SmileDirectClub (SDCCQ) 1 Mar 222021 Q4 Earnings call transcript

Greetings and welcome to the SmileDirectClub Fourth Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. pleasure Relations. your my Director Jonathan now Investor of is to host, introduce Fleetwood, It you. Thank you Jonathan, begin. may

you, Thank Operator. Good morning.

Before remind includes we you that this me begin, conference forward-looking statements. let call

the on please Risk information described therein. filings, additional For Factors refer to including company's SmileDirectClub, the SEC

forward-looking not are All earnings based today. free and this as that for should on on future certain financial update required our by cash rely I by In conference statements slides applicable on Exchange description of except of we We a Regulation G such a non-GAAP statements. of obligation will of law. to this with for XXXX which our on non-GAAP assumptions be including website. presentation also such call, the as You we the our refer respect of make predictions required measures, to forward-looking in forward-looking presentation events. information, statements discussion and call QX flow. as have no you financial this beliefs certain undertake obtained Act measures can Information call, EBITDA included is adjusted to

refer you certain financial measures. presentation Global of Katzman; David Weaver. to Officer, Crawford; for to a Financial Troy non-GAAP by GAAP the FP&A reconciliation and Jesse I'm Head Officer the of appropriate call on Relations, Chairman, and this measures joined and today also Executive We Chief Interim Investor Chief

the turn to now me Let call over David.

mission convenient to each seven person years and talked making Thanks, over past we've lot fulfill deserves decisions for and every us for our about made affordable and joining today. Last Jonathan, morning a and to quarter, a we everyone. it good loves you access everyone. Thank the by smile democratize to the

more decisions been tactics our consistent all and with have been than mission. have easier, But impactful others. they're some Some

partner profitability, made reevaluate more made a over of what these structure include professional next direct investment. this a line I rightsize of in my the initiatives and or several international positive produce businesses within footprint decisions hardest weeks and that growth, our profitable in capital to will innovations to Troy focused flow share on to and of existing Americas our members contributions sight part our many households, near-term the to discuss importance oral the our highest of to growing profitability, growth dial for some care channel, announcement will the best can for all will profitable decisions aligner to markets our existing on And mission moment. have in XXXX years. cash successfully success the return and impacts core are we funding business late allocate that product small back that and stressing remarks on world our our profitability. the the One team attain markets. income with to high expansion have in five January near-term and markets the of what our growth, results generating in past rest later our reengaging expanding the By the means with close we initiatives support and expectations returning We SmileDirectClub demand. products was footprint of shop These had strong with of operating of our ways our consumer network, forecasted

median than and of But one bring influencing able and to are to been household economic about that past teeth to half realities year. income talk been let's one base market our expand have tactics traditionally reasons to customer consumer we primary without our First, has a priced spending. demographic our customers This of Recall more customer customers' this worldwide. There core of the we've that $XX,XXX. evolve needed out a is offering this this options. straightening teeth the with million approximately straightening

their in items. such we inflation I last spend the affecting factors late on as to to second need as Just quarter past in that of now, ability With our pointed the to existing on year everywhere have discretionary case forcefully don't inflation we as have point. we think make economic

our as not there's today think that that well. consumer is middle consensus that the challenged I broad income is only customer to lower base

quarter a on more since past inflationary what to consecutive every goods of to and provides consumer experienced with have on appear seeing, capacity charts of the upstream early what reinforces as cost with the our income are and with services. consistent we've We logical this In deck for higher updated non-discretionary was included items color pressures increase. increased we sequentially sensitive, earnings such items have All to non-discretionary source X.X% friction several discretionary mid-XXXX. cost spend are in less be little three this decision quarters, an as XXXX, January price and that that month to more most higher of has the expand reach our our demographics even nearly

January credit With have households basis. Child last been of half XX passage that a This to the pre-receiving approximately July, Tax on on have the spend. million their Credit could impact XX season in monthly

curtailed income. presence less this $XXX households printers, upstream adjusted patents integrated differentiated unparalleled integrated of a the to few customer These channels. allow XX months, incredibly the difficult challenges for with overcome we've the clear to straightening nimble XD ongoing folded non-vertically develop we manufacturer to with us stream will last of online last our per months DTC than other of the include moved the income in business, have SmilePay are small state-of-the-art of headwinds believe for these the of payment our than tents several teeth largest a FDA assets at necessary qualification and lot competitors who adversity their household aligner scale, but be the offering and has existing clear are years. facility technology medtech financing Given over These gross to assets have $XXX,XXX and benefited our the more largest innovation, in on, and requirements, success. marketing few We customer and Unlike dramatically with only fleets replicate experience onto U.S. additional our expand and assets along capital customers in issued for acquisition long-term the believe vertically and registered platform one cleared past

across July, Last Challenger purchase the success, online know decision, those friends value all we and and family a to continue targeted spent with three an the launched and that three that assets channels. straightening brand lines they quarter. up believe highly important While we buys and references, seven talks why is their credibility years channels to opinion customers trust our users for a their rely have we and of for that to reviews, decision. we to important smile these choosing throughout is dental with customers our we over They build brand proposition end know on love campaigns the ramped check and that's have last solicit your making a the a to brand in build for the This When investing they our professional. billion that marketing ad considered teeth $X information. and go important is of brand

campaign recall. demonstrating and excellent Our ads are Challenger breakthrough

XX% reach in It's the effort position noting really Based is our consumers. two just nothing cemented meaningful channels in as income or in and that have worth a this a it's and high all brands ad to to competitive on not remains our have our we horse to research, share U.S. demographic. customer much expensive. expand campaign. I earlier, change campaign our continue We piece to across of concerted to less experience But with race noted This perception a this Invisalign, is product gain an larger the

this harnessing network. accelerated Expanding on and which have smile. brand well customers, material and a partner on formation of our XX The to Deaver for We the dental Oyeneyin our GPs a Arielle of help that strips. with across convenient to with as new utilization help by commercial by not brand will the with Network. dentist growth underway our with with orthodontic Walmart network build education strategy, and Amira, Manager this and professional the the X,XXX the included channel. for reach service Dr. announced by global celebrity strips, care transformational very Partner of in sales, fractional fast-whitening are of we hit innovative our capability dental partnerships which to Van advocate Confidence ignite care access the BXB to the be customer the strips had Council, which a shared knowledge new partnership credibility is in majority get new the will mess and in we will Brett Given in us. of join percentage easy further Tunde power million the drive Brett fast-dissolving we partner General and could to their professionals, Ness, practices. investment leads during to a of QX starts Jonathan the a our many Vandenberg, healthcare launch who SVP, as advocate demographics February. mission for innovative reach the of way to We of of He Introducing treating deepening influence increasing space. the and our light shine cosmetic solutions end-user shelves base, without Further through previously extensive end appointed oral tactics consumers, results case whitening annual world, focused as adoption and brings from traditional of

to we including Stain whitening Wireless addition, and Barrier. system the Pro continued innovations In launch Whitening other

scanner vertical software earlier, more rightsizing AI we notably enables visualize their for network our a Last our of delivers mission to partner and supports adds and of patients We broader I Carestream allows integration Shops leverage to doctors can most customer the the doctors expanded our of our platform range of Edge utilize tooth addition enhanced better intraoral care. Leading aligner software patients. of help in treatment efforts spite SmileOS. throughout scanners SmileOS treatment. functionality the movement, utilize to that our they Smile partnership next-gen This locations. providing Carestream's in partner our a partnership to superior experience we greater and planning. week, to announced accurately creating accessible network proprietary R&D treatment network treatment mentioned for in cutting to flexibility exciting Health will with clear how business predicts planning of outcomes, treat announced invest our Finally our openness locations continue a edge

that see innovations continue phase on for our foundation Pages described next that growth. we want our see, outlook can supplemental solidify outlook for further to XX. long-term deck, This will you market to you you will In focus the believe to on bring I XXXX. the our we the we've the As next already XXXX With five that and of Troy our through guidance walk release, our XXXX encompasses through XX and in earnings years. in momentarily,

highlight gains about I higher adoption quicker to in of partner I'm and Before investments network that the demographics expansion rates faster produce require I the and our that begin, to growth present. want income above numbers could

to increases we and costs aligner to Beyond profile in on expand oral Annual to Selling and continued volumes at products. by a year to to of spend the basis offset increased X% the of XX% higher growth. on care XXX margin products. remain improvement and to Gen and utilization. lower oral XXX to spend modest the compounded based marketing to close with show XXX range anticipated gain price as annual marketing show X growth increased at gross margin as strong expect G&A expected leverage inflation, continued margin the returning growth of by fixed efficiency, to margin each dollar is points of points on on CapEx total of XX revenue spend in from leveraging XXX from utilization, XXXX, in aligner shop care points shipments improvement gains our each X% to by XXXX each aligner revenue marketing pricing basis to year is mid-teens revenue. expected is levels grows resulting Gross leverage XXX year rate grow annual XXXX. X% basis of we increases, higher based

be less continues The math million is our large means imply there the would and world profitability can flow opportunity afford of of global underserved cases market addressable return crowding would and and and within of these to are that half. clear sight using there than treat approximately people for whom the spacing, expand. XXX Between SmilePay to penetration annually would Within and an that moderate the challenging XXXX. the a the during cash who our XXXX to is can't we aligners EBITDA to here with orthodontic market by Now XXXX still positive are times and It's U.S. approximately treatment by million expect total to or we clear doing aligners orthodontics XX rest appropriate mild program. that to lose that tremendous and worldwide starts core global customer. that

income have We achieve These successful expansion, and expansion, network over profitable growth to SmileShop and professional multiple include and higher growth just channel growth footprint I've through. consumers. retail what of organic outsize avenues volume adjacent above partnerships, walked targeting product and

opportunities. these before, As surface to we the of most we only begun said scratch on

growth us now provide more Troy QX liquidity, months XXXX financial hear more detail our outlook. our expect results, call in for on turn Troy? can will You I'll the over the avenues on to all And these ahead. who to and from

decline on is XX,XXX Thank will I'll right the into basis. was of of X% by additional investor which to you, is up shipments the the a and for our decline $XXX our was primarily year-over-year. results David. details year-over-year Revenue provide $X,XXX, cover. XX% driven ASP everything X% website, jump which for aligner quarter. a an posted million, be quarter fourth at sequentially, of which supplemental to our I of latter initial on review materials This sure Please

more versus prior year. QX X% have discuss The $XXX gross to For concessions say revenue is headwinds X% our I'll primarily of call. mentioned some due in price the David results the implicit our million, provided quarter. revenue from outlook other third on that down guidance revenue to which for up XXXX XXXX. when factors to in macro I decline is these earlier, revenue within XX% the and were the was earnings aligner QX full-year details on were our the revenue range items, Providing our

As overall we and We quarter. was The due cancellations. lower current separate we rebalancing IPC on higher to this maintain IPC regularly have rate based this and quarters, the revenue mentioned reserves prior in on for reserves rebalance those information. quarter analyze for

is other revenue QX. revenue, QX $XX QX. slightly which program relative net receivable retainers, is $XX at due slightly in lower approximately revenue SmilePay came at While The revenue, IPC revenue which with was is tax down as delinquency were for Other is our Reserves prior gross and accounts which our full-year historical came which to implicit adjustments with to million, other includes products in the adjustments, down impression the XX% came up whitening, aligner refunds, includes price of is with concessions in reserves flat quarter, which AR consistent to Financing interest related and which million, percentage to credit with remained and a of in which quarters. rates of rates. kit balance. aligner the strong associated revenue, at line gross sales X%, to and ancillary

to strain financial SmilePay Overall indicator full additional QX delinquency Now well. purchases. pay rates to SmilePay XX.X% Since below the sensitive turning with perform quarters. U.S. has than customers QX down macro of of This consistent more in U.S. aligner decline at we SmilePay factors customers the our price on this as SmilePay consumers came QX In to believe is we customer. in core relative historical view purchases slightly X% putting decreases prior and SmilePay. due in rate an were is in levels. And to our continued initial

the on us and had file low gives a keep we payment admittedly, will While confidence SmilePay a core fact monthly with card well. the macro environment that to have credit that continue customers the difficulty our perform

due of XX%, of Turning along of the Gross lower had produce attributable to items and about basis reserves. gross components to margin our with a couple our costs a items margin costs, including deleveraging sequential repeat, quarter. XXX don't causing was these startup implementation, is results representing side retail points on for margins the will SmileOS our on about XXX decline. a retail decline sequential about business. the fixed basis point to impact adjusting the cost higher higher This of with to revenue well Collectively, the international inventory business, in our a we quarter. expect items And expansion for our this margin quarter associated manufacturing as that as retail XX% gross decline costs the non-recurring these primarily in

course the at we locations QX. our comments XXXX from net up of XXXX. came year-over-year hit at of and with we XX% as of will These of Marketing This consistent the revenue brand with Facebook XXX second efficient as more decline reduction our meet quarter Our to permanent streamlining result total machines to is expenses associated some product end been in fully have of of targeting challenges January pop-up and demand turnaround of and a end to scrap to compared at XXXX awareness, time, efficiency revenue end, for international the spend to an meet outline club well is helping revenue approximately least XX% total percent us SmileShops, attributed members. building, of SmileShop up in and I'll the XXX target the productivity, markets. in pop-up or reduce later in how superior exiting from a $XX That had XXX expenses selling held the the The the primarily and of marketing the is with sites. increase marketing. generation in environment. to as of macroeconomic in and the in demand of events quarter with XX% our in marketing to the that are international a at enable actions XX% as sequential automation our from resources for and our leverage in is is events pressure cost and a took selling consistent my internal the QX XXX marketing over through but net increased seeing quarter aided related revenue our aligners, location we're producing increased On of now referrals, and million, increase also the QX a XX%. from order way coming and QX significantly XXX

We and profitable distribution partner network. where we critical have evaluate now We continue network scan locations globally over primarily QX additional locations. and to these from of to believe XXX in our and supporting SmileShops to in that of German reduction the XXX partner the private practices cover due expansion are locations from of They other pending pipeline also demand models and with been incremental have of market cost exists active locations. active DSOs an productivity. The training deactivation is or low approximately X,XXX exit the

leading With to productivity they been within extremely the on the engagement practices. maximize model focused and have active the Deaver of team, addition tightening Brett

number a total base. total increase partners number of practices decreased, the the remaining has smaller on while So in increased in productivity submissions an case has with of the significantly

significant the selling XX% in U.S. quarter in our to as was investment rest expenses earlier, referenced emphasis. long-term Canada. percent compared and in and Sales marketing a world brand of bear marketing our markets, and revenue that quarter's out reflects in to results building of XXX% support this As growth and the

believe prospective nurture in and This because SDC Facebook, to strategy will volatile aided in of marketing, of We awareness. spending unaided and brand network. consideration through being through will and our efficient our customer investments reach platforms We expansion aware business have greater long-term be performance sales such CRM with expect to that improved the emphasis funnel of also more through members building of partner system influencers, increased less response pool at approach through we result our and and greater capture can our this will lead in the direct high sensitive continue effective marketing as processes. we the TV, club

showing As to per capture website. visit important sequential continue And indicators increases strategy this expected, XXXX. we we into lead the Canada to this into in U.S. trend in lean early are expect and our as

from to administrative QX compensation convert to continuing $X.X subsequent and loan a QX million our in and lower are XXXX. include the interest approximately long-term $X of $XX ensure cost with compensation headwinds legal the included $XX with associated of were leases. one-time expenses G&A $X of strategies The compared primarily costs, media expense to We of $X.X and and of long-term segment with reversal diversify efficiency QX results. lower iOS cost $XXX,XXX cost in was XX.X phase was was and million, issued based updates, million. million deferred a million associated stock-based earlier to the capital loss. million full-year incentive also settlement privacy investments in Other due was costs which lease associated on accounting, expenses $XXX,XXX of in year, we General

All impacting USA region Additionally, Breaking million. of at EBITDA adjusted negative million international Canada, the macro the of EBITDA adjusted $XX negative loss with out other million $XX the facilities. $XX of for one-time to our produces came this factors expenses currently all-in of due core with some quarter an and underperformance the million to customer. in approximately it aligns which in regionally, net $X above closure the related cost

EBITDA For rest of million. $XX was world, negative adjusted

fourth plans. cash from $XXX $XXX less with the $XX was on fourth have into we to We and was Free Cash savings fourth Moving the from as the investing negative was execute in the cash balance investing in flow as labor liquidity fourth sheet cash operations year quarter for associated million with and well and ended quarter million million, spend mainly with from for in cost sheet, million believe software, million. defined automation the $XX Cash $XX for facilities. enough cash capitalized balance unlocked $XXX and cash coming as our we manufacturing equivalents. the cash ended quarter negative to million. and quarter operations XXXX on the

the have and shop terms value access to often structure. noted accelerated through such to initiatives liquidity liquidity evaluating embedded add small and any and asset our We base previously to have capital unlock additional ability investments are network to our on partner that and expansion. receive our offers we support in unsolicited always favorable liquidity we We additional as needs

we in to refocus on reorganize operations actions previously impact company mentioned Overall, As minimizing meaningfully revenue. our million. took our and profitability, cost expected optimize business to these near-term our approximately actions costs. January, These $XXX on to targeted are reduce while any reductions achieving reduce cost by

exact efficiency from million. gains, to While from the the operations, rightsizing $XX $XX and general our international costs during savings should selling where approximately model savings the and in understand breakdown year, sold of automation. occur. our components be cost change expenses and million targeted scaling markets Reductions staffing will Approximately the million back productivity administrative and the will will approximately reduce help due goods marketing following by could of realized the you cost in $XX $X of through savings primarily improvements million to by

remaining and reduce save and support We and expenses. the $XX also will markets from $XX corporate million operating expense in to million project-related team between members

reduced capital Lastly, to million projects. $XX of for spend expenditures based we reducing million $XX disciplined and expansion be redundancy by capital will prioritization on

will the to customers key affect supplemental our XXXX. points macro Turning few continue believe We XXXX, to I underlying our deck earnings environment forecast, a there guidance to point the our are for assumptions to our would through for note.

costs million. or investments or to does of of second half outsized expansion customers XXXX assumes related worsening and volumes not our to $XX driven fixed to care the largely a higher from driven $XXX $XX the revenue The Our loss million XXXX. million $XX million Adjusted partially million anticipated environment the $XX year partner by shop and is million of million. include January continued footprint. for The our contributions customer. small by between Capital products between any one-time carry revenue. leveraging increased macro EBITDA acceleration gross between margin. our finally, of $XXX for guidance lower range costs, XX.X% of to headwinds offset flow-through from between We be in impacting the end million. oral anticipate on by aligner in and core lower XX% announcement network revenue end and expenditures contemplates margin And reorganization the $XX higher that ease Gross volumes a with our $XX also

joining third results financial We call. in our brand our provided our of improvements among line in the deliver targets our operations are consumers, provides brand quarter Combining credibility QX with perception pleased strength to with and continued a With in solid XXXX and help best foundation for to you provide Q&A. experience. us the our to Thank and long-term I'll everyone member club growth achieve operator to targets for today. over the back the that, turn call

you. Thank

first question-and-answer be is now [Operator our Instructions]. will question. your We now Miksic Suisse. from session. And conducting a question Matt with Credit Please with proceed

for question. much so taking Thanks morning. good the Hey,

year you've made demographic, half is of an effect this assumptions your into expectations pace your and forward? just you the going around its awful about guidance lot for inflationary of your pressure, and and some the on which plays on the that of of sort year something assumptions question one back talked how thoughts on So the

take one. I that Yes, can

first was start So now. summer, reported back the inflation into of shy were to in and X% approaching the around of we back companies little X.X% was one QX about then X% in QX I talking it X.X% believe increased, January it just in

So in happen knows look, going what's nobody has XXXX. control to or

of it And the some this can believe continue. low range at million hit we higher that's to is based Our the be guidance of ease $XXX we is that the We things the inflation end if do. to of high-single-digits, that worsens, range, low-end to on double-digits the of can of type going going anticipate range. government's starts the we that it

So counted anticipating will everything far as continue. that for as this is

built to continue not that agile, be And are with and that tactics some up combat come models to will necessarily we're fight to into of the doing the tactics that. solutions

not One we network, of quite as by incremental then expansion the income inflation. our well. group, which higher and into isn't affected into And which believe going household those as partner this effective is is

about And and helpful. Thank flexibility for your model. of on trajectory some and of maybe drive looks savings like? what maybe then into restructuring follow-up going talked that trajectory that's your that the how fair of the or and that. into you you that's savings amount talk your a just factored -- Okay, Can a cost the the to brand are marketing about you investment? spend And the

offline, a of the standpoint, of that's so a Yes, We digital all channels core all, of to in from them. TV, from marketing group. first competency all direct play mail,

business hit And we normal place. when in COVID coming taking paused in out started the since have are a long-term increases price just model, taking the of are We price getting we of inflation and by of really we in move -- We it's most form iOS. Facebook a had leverage price privacy ability we showing had our of such to different a now over increase. was five what that's of announced. as we not increases we've in we're companies with more price what kind we're done increase that -- pandemic, state, the the this we're five-year and watching period. So a out done in we're But off affected is the been hitting that channels, the some

over to price be five back on X% X% in going next increases get a years. cadence So next the we're to regular announcing and a month, the of increase price

the that some years. off five can efficiencies we our leverage CAC next up X% the spend. go get pretty on years. continue the to will be We five X% with that'll next the the that get we'll helps over our and modest. But of It's anticipate marketing do over that leverage to ASP So

Okay.

like a is something continued know trajectory, in marketing, to like say -- improving margins is drive brand this it drive fair? that that sounds spend that it on the high-level. So operating pricing leverage sounds other you'd and investment a and at things Is steady at your are

fair. Yes. Yes, that's

a dollars, in there we marketplace. more dollars we've efficiencies, think, be put know, you will some in and as the put as I billion marketing, already

help will more to CAC. NPS into so are the mid-XX have the our which that You of lower scores your XX% range has got in that awareness, equate now, referrals,

new The but to our one to be us, More and customers' experience the of with a post on post a more reviews small and customers five passionate asking about in on marketing year. more we SDC. it's we've million other to great And think is half I TikTok. thing a one who And Google going with enthusiastic a we not it's or when has launching, strategy Trustpilot, viral Instagram are a efforts difference. this ask four reviews. tactic, a them currently, that very to our overlooked, viral literally over we've Google. to got that is we customer really it's, kind we talked a star their to XXX,XXX we're our couple harnessing have base, going about and make energy another go are marketing members Getting But posts, around

and CAC will So reduce also get which way we're and a to more marketing asking shifting think posting, our business. providing customer base our referral we our for tactics by more do viral

Thank you.

for our help drive which a made the selling that add to million come of cuts $XX bit we in will will a savings $XXX leverage international of also little standpoint. million about from that the from just and initiative, marketing And

you. Thank

Please with from with Goldman question. Sachs. Our comes next Nathan your Rich question proceed

take to you Invisalign, of do And typically channel, if X% this in increases embedded price level that the with you we've Thanks well both seen first, comments, is what's in just XXXX Hi, up doctor longer-term good demand that following for to on how the from think the as a as I for guess. guidance questions. made outlook. year, in Maybe guess, the X% on morning. increases the you environment? I I sensitive that's think above pricing, do kind then, David price

you relative kind do differential the about the of think that that proposition value channel have? to how of maintaining So to price you GP maintain kind

Nathan. question, Good

with Once price follow we a that I and reason, for the still clear current the demand, they Gen today laser-cut therapy lead. manufacturing, the have the our X automation, and customers transact. started go leader, up, than price this less point equation unit at saw the our every comfort. especially the that advancements would So in up, treatment take was not ASP. the We're our done braces our aligners' work marketplace. not the we We we've started how The There's prices But smaller out wanted nearly planning, knew which of and five our treatment we're All low we are. product increases. SmileOS sustainable. planning $XXX by aligners fit mean, is is couple raising just business that competitors are we've and XX% taken there's see consecutive with five our We because to we We go our years. ours our no right? price the what year who economics the outstanding in way. made

if So over for to the model there out go deck it still in look better us what's where investor XXXX gets XX%, other still It's than aligners. XX% the at up or us insignificant. and clear pretty with up you to savings

our on monthly anticipate go up protect We'll And the don't going payment. SmilePay, single we consumer pay. so relies to up the who on on

you So $XX.XX take at a if do the math, at you increase, if we're X% $XX.XX. now we're

So a $XXX. went up

mean $XXX that $XX the XXX,XXX to line. way million bottom So that's units and annually

SmilePay XX% month, the tested Okay, price we've our a different that going to points. is but $XX sweet on maintain that's spot, which business, of because we're

long consumer affordability to from their we standpoint, the all term. month and so do, plan straighten extending And teeth, is $XX have spend the as a what to doing we as on

it months, maybe price months. increase, XX of XX XX instead So maybe take another we months,

increases, standpoint, past, So price from we've we not seen an take by the affordability has it way, when these in our affected the and conversion.

the by the consumer. financing this selling this to we way, feel and XX% and ability offering is about line they're not to increase to not So the good consumer, take the very

price who doctor or the their -- to either consumer. raises for selling to they're absorbs or the So the prices increase,

matter. our So flexibility it's the And too. and I and we of that different use, this cake little for a having the can terms we the it us, financing, having can think eat captive have by SmilePay

XXXX. more the kind are for Is year, would you're maybe consumer. how quarter-to-quarter. just outlook sequential expecting be I that on is maybe going looking pacing half, at that were thinking the growth growth you'd what to Does apply pressure the helpful. follow-up with kind Now, could for great? weighted high-single-digit us we be on just the revenue cadence anything a Maybe kind do given about in maybe XXXX, over it of looking near-term help And if Great. year? we the revenue back growth to like of you the That's seems of of some sequentially, quick back towards of that of growth how sort of you thinking guess, kind about the

Yes, I can take that.

would if of the with being XX% looking the you look at back the way of XX% because So see be $XXX QX half front the than to million year. at kind little half the $XXX currently. to million front full-year, being we the We we're expect economic year back we're in macro the conditions definitely little the XX% half than That's that of half the QX. XX% bit to better a of And it. stronger seasonally in of believe the just will be a probably to do in we

Thank you.

Stephens. with your Our Chris Please question. next with question comes from Cooley proceed

taking the is for Chris. this Ben Thanks question. Hi, on for

markets? new to take these to us demographics over marketing wanted dive the think Could timing the and And years? help long magnitude how the to looking understand reach? related first you're better Thank you to that few next spend it'll develop to of you in the you. Just new do

Yes, good question, Ben.

for higher, model and the index. market. get of we household We in that XXX,XXX is nothing but more income today under capturing So do

now, and we million -- to Like $XX us to. get starts. it's range If get so a we initially to said probably and case market it the fraction the beyond then of right that that we even And end and get guidance can just we higher then really think meaningful, to indexing giving back are of over want indexing. above that very another level

plans, one some working have initiatives take time. we're it's on, We of our it's to big going

you'll think braces we very which traditional QX; less rollout have XXXX, I customers time to than the very and that in start in because is we just it aligners. kind products, that of plan. going coming not of and are involves all together price, and real see can to this don't our new household understood But the markup dabbled some a put that making the a it's sure this income, XX% of that we think It's of what the consumer. comprehensive are that we about appealing some three comprehensive be advancements we out higher we all we of solution made it can product that services in offering for innovations offer, to make our

see whole then test the And the launch can't to you'll I lot half the and later and say of that measure in continue So but upon. today, year. of a expand back we'll

back you. moving price pricing great, to very Okay, in or about thank increases Then, the That's concessions that think just Thank levels price does forecasted forward? helpful. can you. reserves we quick, of how historical the real come jumping with increase and

credit perspective, our pretty last cancellation an reserve think I consistent, perspective. been an expect and we so. From would say consistent numbers very over consumer I and from overall year-over-year Yes, I would has year would the say IPC --

you. Thank

Our next Please your with proceed question. Jon from comes Stifel. question with Block

morning on more just a a that it provide more signed the And you sort don't for for I for maybe you just from the metrics like from at because the there? if time. better little volume initiative color platform, guys to on this bit get seems have, is anything six key partner XX months or been traction that while markets than network. you or international that cleaned that out been It's and up guys have economics. to have for Thanks Are to signed would on CAC more months some of you're for how on perspective a there a you more longevity any exited. I guys. seeing are those about there that up But talked Good if know it know start, practices up any

that's good point, Jonathan. Yes, a

We been be hired on growing as definitely to are morphed up And customer model, ready Deaver dental industry the signs that going a hunter of of service, once Brett start more we've space. hiring in So we're he's our some tinkering we've be with been He's which up an a really accounts already to farmers practice. it. model the we where hunter-farmer to veteran talked about; initiative. coin

and the it's and XX% savings. all on based So it's about services, the fees paying we're CAC you're on side, right a the

So mostly these incremental. it's coming practice. And it's These spend. are definitely brands. SmileDirectClub the are are something help their customers overall our from introducing these that And marketing will with patients

we we Invisalign, to I to start companies and know that But to metrics these some $XXX And over grow We're get similar real Partner include aligner and will submissions, do growth wholesaler does as see pipeline's in offices progress, a million less report these offices in we a number hear in you other the a $XXX because or million the on so -- really than we're guidance some you'll little going X,XXX. start like like to of submission. clear X,XXX metrics, what happened down out, of to as want offices, once hasn't therapy start guys again, yet. to a Network, today, growth it not

of went that learn the model we're these and of that kinds in go those we other active with one the things total test network hard number not doing, submissions this I we're So submissions came initiatives and partner of substantially, but up. we're down, and feel that submissions these offices of is really working farmer about up, locations doing, some seeing think XXX we're getting and up on our

So couple so will out. of can quarters start to of grow next we the model you we this, things I it start as think, that some in report to the

got for Thanks. just revenue like exited adjusted you've in rate know mean, network XXXX. that I for still number. XXXX, when I the there's overall about million, was maybe I the $XXX no shift look you Okay. of international surging, Nathan partner you're likely million That's And gears cadence tough that the out XQ markets it's seems inflation $XXX run at earlier helpful. midpoint asked exit it there, the But XXXX, shy to just maybe saying

million? of So about, healthy very it Thanks. can what gives that like seems in just you and how conviction there, numbers, those of very, $XXX sort a just you ramp, a midpoint talk you get

can take Yes, that. I

So, I mean, you don't have to go back far. very

to about but we of aligners as XXXX on don't point the standpoint, XXXX $XXX QX However, exited shipments, in XXX,XXX QX QX well. a far aligner XXXX, and and of XX,XXX from shipped, out we number you there go over see $XXX back you sales do revenue to did have very million XXX,XXX million

well has we that that able think is to need hurt triggers we improvement we other So, macroeconomic see in economy, really be all drive we some is the can as really really environment to a But should pull we little obviously some of there what bit have, us additional so the growth growth. far.

improve So improvement just from numbers see XXXX we an of a there, should little we with. what bit exited

get we take can number, improvement are overall, million environment. we And numbers believe the growth to feel flat little out, really do from macroeconomic there's bit some about is So if those the considering just pretty we XXXX. international of where with same about the good you which a the so $XXX is midpoint,

you. Thank

comes Our Alex Please Nowak with Craig-Hallum. from your with proceed question question. next

--? morning, spend is slipped for believe I has wrong this Yes, Alex. spend. low high between Do The good the originally Yes, company was just [indiscernible] you one. had and company

it in, anybody hear I can't else?

me hear you can Sir, now?

Yes.

go. you There

brand this level reduce Sorry in expected? was originally that. And slipped the spend. I the has company wrong awareness back spend Yes, at spend SmileDirect, believe you in of Do XXXX? to quite a words, high had about company low few, was and just not between and you other XXXX the

QX you we have going lot are $XXX back-end I didn't our these mean the -- were XXXX, numbers, Gen growth, coming from went XXXX, treatment have software, high into out the growth a spend, didn't rough we infrastructure not not have of of business, question, million any XXXX, understand infrastructure we we remember that fully the $XXX XXXX planning didn't $XXX spend. today. and have in in and hyper mode, were keep you sure, into definitely XXX, the IPO low if the were say I'm million we million we automation, so the in I X shipments late, up with the back

the growth. we So market down slow on to nobody side. own telehealth we There's us, the chasing decided

right this do. to And experience company customers. mean, to that focus; was to the great customer that's centric me, we're want I we very have so our thing a for

experience issue CAC And customers. point, is we in the at to lot five starts signal now. loss, We're -- the given our go up. the of today star we're Part with the for that have so XX we're of we that right that were back a a back using so channels iOS

that play good all you to we have The like channels. is find in said, news different So the other I channels.

other we're we quarter, where looking have more shifting issue. podcasts, privacy don't direct at So this vehicles that mail,

did, on stuck that that fast. these people at big of sales thought and getting we'll allows be very came continue go And be mid-teen can we that okay. And XX about market that's and agile. the think levels allow headwinds good counter it until increase testing Facebook a we We're investors on other side something to nobody very in and us the very as iOS punch, others. The group. a inflation this CAC we learning like can feel a that help mistake channels. as would impact would have do But exists the if and of would turn X% the us to versus in percentage wishy-washy. handily so I throws it But opportunity that price And does and spending. not can't The other more, the And shift you the CAGR, we're way. agile we can we flip-flop we're our

XXX we good see So we definitely Partner and we're pretty call. back were I cannibalization. household haven't about this expanding, Network, really pivoting And some were higher over talked have we income, the a we think started lot which lot initiatives and shops. over to then we of or nimble, I doing we think we're on Pre-COVID, things expansion, we're on SmileShop a like

the subsiding, shops, journey about subside, the to what gave start us COVID XXX have reset, have COVID reopened we more through on that especially shop. ability now people has want have and to reset shops the So seen, all the as it is that we

slowly a not experience start only more to through to that who customer. shops, wouldn't get person a we're going the some shop are you test so also kit than otherwise And a into with want conversion incremental, to And market. going which the has SmileDirectClub, do higher kit

able if it's to have it's and kits we're more of that to stands enough DMA, if incremental, to for shop profitable shift even us So in them, just a there. it's

going going to we're we throw conversion just the light larger there be out allow shop slowly get end tunnel the have SmileDirectClub. in shops to with to to a incremental spent so see the more something a XX marketing get a that's but footprint, if that people can higher So same that at our we again, once that of not would dollar numbers which another, there start to in or is I'm XXX number

Thank you.

question proceed is next your Our from with with JPMorgan. Marcus Please Robbie question.

lower call ability marketing works a Facebook than with iOS online two the to there Oh ago. the decreasing your think SmileShop and the were that, forward? and first productivity year great, do with thanks some it How percentage you're increase you follow-up about let's to sales advertising taking Maybe David, going for or changes the question. on and presence years as of the way just selling is

think I a the talking So, same been yes, I've about. lot of that stuff

us. So newer productivity to longer-term more of play; and awareness it, for it's a But find well TV of worked it's lead a driver got the increase has we channels. play.

to every that'll Long-term off. growing we've a awareness X% getting it is So numbers seen pay quarter. up

to certain someone's and years, income So even person average when going their purchase, a profile, maybe see is the string has two over more.

and So get a spend, get as off. It's immediately immediate you will quick as not pay that a sale. through a Facebook where you

whole have better companies So better the help, referrals, will and viral drives here. I hear especially you're in experience referrals, real, hearing marketing, more better a been NPS thing customer with it, your talking down about things CAC. This think lifetimes, first embracing other you new scores, I'm it's that

deal with You're marketing a spend marketing, DTC digital. of companies about that with on same because lot the lot consumer facing their are going a and viral hear issues more to

that And and energy. half something like, really where moment, need shop box, of have these start good of look at I they that, shop a we to when excited we're SAO going of capture strategy the and open they really how they And lots who once on, journey. that a they're was a their that's the that we that's experience, fans, a that try have think, coming box, out we their of to harness passionate ship to get use. they There's it to are so points million good them, using, back wow,

we more productive. XX% marketing, in can get dollars that more referral make X%, marketing will if which viral So even business also to our is get

So hope that helps.

And taken drivers still should as plan international a about on Okay. Or biggest the viable of we expansion at market? this is out as long-term on a how the permanently? maybe company's thinking the a originally. that back, follow-up Because, depending point? Is growth was it of think one view it option, long-term

in it plays So how about thinking just now? Thanks. right

countries, down a seven that We've asked something since bit been countries. quite we question. getting shut what good neighborhood Yes, on six

lot telehealth had it with certain after's. before Germany, have down I seeing come teeth We Court not advertising exited; tough They countries and companies loss Supreme So would of restrictions. there we had of but advertise gains, it's was telehealth restrictions. forever. could couldn't advertising paused on mandated were slow. just these was we say, shops they it's market a A dentistry really in another Spain had it medical and direct-to-consumer. devices, tele that

countries to back lot model we're mid-teen lobbied have that which a that us there. will today. because other any we that countries ease to they're of in But the restrictive help in now So this get the not does I of than which include think help time, some will the being over expansion current care --

will lot on investment site improvements has king. anything and return marketing to make income. said so sure three We going in that though we was of is near work, just we cash we're the other on were financing costs year invest of side, as did be lot countries. was investments apartment, higher very long-term. on We kind with can India, the going we a in today, were what investing seeing that quickly, to such a was to the China, It that we in over is we're the want that's We We're too exited make long our ROI and on countries. horizon see but We're work. household cash. of side, we date substantial, some in work, regulatory And if as the two them, to the of on call the position looking happening a not what such return so these reason even

works allowed. kits forecast, it's with it's lot the market been as at we licensing So and for, couldn't of not but countries A launched we both was the houses built kind so that of was didn't fairly A a point more money, that have the were Spain good ways whether, we done easier a these And there cash at we of some business. have And see recently a we pause. shelved lot and easing up much go-to-market regulatory kit environment. marketing restrictions.

have in Less your a So market SmileShop. don't open. expensive recently to success. opened UK have a and to when you is a that we it regulation, very was Australia. proposition have business We're what France a to Germany you in really have kit we that have opened dentist market shops, saw these GPN. good another we in shops pretty like was saw

point horizon there's time. issues of to these lots a that us things this regulatory long-term and just in be with at countries for these -- So makes sense caused that unprofitable

our in haven't I'd say just included to that, Yes, the and things international, add really we beyond just model.

now. around about XX% that's we're partner past, may at all. income many into so network And that in you case haven't starts. in mid-teens If XX% we tapped into opportunities think that we growth entering have the But market, higher to really consumer we talked which XXXX

lot like that international category well. beyond So into network, I us as piece just well said, for improvement as a a important for growth of small just as for entrance there's us that partner an SmileShops be will opportunities

Thank you.

Bank is with Ryskin with Our Please America. Michael question of next from question. proceed your

on is Hey, This thank you. Peter Mike. for

one Just me. for quick one

on you you what's But it. a back in I your that maybe digging world Just or more sense of back your XXXX? in for quantify rest touched in a other of I percent there, can a revenues? of embedded you little know expect base words, just case bit give guess through by Thank XXXX maybe would what you. mix compose those us to

take we're from those, can that. The of very a what I two -- of consistent versus U.S. world is between rest I at say. would Yes, looking the

in year that about countries the been about we split. XX last it's So did we exited. million an Again, XX:XX

we of overall, So initiatives we a about. built we perspective. would some talked say growth lot But the those expect in that haven't that gain international to I back long-term just of from

So of this with organic we the those growth customer to be U.S. kind that really expect rates similar growth the and is existing would and between international

you. Thank

question. proceed comes with with Jefferies. Our Brandon from next your question Please Couillard

Hey, morning. thanks. Good

at Just would channel back to what the we the priority have Or should assess pending progress look that year? of KPIs or your active you many over expect end locations network how by year? the partner in the to on

question numbers are couple do that those of will giving I the There's that in think will believe they trained this happy happen like become we're this we -- more Things so submissions, number we open. to out that today. But topic. year as another opening of Yes, meaningful. this and be quarters. on And next not locations

a So within speed in active. that's on call up to those design what going. three-week there's goes we to They're come They about the them get offices training pipeline. live, that and

together, flux engine. those you have be offices, on SmileShops, But a thing going SmileShops sure XX good We whole are to at make saw work. that month. that comes and calling at these we're the pretty We're we opening were what an that's as it's call doing, center. to farmers casting this when We starting

our as expanding did the revenue, will we'll So, that meaningful network, it -- just like the rapidly world. start at of and part start partner to rest some becomes point, we it of more more share with will

talking from about sales of coming business. Aligner are our the partner percent we'll network. So start X

so on getting the the average, channel. that many on another we're calling in many model Here's company submissions we're wholesale similar offices so clear you here's is in, to see professional very aligner

metrics, similar expect So KPI.

like, But potential that And network Is or include accelerated what view. one network funnel? a would the be curios that that SmileShops thing? just would curious that just the revenue expense What you'd the be. out of what or a macro expansion would that? traction Is drive Okay. point the with change any point clarification, from spending? of it partner does trigger guide it Just would

on our just high a still everything. have hygiene allow get I ignite little growth network real But system partner don't what's the macro good productivity the using the of a scanned and is some dental Gen is our to like the so and another want less we're in by that and they Carestream networks. of these into approach invest with But a X. takes inside the announced over working doing. to partner loaded time cloud out household network, option. think go-to-market there two-thirds lot it going the couple Carestream's it's for partner us other partnership. We of engine income. option. the of get on, dentists placing specifically A things the to them, that hunters. We new start we're patient And things pressure high But farmers this it's because because And about great for offices [ph], two-thirds less Yes, a

So get a our little models to the niches start sustained to traction make we'll level, see we certain that submissions and and accelerate that then sense, we like can our growth. once and

the in growing, are got new are practices, we we X,XXX We pipeline. opening

come you're We I fruition we'll to Same things the have growth, on think but next month. see in few we to little that. aggressive SmileShops, more are we to asking some growth see thing with start And what more a submission more side. a continuing want for the then

COVID. have We not say our we which I back that. XX opened SmileShops opened since new up. it's new think base SmileShops, case I shouldn't really

may shops ones. have We in new DMAs two that used opened these one new where haven't existing not also only just we but And have to or are six. incrementally DMAs,

XXX weeks We on the just three into the market, to And that get. kits gone shops and the see gains kits that that XXX and get XXX see in to the that in well now. hear above incrementality. as we you'll as we been And we've shop we in profitable to we're more the all two, one accelerate to a see start shops measure will an and beyond incremental, and about has add We to We've four revenue, open, get right shops weeks. quarters that or which shops initial and that you'll so. coming in always pop testing from got wait team in this. will six having that to first to So analytics FP&A and team

Thank you.

comes Champine Laura question Capital. last with question. of your Loop Our from Please proceed

question. my taking for Thanks morning. Good

long-term trajectory So what Whether or that long-term growth I'm that growth how macro if you mid-teens look that it macro backdrop what given the trends think the growth hurting GDP have in mid-teens out rate? expectations I you to sales at now. this frame curious level as of kind it your is do macro of you that's outlook, of view.

take that. will I

Troy. Go ahead, add some probably I color. ahead. Go will

of non-discretionary. see model cost normalization, a a X% just the from see perspective, at of just In you just we if so that. a really increase Yes, look of for in normalization more Okay. more QX, we

coming of year, rate expect the can't more So a say much and continue I would XXXX. then at inflation through what would be bit, the we Obviously, half through back this forward. going normalization little that this would back

So we definitely expect some normalization.

guidance. shipments XXXX the in to our years XXXX. in Yes, was And investor aligner same I out, a deck five add, as we are going from the and in this put

a lot oral pretty that of care A retainers, business today, I models for bigger price CAGR think part whether whether a subscription of increase, a we things, lot have made which increase it's of XX% it's the of conservative is our is up the mile. it's retainers. expansion

pretty So from an it's conservative. aligner perspective,

guidance don't And now, shipments we network, at for be model, getting could some of inflation like household as doable. to XXX,XXX we're about, the and expect in be this going in years add not will Troy end believe the XXXX all so to things and those we'll income, correction in the the point XX% shop talking which plus expansion, environment. too partner And things improve. business higher growth X%, is from We a all will what's the to model there'll of accelerate the said, it's will year very year update five five that

Thank question-and-answer for our concludes your This session. you participation.

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