Align Technology (ALGN) 24 Apr 242024 Q1 Earnings call transcript

Greetings. Welcome to the Align First Quarter 2024 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

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

You may begin.

you us. thank and afternoon, for joining Good

I'm Investor Relations. Vice President Communications and of Corporate Shirley Stacy,

Joining today's and John me and Morici, President for CFO. call is Hogan, Joe CEO;

Wire, financial We month. quarter conference approximately archived call webcast website results on which audio Today's is being will today at issued investor.aligntech.com. available XXXX X via and first is our our on for Business be website

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

with non-GAAP conference and including historical refer posted reconciliations, our for corresponding to have on these slides call first to GAAP Quarterly our information. website files our financial Results. We detailed under Please applicable, if quarter statements more reconciliation, XXXX

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

and Good thanks us Shirley. call joining today. afternoon, Thanks, our on for

our second overview for our financial Services views an on X XXXX operating provide performance quarter and will our discuss results segments, and and on the Clear and QX few provide in I'll of detail more System highlights first comment a from our quarter Aligners. total. John

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

the and better-than-expected year. earnings a to start first report the and quarter revenue to pleased I'm solid for

regions Clear younger from as as QX patients region. momentum from XX.X% Services. growth regions a Clear Systems Invisalign segment was all Asia by driven X.X% year-over-year, starts and basis, up reflects For QX, total touch-up and continued Year-over-year and Invisalign DSP was strength revenues driven worldwide cases. total strong reflecting Aligner X.X% with primarily across growth Aligner case well growth by the across year-over-year volumes, X.X% First, On from up Invisalign orthodontic and growth the revenue up channel our teens year-over-year, also Pacific all in in from were

X.X%, total sequential Aligner for a well North basis, as wand were QX in primarily American increase iTero Systems up revenues, Clear Lumina revenues orthodontists, upgrades a North revenues. in sequential reflecting strong driven Especially and Services America. by On as

generational During which generation and Expander the printing of a Palatal Expander scanner, and milestones. several We launched intraoral in our achieved next in the New digital Canada quarter, we launched XD manufacturing. the system iTero aligner IPE Lumina the Cubicure, Zealand. next U.S. for approval the foundation successfully Palatal regulatory scanning and completed significant received in is technology. the Invisalign solutions, of Australia or direct We We the our acquisition for leader Invisalign

the reflecting On QX a Systems Services or wand and scanner expected offset intraoral scanners Plus. a by and scanner ASPs, from QX is XD of in growth higher were higher sold. Services base from revenues revenue The to larger scanner X.X%, Element basis, year-over-year by nonsystems volumes Lumina iTero quarter. to partially due revenue strong upgrades a iTero growth now increased revenue with workflow services reflects and to orthodontic a XXXX. quarter standalone lower and driven up Systems fourth workflows nonsystems sequential and revenues fourth The iTero be available new volumes of seasonality, available scanner restorative upgrade Lumina is a as wand as

speed, Lumina lighter imaging the super intraoral models. capture field practices higher comfortable replaces Xx In XX% of faster smaller visualization and from The iTero a that the benefit capture has confocal XX% earlier a scanning technology iTero scanning and and GP Lumina's scanner can wider meantime, multi-direct experience. accuracy, technology new in more wand, the delivering

we're launch about Overall, has the pleased scanner. of Customer and positive, been really feedback with the Lumina excited feedback really iTero we're from doctors.

we've in included some webcast our So slides. great verbatims

up from APAC Aligner markets, growth strong QX across reflecting revenues growth year-over-year region. as across regions volume the were year-over-year revenue as EMEA the total Clear well

For the Clear Americas year. prior volume QX was consistent region, with Aligner

For APAC were QX, regions, total shipments with increased seasonality regions. X.X% Clear EMEA by the Aligner sequentially, in offset up Americas reflecting volumes somewhat and

channel, or Clear Aligner XX% from of approximately subscription XX,XXX touch-up cases North include America QX, For primarily DSP Doctor 'XX. year-over-year over QX ortho Invisalign from an cases, shipments increase

cases be and of DSP aligners, touch overall component important Italy, a up patients. in United the continues the of consists for most The customers France States, and and Canada, cases are Poland. available offering U.K. DSP Iberia, touch-up in their to and recently, an it which or is retainers Nordics, the and DSP our program, currently

continue expect EMEA aligner markets touch-up a XX-stage We offering. to QX expanding including other into country DSP and in

record strength China. EMEA. teen were starts up Teen with fewer shipped For APAC non-case market, prior as sequentially Invisalign X.X%, a teen from teens and due nearly in QX, patients America, treatment revenues, revenues. offset QX by a started retainer seasonally cases teen EMEA Retainers starts year-over-year, Vivera to along number Invisalign growth with DSP Aligners in North strength X.X% and represents This up year-over-year. up and younger was reflecting compared X.X% to primarily In Clear of XXX,XXX continued in quarters, in reflecting

starts, be less more market that in Clear and to While our were volumes than and Aligner both case susceptible for orthodontic QX, resilient teen to the teens year-over-year. around and consumer we're demand spending up sequentially pleased adults adult tends discretionary

a innovations a we've our Palatal Expander patient's patented Expander for safe, expansion. narrow option system system based a the appliances expanding growing and X that We data a series Expander patients proprietary and believe effective Invisalign Clinical in for Invisalign shows and positive. for that Palatal deliver is Invisalign It's Invisalign of better to skeletal and has XD-printed not pallet. from the systems is doctors The skeletal Invisalign Initial direct response aligner. is is on of traditional is Palatal Expander technology developed history system Palatal orthodontic XX-year exciting system designed one most expansion. proven

Canada X expansion patients X.X mean millimeters millimeters between XX X.X measured and mean group, and of using is post-expansion minimal ranges the this between the data clinical intermodal expansion with scans with age tipping a and the XX.X achieved of was In the States mean in as and across United on of initial between X.X with XX years. ages XX%. with width a our based the efficacy of Specifically, change

Palatal and early In both intercepted addition, skeletal, traditional orthopedic to includes arch provide I orthodontic interceptive to First doctors early agree each Expander I year. all Palatal solution a full oral case and better found the allows Combined with traditional XX% expanders. up doctors dental expansion Phase patients. makes Invisalign Phase treatment, treatment that doctors treat survey and or compared is of we Invisalign than painful with Invisalign expanders aligner facilitates treatment the hygiene orthodontic to that less metal Expanders starts

regulatory be markets We future available Palatal applicable other in approvals. expect Invisalign to pending Expander

Today, huge the underlying faster Invisalign and remains Aligner and most is the metal globally, opportunity than market orthodontic brand recognized more and traditional untapped. Invisalign Yet Clear effective braces. treatment is

and webcast is slides. potential highlights creation patients to several QX are invest in raise information and consumer our from globally. to to practices demand and marketing initiatives drive continue more 'XX We available earnings awareness in Below Invisalign QX,

million educate increase adults 'XX, to visits In we had we to the and delivered and reaching Snapchat right and about awareness globally. adults, teens young and WeChat the parents Instagram, engagement in impressions creator-centric TikTok, as well billion QX parents XX to media invest websites their influencers benefits Invisalign our the and Invisalign YouTube, top To create across young campaigns. of brand, and also campaigns platforms XX.X markets, and as continue as teens such requires

in is partner with excellence. by of the compelling our Free a Bowl. with as award creative ongoing Crosby, influencer, activation recognized recently create campaign and designer, Our for the TikTok at was the Association brand a the National In Z fashion campaigns, famous Gen such Juszczyk in and Maxx addition Overtime influencer Meg to strategic to Kristin the Super athletes Drama teen Advertisers we REGGIE Awards silver U.S., Invis

Americas. delivered campaigns platforms, reach consumers more and launched TikTok our including Meta, unique teens media with than influencers to partner X.X campaigns and parents. websites consumer we and billion for the region, XX.X across consumer global across social and million to In Our visitors the impressions our EMEA

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

our continue We impressions APAC billion consumer advertising in in Japan. and reach reach across our in XX and our expanded India region, We social partnered websites, across the consumers to brand unique to than more by in a key increased increase invest Japan India Meta consumers and and to evidenced YouTube XXX% interest influencers in saw We a resulting and year-over-year. increase X.X visitors a with XXX% website from million XXX% via year-over-year increase to in as visitors media.

to app rate. 'XX million such Finally, international increased digital growth year-over-year and sequentially, as continue date active and EMEA Clear year-over-year increase patient growth the tools growth reflecting consumer reflecting with increased regions in My X volume downloads Americas XX% Aligner Invisalign the XXX,XXX DSO QX customers users, regions. monthly over from across to and and

adoption and of large help dental to Dental across industry. represent drive DSOs, organizations, or digital opportunity growing technology service a the

as practice the with established including digital delivering better a portfolio benefits profitability, shorter Align and services patient customers. DSOs our from the enabled as recognize globally, relationships of products and We efficiency and platform, many cycle their well up have to make proximity workflows increased by that of experience that times digital

can some DSO and vision, business continuously working Each and encouraging exploring that goals. our DSOs focus on the of Docs is digital and the with further and model aligned a collaboration different our business partners Heartland DSO with DSOs with of strategy adoption Dental and are dentistry. strategy Smile model has are largest

GP with years, practices $XX Heartland's and the million an training more previous the feature a the Heartland novo dental and are multidisciplinary practices which ago. mentorship, ortho a with de de community Heartland, novo $XX opportunities in following through investment need planning investing practices, includes leadership to continue Today, Heartland XXX we X opened In Heartland areas practices the announced Their DSO continuing novo education. year dentistry for States. additional growth and state-of-the-art for in technology, where located a U.S. strategy equity with across de equity million strong United provides is modern openings. last across increase

to the Heartland. help shared with a care teams they serve. and quality of purpose is mission deliver have highest We doctors communities to Their the digital their dental sense

it John. With that, I'll now turn to over

Joe. Thanks,

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

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

For treatment and QX, Invisalign ASPs for were up year-over-year. sequentially comprehensive up

offset the higher primarily mix ASPs reflect exchange and comprehensive partially additional higher lower product On the ASP basis, and by a a a price increases to offset primarily in On exchange. to from mix by shift ASPs increase foreign higher the variable foreign unfavorable sequential products. shift additional lower partially and products of and discounts year-over-year product reflect and impact aligners price impact basis, ASP aligners a increases

higher unfavorable Invisalign country On On decrease revenue impact and in net higher a basis, discounts, to the QX, were treatment deferrals. unfavorable partially mix sequentially the down non-comprehensive and year-over-year. a ASPs the products, and reflect reflect in non-comprehensive by year-over-year partially shift decline ASPs sequential offset shift by mix country favorable product from the for ASPs offset discounts, lower basis, ASP mix shift exchange. foreign lower For

price and in in reminder, we X, increase products. Middle across Invisalign some and Three North the Three January and available announced in Invisalign and did most products X% launching Comprehensive French Three APAC, markets is recently product East. Comprehensive certain As EMEA Three global in This and not territories markets a include most America increase for a Invisalign effective price about XXXX. in

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

sequentially. Aligner On Clear by favorable million basis, exchange a were Clear unfavorably 'XX or impacted $X.X X% or $X.X foreign exchange by of approximately of year-over-year foreign QX approximately were revenues approximately approximately revenues X.X%. impacted a million Aligner

$XXX.X year-over-year sequentially increased X% sequentially, related X.X% are of primarily balance ASPs, higher Services Systems million and or or volumes. Clear will were Aligner mostly and $XX.X up due sheet lower X.X% by deferred partially million QX aligners revenues decreased and on to revenue the additional and be $XX.X increased million nonsystems revenues, as the 'XX upgrades shipped. recognized to offset

QX scanner for Systems volumes XX.X% year-over-year 'XX systems from revenue QX were to and of higher services our to Services increased primarily base upgrades, and revenues revenues, represents our sold. larger mostly of revenue and scanners and nonsystems up XX% Services due Services related business. approximately CAD/CAM higher

to Systems approximately recognition QX and million on the down revenues and million is The with ratably Services recognized impacted exchange $X.X On decline Systems scanner Services unfavorably foreign services and sheet impacted contracts million approximately balance Services Systems sequentially or both or over 'XX of were approximately $XX.X sequentially the a which X.X% approximately were the in revenues $X.X -- X.X% year-over-year by revenues shorter was will of million year-over-year exchange revenues and deferred or by reflects primarily favorably service duration foreign the and due initial X.X% of deferred service year-over-year period. of sequentially. X.X%. or which down revenues, $XX.X purchases. basis,

portfolio equipment growing leverage of a increased we introduce new want is to customers technological As opportunities our to trade, opportunities the DSO rental for We're customers, the efficiencies go-to-market capital Developing products, selling scanners the buy. meet partners such innovations of and base progression to make customers provide operational with new business scanner expands to and our sold. pleased natural and customers to equipment and our and our models to able to our our needs and programs. and scanner be digital other types different rentals we in capabilities to for large and our transformation of a leasing upgrade way leasing, that addition as

Moving on margin. to gross

points Overall XX%, impacted was flat X.X unfavorably approximately sequentially points margin exchange approximately year-over-year by gross approximately and sequentially overall foreign margin by basis. quarter favorably X.X First by was year-over-year. gross impacted a on and

was year-over-year, points higher Aligner Clear quarter for Aligner first higher higher sequentially gross by XX.X%, due the spend, manufacturing gross due partially offset quarter to the partially down was spend, primarily by -- margin manufacturing first ASP. margin down for points favorable primarily to Clear offset X.X due X.X ASP.

by quarter points sequentially first to was partially points Services service Systems quarter was and for up XX.X%, first margin manufacturing and and manufacturing margin higher gross the up Services ASP for gross due due X.X year-over-year, X.X offset costs. to variances. Systems lower the primarily higher ASP,

continued million, year-over-year. operating up higher QX $XX.X recurring other by from million and operating increased $XXX.X offset a due operating compensation. consumer expenses compensation by charges by and not restructuring incentive basis, marketing X.X% million, our partially expenses X.X% and sales sequentially sequential and to up On incentive QX. spend, were were R&D and in primarily $XX.X in higher activities investments Year-over-year, expenses

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

income operating million Our sequentially of an margin $XXX.X XX.X% down operating points and points first up X.X in resulted year-over-year. of X.X quarter

foreign in our is to decrease offset exchange primarily attributed unfavorable managing is and and investments compensation. by X.X year-over-year sequential increase operating go-to-market margin impact approximately to from in incentive in The our costs, attributed proactively teams operating The higher points. primarily margin partially leverage operating of

the and compensation, million certain points offset On 'XX, of acquisitions restructuring to basis, QX quarter an investments in amortization for X quarter equity which and income year-over-year. other charges, for of QX compared XX.X%, of and operating an to other points down in a Interest by and first an expense unfavorable and a $X.X million net $X.X first on foreign driven interest and income net was of of 'XX stock-based the primarily income of $X.X was exchange. million, gain non-GAAP up excludes income intangibles X.X and margin sequentially by our income related

in quarter year. in to XX.X% compared prior quarter quarter The in XX.X% tax of first GAAP the rate fourth and the effective the XX.X% was the first

rate, fourth higher offset effective low increased due QX jurisdictions partially the The tax to in recognized first in of tax by quarter than GAAP tax tax discrete 'XX, benefits in QX of was effective rate quarter 'XX. primarily earnings

the which tax projected was non-GAAP quarter in our Our tax rate XX%, first long-term effective reflects rate.

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

was not EPS basis Our on sequential impacted exchange. a from foreign

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

the Moving on to sheet. balance

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

In at January upon of settlement total, contract. final XXXX, price QX of the of million accelerated an 'XX. approximately average shares our million In we repurchased shares we X.X QX the from $XXX received share of per repurchase approximately ASR under share XX,XXX common $XXX.XX stock

repurchase $XXX million repurchase January our stock for have of We program. common under available our XXXX

of through During our $XXX or million, of to repurchase balance accounts an we was to receivable up QX stock 'XX, QX repurchase a accelerated common market up expect agreement. stock open either sequentially. repurchase combination $XXX.X million

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

use and sheet We're healthy drive to profitability. our balance to growth continuing

growth to quarter disciplined Heartland continued completed we support Cubicure, we healthy Dental and our of the no long-term We make debt, additional printing investment exited quarter, a strategic drivers. partner a strong operations direct investments our maintaining which DSO appliances in position million us custom stock $XX per the and with enable to our our eventually the and $XXX position day, cash print to scale millions in flow million acquisition buyback. our will to of XD During

Now our to outlook. turning

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

we 'XX, business QX For the outlook. provide following

of range billion. For in QX $X.XXX revenues billion 'XX, worldwide expect we the to be to $X.XXX

We expect up result as ASP foreign and down Clear to primarily Clear slightly a be Aligner unfavorable Aligner volume sequentially, to be of sequentially exchange.

and continue Systems we to expect be XXXX. Lumina We sequentially Services in QX as revenue up ramp to iTero

We expect above operating margin respectively. margins, QX QX operating 'XX GAAP be operating 'XX and non-GAAP GAAP margin non-GAAP and to slightly

For business provide 'XX, the fiscal following we outlook.

execution that XXXX continued our We We to compared our fiscal revenue which XX-XX XXXX. of our outlook up reflects prior QX growth revenue be the in X% strategies. 'XX XXXX, The outlook of segments. total to versus QX mid-single-digit in and reflected incremental results, X% operating up between our than expect outlook will XXXX higher to revenue growth outlook our split be anticipate is our X increase roughly

ASPs We be slightly XXXX year-over-year. Clear to expect up fiscal Aligner

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

million. relate continued -- expansion. building of our approximately XXXX well improvements expect expenditures our in support investments to to capital primarily in for as $XXX as our fiscal and We capital construction Capital capacity manufacturing expenditures be

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

John. Thanks,

summary, was the year. good start In a QX for

in about we dental more printing. XXXX I'm and even results, While in revolutionize XD continue that Align's and with orthodontic growth the on direct drivers I'm will to industry of software innovation scanning next pleased wave believe our excited our

the advancing has excited enable our road printing pipeline a products We're these scanning in the execution for phase further investments the of of product growth technologies XD capabilities. resulted software Our industry new introduction again. focused our and largest potential history, about and innovation transform our and to in strategic new of map to orthodontic

especially is the promotes It clinically dental new appliance case while offering comfortable orthodontic effective. the standard kids. The a for The removable by scanner starts. traditional and regions of Invisalign revolutionary visualization potential patients, proven to and set of Expander iTero metal system complex simplifying to oral experience care the painful increases clinical expanders safe a nearly XXX% Palatal Invisalign than better and practices It superior for applicability Lumina of is a the intraoral oral of less scanning to chairside has that is hygiene. XD-printed be more

of printing patient providing us manufacturing, operations, acquisition Cubicure, as additive of benefits XD for our unique design customer well recent pioneer solutions our printing help team outcomes standpoint operational freedom XD brings a from and And into customized technology to as highly polymer business. a and cutting-edge to the ultimate a talented and Align scale

Invisalign enable business orthodontics. digital see that of them continue with We system to to make easily diagnose might incredible not and access We're and their doctors healthy standard and treatment. of services treat for teeth beautiful care the the who in continually in developing more orthodontic crooked opportunities innovating technologies this smiles. help By care and patients people, to retain receive millions increasing and otherwise

forward to With thank time We and digital look orthodontic you I continued progress in your dental the of leading restorative the that, industry. our today. sharing transformation for

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

[Operator question Anderson Instructions] with ISI. Evercore Our Elizabeth from comes first

environment? demand you're about especially make bit then the that a in secondarily, broader the was guess, how of how the comments curious on in SmileDirect super seeing on demand any you sort And China, I'm you I impact if talk consumer environment I if seeing quarter? particularly more could about U.S. could and would a from the overall the you like wondering be on could helpful. little you're volumes demand perspective, it comment

John Elizabeth, and off have I'll in jump on start anything.

that that kind we teen our in talk stability and a from also we talked that of led about of And script to quarter, right stable. same adult things we good that an standpoint that see stability just the you describe all, of around First as globe. we and broadly it's we fourth about. business we the out now to, read standpoint, came too, saw as again, which, The the that

whether mean in seen around that If see stability United in the exists, we've we've also. Americas we of parts -- Europe I Asia, the it's it the in and I whether and it world, look States

it's -- call We moving down hard just out that is whatever dramatically particular in unison for much I or in quarter. region us a the see So or them to dramatically first up. pretty

you would add anything? John,

And -- we're the agree. driving I growth strategies. that's No,

we've said, stability we've seen As against that we're environment the in executing and that.

that And Elizabeth, thing obviously, on SmileDirectClub advertising they not comment, anywhere we in last was marketplace were more in or States or in can't I part United equation but time. part this pronounced any like attribute them the attribute world, else of up demand down whatever, it as your in the the because not than being any point was before advertising them And can't of that. the change of at

comes Blair. next Brandon Vazquez William Our question with from

on teens for market and how to in a what couple fuller and maybe of a years within of -- look growth mean as that next numbers now the relative adoption here understanding prior you the now just have getting rates kind can correctly, teen it And within the This opportunity. Palatal like you section within years? does if couple you you I'm that forward focus great years? curious look teen if to I'm of more wanted for out we commercialization compared able of next the reflect the a to on closes, the does XX% like to Expander second the been such hit have of portfolio couple that's that that and on underpenetrated that there teen teens it I big before. broader side, reviews, haven't seems is

That's a question, good Ben.

before we it's I IPE, teen there hit -- With They're really. years Invisalign them the now dentition. have handle -- call XX% mature and the that's And students we on they out can think and mentioned, Phase the tweens, we -- there's really I. as we a XX%. we young don't First with

both cases, the tweens And And widen the of kinds these need dental doctors of tried may to higher feel or even need patients specific cases that was overall. those it think these risk what and First, wires have the to because of to really impact expanders and that unique Phase and expansion kinds comfortable We be the make with pallet actually you some IPE you before things. -- in and it on comfortable suture with some I, are aren't now those just with will work is area. of teens very more just and products when split we brackets not Invisalign

But like episode. takes takes in an acceptance. XX-day for anything good XX- of kind the time. is it the orthodontic a And this community, about about time is thing IPE to It

loop feedback is our So really good.

also throttled the from we're And the tell go to ANZ. is You throughout and in can my world. now, transcript have Canada we right regulatory right approved we're in recently and States United the now, procedures by

too, that go extremely Lumina a to it that of such new forward. the we So mentioned more we'll be about broad excited able well. technology. in together didn't a a we But as closing tie cover really scanning you has as my I we're have scans to give with First you specificity that standpoint, on brand kind this scanner And palate from bandwidth Invisalign

thread technologies there. well those So out very together

excited and come. it we're more about So to

from Block comes Stifel. Next with question Jon

the think Hoping was don't about an throughout first weakness. to March ask just sort quarter, X, anyone February I the calendar the both. from or There strength, focus there on or obsession was trends. if of maybe if it consumer really one, was month-to-month like investors or knew big the a talk

X guys, for And the And just as February on you about little weeks. how then you here played March? first touch a X follow-up. bit to guys I'll maybe and you can, out for my can it as much So elaborate ask talk on April

from of mean the the we quarter I we mentioned, Look, is was it -- with less very quarter the as into we're stability the execution about the -- this that and QX, the the from Jon, about pleased products. stability, saw John. month-to-month. results and in with year think our then about end we really Yes, as our talk and continued Joe quarter, that had throughout

might unchanged. the the to midpoint stick I is with revenues, XX.X% the the Okay. think from OM, gears. And believe John, then you. I'll X%. I which above higher is just wording roughly X% Despite shift XXXX slightly I going

about can extra is Do will and into So more spend the that XXXX? Or tailwinds going? some see where aid you on you we that give that talk this returns year?

to that, difficult. more too XH, implies just at of which the X% new but in the then year-over-year comps dissimilar from -- part tack get higher to growth, the isn't guidance year, a on back this And doesn't

should we of the accelerating need from be those and like with Lumina just some Why So an to stacks new IPE? accelerate. comfortable contribution that products Is that?

I is We're short make look it, in investments is whether they're We returns think or products we throughout that on what stable we go-to-market get longer-term activities, investments making point would coming. different new term. that continued at a environment, the long we But the I latter how investments shorter see investments. year. We have make Jon.

that in well us get others accelerate talked approval the where as helps as we'll the IPE really that things year. we later with side, So on about, iTero have the that and Joe

in the give on benefits stable into and described a it's our strategies, growth half. So and executing us environment, second the that investments environment making about then that that you should

from Johnson Our next question Baird. comes with Jeff

little Jon's on a finer the up just following maybe on and itself. question guidance John, point there

to mid-single You've about of is And guidance digits taken of your upper in kind double CAD/CAM scanner digits, digits. Should teens. that upper maybe services where and still services the the kind obviously digits, double X to continues X kind double from guidance we teens, revenue Aligner not Clear but think in in that came mid-single scanner the of year? and this in digits the strongly

the maybe me we growers. the stable, kind CAD/CAM more be calls It Joe here to being the and revenue services. about being quarter, at to look were raise like still think of market Is last a fair And seems of that kind is talking way both as digits. scanner those then maybe the segments driven by now, to guidance? that I single Aligner mid-single-digit expected Clear mid-ish in

the bit at have Jeff. growth. see, revenue we quarter. being a that gain look That's first a equipment the I a quarter see fair way in we'll you Typically the Lumina the from an with business. would to products pleased with little in given first it, sequential and very you iTero, faster in We're new mean, saw quarter, we fourth don't what have

Aligner with in products be saw and pleased look the we're help to relatively growth. that grow at supplement the expect very should Clear the able making in new investments we're business, there. we stable environment So that some of to we to grow then a also that there, continue of both But what and and we terms

follow-up. that's one helpful. Yes, then And other

of I I getting an recently, patient if you've cases Day here of financing don't financed given the some it's But maybe your third-party orthodontic remember I in company. been think something. that sort clear keep asked base and percentage something it's at of maybe past a patient asked a through or answer. Analyst that's more get

qualify something for areas in like procedures like that gone seen this standards cost capital FICO have We lending to financing capital of scores gone and have XXX some full of where up, aesthetic the environment. of patient XXX, implants, tougher the from to have in arch dental, outside

what lending know cases financed? more -- or you about on all So recently? have get patients And pressure those standards an of here percentage and if a percentage changed what round put do at incremental

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So we're can well help. we aware. know We

something keep to our want And cash be that's with the and that pass sheet balance can able the that help have we they on. working We that to to so towards. customers,

just to any overall way? the in getting as standards those lending just as like described even you do you've the over kind environment change that note feel months few as John, past tougher? Or that's stable of well

as more that at stable. look I

lot was think things. a I of there

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Partners. Michael Our Leerink next with comes from question Cherny

you hear okay? me Can

we Yes, fine. you hear can

Okay.

if So to a spend, dive in little more, relative to the I possible. want bit just

relative to the printing what incremental versus printing new into, You that or ramp ramping it's talked call run the speak, you're your And time? markets about should grow, about product on is especially to coming of launches? the you thinking much investment, delineate rate so it, you to that think how over the core investment the on to regards spend, growth the be how growth. going Can with some where side, now

Yes.

core we have to think of grow running. obviously, go-to-market that the a able And be have. we around amount that marketing I investment and we're have there's and that a to certain sales you business activities sales,

to time had as over a of spend have. XD into acquiring time. we platform of amount certain printing. the How we've of this throughout and out, it varies There's in spending now now that that the R&D also be build our more Cubicure turning that that that XD lays we'll the assured, make We how printing have. that right we'll investments go be we fab sure rest balance and making scale know the right scaling But forward. as scale core direct that start printing. to while business We'll growth, the we products. know that has up for to how There's R&D to case investments able And a able to to

from Bednar Jason comes question next Sandler. with Piper Our

out drive that Invisalign asked. And with First to into Aligner you to do fund It but need March. confidence you Clear of that, of drive macro demand. comps How think the office? consumer on confirm volumes investments any to point, growth might to speak a turn like the going some case a downtick I just now forward, belabor questions maybe more want to with called your to in have wanted saw the to build you much sound but that respect traffic I doesn't companies don't little that want discretionary tougher. that's bit other to the been

first luxury read investment, read, it. about We stable on Jason, the consumer there the we've the what's part particularly that talk is, or I on the going on out some what's going with and there. environment concerns, stability we in that seen goods of

But and around us who the what an here honestly, I that's really business. pick we And all differences U.S. just great analysts is about see and think world, the often follow what up see we data. international having what's

there's goes You there. say right that of I now. we cycling out But saw first the we in on what something XXXX, would sense half in what the would highlight second to in what of the think patterns and quarter nothing we of saw I counter say we have in year. changed some this has the would demand that

you? John,

terms in But our we And continue second deliver about, improvement when go investments, market sure as company. to the investing not the as in expand that continue we the talking investments opportunities talked and expect to the need manufacture we we're -- those that still have, and the what total make but on opportunity that able in grow. sequential we the only year-over-year for making improvement amount investments. then margin. that be into profitability. about op To We'll that quarter to need what year of we we able expansion we've respectful to and margin market we're about margin be terms -- and where talked the we've with of in in now We're right expand of being to grow for other

here right. a maybe helpful, Very Joe John. to maybe All one on multi-partner and follow-up teen. And

emphasis like here with But me. younger So younger a tap and of new opportunity. recently benefits It market, marketing in there. your with and branding trying to might lot be There a marketing that Phase seems I really there, Lumina. be into to patients IPE fits just product for seems bear development emphasis plans in much that nuanced this some look. that's

channel your bifurcate relative patient your younger could as us, business intentional, So it's really -- maybe look penetration growth to what sit term? outsized teen it part how you're population And broader the seems out does in if in kind channel? patients the this but whole? is Invisalign a the the this of Where for those you as versus near younger from of wondering over teen intermediate performing we to expecting

have orthodontists some I devices of the been consumer it's been a up kind standpoint. I Phase before, on do Jason, just want to years, because a orthodontic give kind the difficult Phase don't you that you of question, in When for think controversial to back I, as view. I'll from kind used, mentioned your just have market actually of conceptual of a been

for permanent those wait on to all move dentition so and And there.

palate within We or this for little will to morphological that then an track First think orthodontists a a I treatment, do now in IPE change, understand things because expansion and expansion their and Invisalign begin feel gain and dentition. And industry while and more for that. we confident you're dental Phase a with to for but them that bake kids' and to working teeth is takes it mouths I this for confidence

to patients them in for for a on going to been great actually it from Phase but I, it future the simpler for of be watch And interesting us. think and think II focus orthodontists it's these it's significant of future. that come in this because how area, Phase growth a actually we we devices amount time, focus will take could But the make but kinds

sense, rules just roles. now, right that of can't but I In those it's give changed kind ground can the you going. on we've I So where a project exactly that,

Any market? sense at relative you're or penetration-wise where maybe the teen to broader

dentition that too. First sometimes story. on mean permanent used more say I'd in is even just I Invisalign we're

really of the and out we'll First what some age through whatever. specificity get share cases our or split to are we Invisalign of this, have get data and and we'd -- is more more as the of with rest the.... patients around But IPE hard with you it's it we So

thing only age The our gets younger, a know I you while, mean XX and versus teen think if that we're before. you've patients us for now younger of that average -- I plus tracked XX

those So reflection that's patients a of I First. being younger after able go to mean with just

question next Goldman comes Our Rich with Sachs. from Nathan

know times. guidance. It guess kind But the for outlook Great. curious, what would with and maybe specifically be versus could I it's to looks great. full be just And I back like it's improvement. could you to revenue the But IPE touch around X%. raising maybe color on on year expectations on like guidance to Aligner go ask Clear wanted the that about maybe I outlook. I the versus to by a share you're adult any DSP wanted the touched different I'd of few been there? teen changed respect anything It outlook? on sounds updated you within market

I'll Nate. Yes, start,

this to had We saw midpoint things. in stable. that more few seeing. digits, raising fourth a as -- it a on so we an really, continued up stability the One call the And quarter that's that mid-single coming overall, went of about and of X% now so is the to that's points. we're X So into it talked quarter year-over-year, reflection we We're well. into X% operating a environment from

if there. stability that's good So we want that

look execution that drive teen and the and about at with the products really products Joe expansion the and some have feel as a only well the as various and we of we be that of we have to that as We we promotions business. pull growth there, to Lumina in then -- lot to and the to to products grow sales of help have, talked further in further And iTero about. with you that core can the some can as that into drive things those into that First able others have the on unit had business the not like that others innovations IPE new we around we we season, then our other launch about supplemented teen really see that new but that get other good described, Invisalign we really help on

but how us. then a adjusted growth stability, on seeing of it's to what and we our help And combination Nate, supplementing really of total we're the in things, extended why products some new that's strategies we're So it's executing core the our year.

the I as in think know That's The just a the should but quarter XQ bit Anything think margin little that I in to up out we think to guidance it keep I it's what there than anything step-up cadence? respect you. with second John, with implies. FX? sticking but Okay. then, operating And been regards slightly I margin, variable, you the helpful. just you've seen maybe some call And down cost mind sequentially, Or more historically, but year-over-year. a mentioned manufacturing of spend,

stronger Well, a we and are certainly, dollar. seeing

quarter about So a talked stronger we the first our the see guide out we about of coming that second when out quarter. dollar think too, something of that's into we --

Our well. that guide reflects as

to be to and you doctors ecosystem into look making then we're more able then more submitters, drive the utilization. more at drive continued our investments But that ultimately more and

Some growth. be of core able to that drive to business we it's that have

that. we that the certain a some it's spend some And of amount of of new where OpEx products there's with have

means to mindful margin also drive a to to we're then up being year-over-year what able margin we can of But And we're And do year the of XQ from that talk and in an being on be sequential operating it to total from delivering operating XQ basis. improvement standpoint. very then growth. what

Our from Stanley. next Erin with Wright Morgan comes question

there? guidance think but say embedded that but just uncertainty healthy I your and much, now don't I'll on underlying or globally? upfront me you Great. you some the element macro still that's belabor visibility demand X conservatism ask on still the trends this guidance, there's an to would up better in of a element Or here, you too follow want and do have

success the expanding that you're would you share upgrades terms with just markets where promotions target as and focused can well? where and launch. you're second the the most And then be in on about Lumina And of talk launch seeing in the and

is a John. little I'll and Erin, this talk about visibility guidance. bit

to that more I an now is environment. interest There's higher higher we be are we operating what we Markets able environment is stability in want have there. people operating and -- that open. think overall and enjoy and stability, rates, what a to what but inflation in are

index stability, indices point of new that initiatives that have. how it other transcends know that it our of We we're going things stability means business be that to investments that's have, for we the that us basis, making, other we the on market, gave Michigan on we to drive that or that stability. core the to could, other have, what we products see we're as Based That things well able the kind we that that some confidence to guidance a new to what that gives products have and total for QX a as and year. the

it we've And It working is and a new on platform. years. it. Joe, platform. we're imaging scanner as It's there's how it's built really obviously, script, of true confocal -- really is of a that that's old in closing I Lumina the And We've world no in on that other piece, derivative the not like excited been the for X about Erin, technology. mentioned my the

doctor the community will this very absorb but we'll you it take we're the quarter comprehensive one, both response market are the able piece, also that's tolerances it that had used the and orthodontic too, a place while just that restorative and a not the to -- dimensional of by mentioned fourth year doctor though even enthusiastic ready the to have unmatched. place. So and and capability community, sense think, general we've the do I orthodontic this that of from scan, the, for we really simplicity by all cases of as and completely But dentistry for to the being be out. It's the speed in will have

it we from to couple a scanner now strong out but a We've really year, of had a have but forward. thing. we're more take the that expecting just this months, roughly importantly, standard going standpoint So for the only of to have we have really but for be industry that, excited set are to about

of Ryskin [Operator with Instructions] Michael from Our Bank question next comes America.

I you little prepared ortho on of touched If up U.S. in quarter quarter. caught of Americas in pointed want bit something, on out Joe, the remarks. kind correctly, to strength it follow on or stood you Congrats I in the the us. ortho to think, for a I

It in stronger seems number like it's one of the quarters. results a of

Lumina the on Just more teens seeing Is with a wondering fact group just which into that little structural younger moving younger I launch? kids, much? any you if is am obviously Just Is reading there be of going bit. Or ortho-focused? to you're dentists? could little bit that a change that and expand it the you're too

teen known always we've question. this year We've the say that that us quarter it's stability I the for -- we it's have more seen the year. of more held that segment the Michael, market your understand last but adult adult feel I'd than in solid up in segment, we segment X. -- much than

And was that good for adults the aspect us of also. so

we're this this States global of are just lot month But the you has dramatically for see market sense. I'm on, focused again, not with been going about because pretty cautious projecting But market market can us to month. in surveys a as it's very the United done, good the that forward that from too moves

this gives a in here confident this a to on are helpful that like very orthos. stand but thing standpoint orthodontic going new, the Lumina also enough we're at of that take from those in we month to So mentioned, is and IPE sense time, that ground say stable, we're to more you us have an products

in way And saw that. so more in this change think do and It's continuity But just about ortho. stable that I no use and what word we to I'd is it. we describe phase another more last between we're have excited there's year year a

by could the also a if progress. I squeeze follow-up in impressed DSP there's touch-up if Again, And time. Okay.

out the it You called in deck.

year. additional some this launches got You later

evolving framing at and point XX-stage into you got about. update go you DSP see that would talking way where revenues volumes some can terms Any you any touch incorporate in in you're longer time? term, You touch-up aligner of terms up terms start you guidance can in how of offering or the think over and that of

buy things needs of They that able aligners take Look, or have. the it to as they able one. I'll really serves cases. buy. want able kind doctors be to they DSP be because the of very that They Mike, popular want treat Yes, our is way DSP things to to be use instead to those of part making themselves, doing want touch-up can and that things to

And in there. incremental us typically incremental great retention. terms can they that, that's we for have what of aligners that have. we also they too volume lot see like use for that's we of a then And that's because that And the

rolling when do. U.S. we it it to to ago, see was this continues North it expect Europe, think few do and I a said out, So what we America and like we now years into us

expand in we'll to and for more from workflow because And start. of we projects adopt -- more They it Doctors positive those their and continue volume like out. part programs success that, see that.

can we more take question. Operator, one

comes from And UBS. our last question Kevin with Caliendo

questions. have X I

be based the and a does there, one I far you point? about X Or great. work it. the guidance, I way business that profitable is But investment does a this way, Can in investments April? little in profits how -- the on with understand that that is regards think is perspective Heartland So you've would your you now to And was trends with also you Heartland talk at if on seen operationally? on of separate elaborate their understanding provide can that from accounting we my those if any guess, the first then for the how secondly, Heartland. . And the -- any so benefits can bit in or pretty

use start to Kevin. the look guidance factors with guidance we a of can our is. that, where I lot of part Look, at

But seen. most we're it back recent the that stability we've So QX from goes data using information. and to the

You in we we things people products do, that to to to have is we but a what can trying see the of with have. that see a initiatives other stability, of new coupled to what market and we're lot do the lot it surveys and go the drive that

No do. in a what we So key factor what terms change of from into of come a guidance guidance. we is that's part in our normally how standpoint. This together we've

investment like a big in to shares And mindset expand share market from to able expansion. that able as we they this look that similar at into to of there. they're to some orthodontic get that be Heartland, don't to mindset, be investing a be in is terms presence great Heartland do a to in much same have expanding, with mindset, a markets we share In that that company cases, digital or a able we have, things

they're any required. They've this years that's we've investment the been with for it's a have there's the it's a continuation investment, last X%. going There's around do year. lot than as whether we results of pleased over forward expansion we'll well. doing, With less evaluate mark-to-market forward. And no that on or we're else But to that that of going that seen the consolidation anything and

ahead, actually -- concludes operator. That sorry, go

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

the thank industry much, American meetings, upcoming for May New Orthodontics including in joining X. We you, us conferences Association at Orleans, Thank to and everyone, speaking and X financial to and you meeting of so today. look you forward

any give call. a us have you. you Thank If questions, please

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