication in 'XX even But was for million. I on this when I

slides do retainers do do we in the benefits as still we know a Invisalign just to to print out, Aligner you question. years", of see hoping margin to start year, couple admittedly And it like Clear feel gross XH 'XX, "next 'XX, I so when XXXX. next then turning from proved as XH So say to we early this accretive jump another say? And think

just because there? you I big bring this help still choppy. Europe we've us very move confidence. that in can in up seen guidance, the And seems For U.S. what's embedded consumer

we when your the you what back for out, guidance for So the macro? current to you tie would, are extrapolating if year,

products us and environment. the doing I'll of more help we're with and that. off IP environment we're but stable, that think, of the Lumina looking great terms that and And start we building not it places, off can most with then in. on, John, its said, is Look, guidance. as It's play in grow we have current things Joe which we're that, so to all in new this we're economy, at

of know and what's the we margin or scale. in feel confident, XD less ramp discussions printing about or the you is be analyst piece can it we and last part whatever presentation as that year question XXXX up, our as expensive from our that, your Look, John, foundationally, mean is

But before ] we'll see has used one's that a that to polymer the as Cubicure so this we it. we [ scale mean, No that we ever degree time through this. use system had And to start come ever need to to scale the need that. I one's scale. No

through year, years knows with systems first X you I the our hyperbolic team Now exactly with just to team this we can't that XD really tell specifically next hits how those that. because and those we that did years, when scaled in within the this to being systems basically X do ago side.

And just it to close years, on lot was -- a the that was prior CapEx, equipment. -- that of was those

course, are locations, on. our for unique that in of we're that so it for buildings Of for but will of and when very And capacity, some our the add was manufacturing we adding much buildings, adding lot a go we buildings. adding always capacity manufacturing existing

add this. in don't for we So cases building another most to have

that's So it is CapEx why is. where the

Our William next Blair. with Brandon from question Vazquez comes

I what's and business I teen On a wanted ask little some not less a for old you to I side, I out If the including could assumed headwinds, of guidance, the of think, maybe one already, growth, volume Clear single-digit little but way if in assuming get Aligner go a probably tease kind to color bit macro DSP. some kind the you to here. other that's susceptible back see can to even probably low of entire sequentials on

assuming thinking of adults for really how year-over-year I am some correctly depending DSP this full a -- the 'XX, kind of flattish, that teams about even are on on of down really out that cases is year and basis you're So maybe doing?

a adult it, as both teen we've we've that our faster show but would to and faster in adults to adults past, teens seen grow than expect be seen to are Brandon, both that I basis, them way. would the of John, on year-over-year up I expect and numbers maybe is compared grow this as characterize positive

It to any both the and should catalysts Are And quarters. over coming exciting. and can up. that about just there might like you we Okay. for quarters take that that going seems then ramp Lumina reiterate key maybe think IPE for like they're

about we of talking maybe that? the next launch when ramp, any those a market get anything to relief, You're a level on full from to limited on like but they the ramp go

again. Brandon, Joe

that have to but we will that sell -- has, more capabilities we get scanner we On comes John that the United ramp it with the the have Lumina third feel will the hinged now, to around Right be remember, mentioned, and side, I now States in out and quarter. into regulatory our in for as we Canada as approvals market probably the But GPEs world. indicated, only we restorative indicated, ANZ. the can like the

IP have to we'll second the gave And in understanding And we're out Europe. that. we the scaling in Secondly, obviously, on come will IPE, as through also. thing I same to mentioned, go the it's We as is still regulatory that, and and around Australia constrained. be IPE quarter dynamics

I of mentioned calls ago as a ramp, more it's So than a anything. few

Sandler. comes Our next Bednar Jason question with from Piper

there I'm pile first. to going the on to here just on guidance, focus

you've And You signaling thought into treatment. what being back the should offsetting that's but growing maybe or footing teens, given for adults as just coming gross mix for month-to-month are are your kind market the then cadence if you getting expect that's but know guess, in load factor this this few 'XX. were seeing year of Or I faster we confidence? a the case to you its day-to-day gotten to think as here, seeing I than showing to mentioned office back, are, doesn't noncomprehensive what's that I for the kind an to noncomprehensive you that had think of mix typically have does, well? are Brandon. a it, also don't benefits it there I better you gross outlook factor. margin but margin sorry we've adults, giving comments ASPs. regardless the But it like seem but DSP you I on got sounds like originally adults

on your question we're take on first we to I'll a the last platform hand of year. John, Jason, is rest I'd and economic off feel it, more the part call stable,

expect adult to in through teen the And too. with our is and we that we as guidance, so that you carry question XXXX, had indicated

with most dealing unstable one and least the think we look we're year, a now, more we stability an backwards was look confidence see everybody at we platform quarter in a last I see. year vision have to what when that parts back, clear from economic that in So I and forward, back we standpoint that has the the pretty experienced third of for it But from all right a we world tough sense.

of we Look, ASP mix DSP lower to products from the that. that, that and and fall some And margin the you non-comp noncomprehensive on into and margin have that highest have through others our gross standpoint. rate as on might questions the an related and gross are Those a shifts

and should gross their a as we overall, for margin year-over-year in business. things we're practice us It's for a we that benefits to talking op about run as how out. margin. see her customer really see would well like him benefits, just benefit in that helpful margin we expect or balance that's they're what But So wants we gross

versus changed level talk X wires. helpful. maybe the driving does All the have I'm you guarantee And changes like other brackets the or and months has looks are practice your that. look made over activities follow-up that It But kind that. on gains of associated right. wires, part that think last do to does you're with items you That's changed then think to to Or share the do that a are against team months curious like the what back second and program It share that to bigger go-to-market brackets teens. that you year? XX-plus you I'll picture, you're with for to here, versus X consecutive could what's of of at the middle maybe ask preceded seeing shift? if quarter last there the gaining

with The Align, that obviously, about, I really see firmer our DSP to together, lead it, uniqueness first. through. is this You is that we that help. just of we things from we're one. our platform guarantee, think All confidence single starting out Invisalign the another variable programs, no those adult standpoint, I can talked economic how more of there's always some say And there's equations. portfolio an put and think the at And team there

Our Michael America. next comes with Ryskin of question from Bank

X,XXX, moved with obviously, sort kind left had and then function. X,XXX, kind it's I successful, step of XX,XXX I year-over-year you of an range. a start of numbers, year. X,XXX DSP whole really where for the If growth look want kind great XX,XXX, and you you're in just the of off to like But at like

could Now XX,XXX, a couple years? Is next into there just of the there dig you you step And next driving into little coming in what's over where Is -- year? the do XX,XXX of range. another bit sort going XX,XXX, you're see function that? that

we've this look seen, John. successful, I every place say would done, is said, Michael, out, as been we starts as this it's that expand with we've to North you this. America

thing some doctors more start that more doctors They EMEA we And up then up So it places. More to introduced the doctors for as it. you more. same have the and and sign other sign and and of then us. benefits and see they same and the volume to And other more doing now more sign up countries, end they taken this up in we've program. start doctors utilize it, that program, the for approach then then for and the We've see more with happens.

nice really of a wants run this way their other find because the now a a just So it's supplement world how is really scaling of matter to to practice. we parts that this to doctor

just see a definitely as But earlier. how year, and a And map like late you progress sort asked year printing for it a years sort of last Direct see should few you and Really Okay. how us walk could then progressing? were out, we out, unveiled on X of maybe bit looking a track be exciting to through little goal questions it's XD technology the follow-up opportunity. of what road on that Cubicure months X post help that you and sort out, the

again. it's Michael, Joe

report takes now. to a I We my in process how X- think in -- time. quarter -- I that of just do we'll It's a scalability by how it. aligners journey. it to it's make understand we way we'll the said And resin describe on And obviously, obviously it like best it's to quarter. to and you, the Cubicure X-year script, to know these

what going you So the we're where opportunities understand what and are and hurdles are. the really

could talk that nothing? bit. at in being to retainers scalability the anything put that is is or resin in Okay. looking going there if -- just and when noncomprehensive, be be your you you're Is amenable there this about us or amenable portfolio of talked just help little terms those. -- if earlier there a some of others? able terms just makes all and I anything Or Is to about polymer, would comprehensive you products more the understand, than Maybe tweak of

at look I basically the mean up that's end comprehensive we'll obviously, full of that's scale, units cases way. one]. And retainers with ramp. how why the first because in you [ you'd some And

with from Our Nathan Rich Goldman next question comes Sachs.

XXXX. for given I growth Systems 'XX me wanted to just on was basically I the and think low up in slightly. This revenue ask flat, looks to guidance Services

Lumina was launch thought would it we the With in maybe more it than be XXXX. up

that you're don't So if I segment. know you could maybe elaborate just on what expecting for

better is this saw what digits. helps, macro mid-single We're we which year, we than have quarter like you're had fourth doing John. actually We very of to. Nate, the do this with Lumina, the what pleased in unknowns but also kind with we that at, said, really buying looking were guided about We and doctors economy. in there's

as to we we go update Lumina as So we positioned properly we're up pleased ramp that but make and with we're we'll sure want the performance just there, of QX, that along.

costs any we baseline the of with sort the the going upfront early the back Great. launches margin cadence, associated right margin think what the are And then either year cadence the about part and that guess or or IPE in just just Lumina either impact to Okay. of I onetime is. as there of

ramping that up. QX. that is We're of some There in

a of it's into factored all guidance. but But and there's big, kind a not expenses hits some X So in up, ramp splash there quarter. is where that's lot huge of our

say in up, when factored we quarter it's expect those are be factored the expenses -- first slightly to year-over-year the So that we in. in

Our with next Morgan question comes from Ann Stanley. Wright

proceed. may You

How of has some also, material any of the in Do you some point? this mentioned any the you DSO at products characterize move those to would quarter? this that changes DTC point, but sort offerings You at as new been I at these we of all are guess, the Maybe tailoring Are of the XXXX call, large greater really having. of customers end some conversations any in picking not it's some was that the enough the some those think relationships contributions the in up then And of front? about relationships, relationships at this there you're terms business? traction needle or seeing you on there? that there on of of

that that, I And sense always of we've mean, and the we'll marketplace treatment. the wasn't customers, our But these obviously, price patients all. on the pursue DTC in point argued

just certain more opportunity. that was so doing those It's we a just support But But for DTC. us we're doctors I than in going right clear we hard my doctor-focused it to client do And for company, now. what probably we're again, order we'll keep can Now being as to a this customers in forward. way. as and see quantify script,

globe. really and good side. the them. our On on Heartland them DSO out gotten I'd to being we help ortho has Heartland and the have and side grow GP more and relationships, call this stronger more But to them new the we around we all well with say being be leverage would relationships portfolio grow [indiscernible] with Two

about have them. good strong relationships out position DSOs, our good feel and with we there I with So

question comes Brandon from next Our with Jefferies. Couillard

last that January shift respect what you XX% And any the confidence you few [indiscernible] International. consumer inflection? Joe, outlook. could we've chance back, months you've chance comment in positive can with in on and coming with the Any seen to given Americas an the macro in break between out you seen growth then

and about out Americas the of can't of you the -- we quarter of last half I geographies year. break really I world between especially because good fourth felt International across Yes. the it for went as wouldn't general in latter

we a go economic think, I we're year, about, talk this As stable I into looking platform. as at,

about data play our feel And would [indiscernible]. what that in We on that now. you that's we support off we're can cited focused think good new overall. right products. of we the And Some

one balance anything on weak. in was It then John. just Can spike you, fourth And the onetime a that the out. like pretty cash in prepaid would Okay. was The any one But call of flow might you quarter operating housekeeping there parts have unpack looks you sheet. been moving expenses the quarter. for

use we things of things. mean, the related cash. that flexibility, But year. model. It's generates that that a that tax some us we great $XXX just we did able of to a I timing million buyback Things and like It and great. payments as go quarter. last a to feel lot cash, through gives lot were It it's

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

speaking We you, and appreciate Thank today. look joining Chicago upcoming as you Midwinter. meetings industry such forward at at conferences everyone. you with financial us to We

or questions Thanks, Investor If a day. contact our you and have any great have Relations. please follow-up,

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