Q3 2020 Align Technology Inc Earnings Call
Greetings and welcome to align Technologys third quarter 2020 earnings call.
At this time, all participants are in listen only mode.
A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. This press star zero on your telephone keypad.
As a reminder, this conference is being recorded it is now.
My pleasure to introduce your host Shirley Stacy Vice President corporate and Investor Communications. Thank you you may begin.
Thank you. Thank you for joining US everyone. Joining me on today's call is Joe Hogan, President and CEO and Jamere Ricci CFO.
We should third quarter 2020 financial results today via Globe Newswire, which is available on our website and investor Dot <unk> Dot com.
Today's conference call is being audio webcast and will be archived on our website for approximately one month, a telephone replay will be available today by approximately 530 P.M. Eastern time grew 530 P.M. Eastern time on November 4th.
Access the telephone replay domestic dollars should dial 87766, 06853 with conference number 1371 zero 706, followed by pound.
National callers should dial 20161 to 7415 with the same conference number.
As a reminder, the information provided and discuss today will include forward looking statements, including statements about aligns future events and product outlook.
Forward looking statements are only predictions and involve risks and uncertainties that are described in more detail in our most recent periodic reports filed with the Securities and Exchange Commission available on our website and at FCC Dot Gov.
Actual results may vary significantly and align expressly assumes no obligation to update any forward looking statement.
We have posted historical financial statements, including the corresponding reconciliations, including our GAAP and non-GAAP reconciliation, if applicable and our third quarter 2020 conference call slides on our website under quarterly results. Please refer to these files for more detailed information with that I'll turn the call over to align.
Technology's President CEO, Joe Hogan Joe.
Thanks, Shirley good afternoon, and thanks for joining us.
I'm pleased to report stronger than expected results with record third quarter revenue is up 21% year over year.
Acting strong momentum across all regions and customer channels for both in this line clear Aligners and Itero scanners and services.
During the quarter, we continue to support Dr. recovery efforts with products programs and virtual tolls.
And training that help more docs transitioned their practices to digital technologies and drove record utilization across the investment portfolio.
Capping off a record quarter. This achievement of our 90 million in first line patient milestone.
We also saw strong response to our new team and mum focused consumer campaign with 118% year over year increase in total leads garnered 3.3 billion impressions an uptick in consumer engagement from new social media Influencers like Charlie Damelio Marshall Martin that's why.
The 6% increase year over year and teenagers using invisalign clear aligners.
Our overall revenue momentum has continued into October we are encouraged by positive feedback from invisalign practices regarding the benefits of digital orthodontics, starting with an itero scanner brings his line treatment, especially in this current environment.
For Q3 total revenues were 733 million up 108% sequentially and up 21% year over year, reflecting a sharp rebound in sales for both Invisalign clear Aligners Nightingale imaging systems Asps.
That's practices around the world reopened and got back to work treating existing and new patients.
Do you see revenues for clear Aligners were 621 million up 20% year over year and imaging systems and CAD Cam services were 113.4 million up 24.5% yes.
Year over year.
Do you think that this line shipments were a record 496000 cases up 28.7% versus prior year and up 124% versus prior quarter.
Looks like a strong recovery across all regions during the quarter. We saw increased demand for new cases, as restrictions eased and doctors ramped up their practices.
This is in contrast to Q2, where doctors primary focus was to maintain continuity of patient care for their existing patients through additional aligner shipments and replacement Aligners. John mentioned this in his comments last quarter and we'll touch on it again today.
For the quarter, we shipped Invisalign cases to a record 70000 doctors of which 5800 were first time customers, reflecting increased Dr activity as practices, where we have reopened.
We have also trained approximately 6500, new doctors in Q3, including 3200 international doctors, reflecting increased doctor engagement through our online virtual education courses summit is important.
Across the business. We believe there are several factors contributing to our strong performance.
Starting with pent up demand.
Many of our doctors indicate that they are making good progress in working to backlog of patients from office shutdowns enough disposable income remains a key factor as consumers focused on feel good investments while many other quality of life options are low.
In our new normal there are far fewer trips abroad fewer flights less money spent on gas dry cleaning et cetera, where people can afford to allocate that spending to invisalign treatment, especially when they're working remotely and critiquing themselves on camera. So much of the time, that's the zoom effect, we've heard about across multiple sectors.
As we look at our customer channels, we feel the strategy to dedicate sales representatives by specialty alignment is bearing fruit, particularly in it and the GP dental segment.
Sales reps were able to partner with a wider range of providers within their designated specialty during the downturn and assess mindset specific needs during the recovery and tailor plans to thrive beyond kobin.
Digital mindset has been cheap and we believe this is the largest influence in the ortho market and the one weve been laying the foundation for over the last several years for many doctors there are still down from normal years in terms of overall production or weekly patient flow, but.
We have prioritized invisalign clear aligners as their preferred modality expanded to the first age group and leverage.
And leveraged programs that helped to make the transition from analog to digital treatment we.
We see this both in teen and adult treatment growing with the same provider increased use of Itero scanners are virtual care or high overlap a bracket buybacks, which as part of our recovery programs, we offer doctors two programs.
Either switched their braces and patients into invisalign treatment by buying their wires and brackets or just buy back their existing inventory.
We took out the equivalent of 10000 cases.
Providers actively reduce their analog footprints by proactively switching their patients to sustainable digital care with Invisalign.
For GPS who already demonstrate a momentum with digital and knock the choices made to position at this line has a priority so.
Scanning every patient with itero generating more opportunity from recall patients even if overall practice capacity is still down.
Because doctors in both channels were trying to anticipate what may come in terms of additional waves and office shutdowns. They are hyper focused on ensuring that they have the best plan for continuity of care and business continuity, which is digital just.
To support them in this digital journey, you pulled out my Invisalign App and virtual care to 40 plus countries. These.
These tools have been received very positively by our doctors are quickly becoming part of their practice workflow.
Our commitment to continuous innovation is key we've.
We recently announced our treatment planning evolution and global availability of our next generation Clincheck Pro 6.0 proprietary treatment planning software.
Clincheck pro six so it was invisalign digital treatment planning to the cloud, making its robust treatment planning tools and features available to doctors anytime anyway.
I taught personal computer tablet or phone.
The release includes a new clincheck in face visualization tool and enhanced doctor facing digital clinical tool that combines a photo of the patient space with our three D Invisalign treatment plan.
Creating a personalized view of how their new smile will look in it.
In addition, we also announced today Invisalign G. Eight predictability improvement was smart force align or activation for both orthodontists in general dentist, starting in Q1 2021.
This line G. Eight with Smart course, aligner activation is our newest biomechanical innovation and the latest in our long history of Invisalign predictability improvements.
We continue to focus on building partnership with doctors, our data shows that providers, who had well quickly develop momentum around digital orthodontics leaned into our comprehensive platform in a variety of our programs and resources to accelerate a digital shift.
It's a compelling story how engagement maybe the first step the transformation is achieved through the breadth of product and services only aligned can provide trust.
Transformation to support programs like adapt.
Virtual tolls development of teens awesome the centers GP accelerator Deconversion Aligner intensive fellowship I pro and Dr. led coaching programs that support GP growth.
Building on the T. marketing Q3 hundred 63000 teens, and preteens started treatment with Invisalign clear aligners, representing 33% of total cases shipped.
Reflecting growth predominantly from North American Ortho goes in EMEA regions and.
In parts of the market. We saw initial rush for gene treatments earlier in the quarter with a slight change in demand profile compared to what we normally see in a typical season.
Which may be the result of a different type of back to school season as most kids returned to school late worsening virtual learning Invisalign first continues to accelerate among young patients as well.
In terms of products performance, we saw strong growth across the portfolio and non comprehensive outpaced comprehensive even with a record adults shipments for the quarter growth.
Growth of Invisalign go product also increased among GPS driven by North American in there and there was an increase in our express package shipments with North American contributing to the majority of that growth over.
Overall, both non comprehensive and comprehensive shipments were up with continued increased adoption of our modern product among ortho and GP channels.
Now, let's turn to the specifics around our third quarter results starting with the Americas.
For the Americas region, Q3, Invisalign case volume was up 166% sequentially and 25% year over year, reflecting an increase in shipments due in large part to the digital programs and tools implemented during the pandemic to help our doctors as well as our continued investments in targeted marketing and sales efforts.
Q3 utilization was up or North American work those in GPS both quarter over quarter and year over year.
We saw continued utilization increases during the quarter, especially among our orthodontic customers and the team's second the strong.
The strongest gene quarter in the last six quarters as we mentioned previously in Q2, we started the bracket buyback program to enable doctors to switch their braces patients into invisalign treatment by buying back their wires and brackets inventory.
We also saw stronger growth in the adult segment, we believe that some of the increase in adults shipments is reflective of how circumstances have changed today with adults in our target demographic, having more disposable directed more disposable income directed at getting their smiles fixed.
In Latin America volume was also up year over year led by strong growth in Mexico, and Brazil when you.
When you consider the timing of the pandemic in the shutdowns occurring later in Q2 for Latam. We were encouraged by the growth. This quarter. We also saw increased utilization of the GP channel within misaligned go in adoption of moderate.
So utilization also increased it continues to be strong growth revenue.
Driven by Heartland and also Aspen.
For our international business Q3, Invisalign case volume was up a sequential 88% led by a significant increase in EMEA on a year over year basis International shipments were up 34%, reflecting increases through both M&A pack.
For me at Q3 volumes were up sequentially, 104% and up 38% on a year over year basis across all markets with strong performances from the ortho channel as well as the GP channel as many doctors kept their offices opened during your typical summer holiday season.
Both core and expansion markets accelerated with growth in our core markets led by Iberia, UK, Germany and growth in our expansion markets led by central and Eastern Europe and the Benelux.
We introduced the ortho recovery Threesixty program in May of last quarter to support our orthodontist as they started reopening their businesses.
As of Q3 over 4000 orthodontist enroll in the program with over 13000 touch points with sales team members, providing a dedicated support in July and August alone.
As a result, we continue to see an increase in net promoter score or MTS, what's qual.
It was qualitative feedback from doctors showing that they appreciate a line for the support during this difficult time, we are.
We also rolled out you are building your brilliance enhanced.
Marketing campaigns to select it may have markets that highlights the skills of our orthodontists and illustrates how partnering with a line using invisalign clear Aligners and Itero systems and services that help further enhance the brilliance that these specialists.
To support our GP doctors, we also launched our GP recovery Threesixty program during the quarter with over 2900, GPS enroll so far.
At the beginning of the quarter. We also launched an Invisalign go plus system in the UK and Benelux and had 2500 GPS attend the event during the.
During the quarter, we continue to offer virtual and hybrid education events for our doctors with online and on demand education events, which reached over 2000 GPS cumulatively.
For Asia Pac in Q3 volumes were up sequentially, 74%, reflecting continued improvement within the region on a year over year basis, APAC was up 30% compared to the prior year door.
During the quarter were pleased to see a record number of unique dr. submitting cases and positive growth in the adult segment with growth in G.P. channels and non comprehensive cases with moderate product and the teen segment shipments were at an all time high as doctors offices continue to recover we also saw acceleration from Japan any NZ.
During the quarter, we celebrated the grand opening of our China manufacturing facility in Xian. The event was attended by key partners and doctors in China. The state of the art facility replaces our original temporary facility further establishing our commitment to capacity to manufacture invisalign aligners and Itero imaging systems in China.
Align was also one of the sponsors of Apacs med virtual form 2020, which attracted over 1000 attendees from the med Tech industry.
The foreign consisted of panel discussions and live video chat sessions at the line virtual Boone as we continue to establish a line as a global medical company that aims to transform smiles in change lives in the APAC region.
Last week, we also hosted the line APAC virtual symposium.
Fully digital event that showcased digital treatment technologies and featured practitioners from across the Asia Pacific region with over 800 participants.
Our consumer marketing is focused on building the clear aligner category and driving demand for Invisalign treatment through a doctor's office in.
In Q3, we saw strong digital engagement globally with more than 70% increase in unique visitors as well as on lead treated driven by our new campaign revamped social media strategy and our new Invisalign Dot Com website. It was rolled out to 15 plus countries.
Several key metric show increased activity engagement with Invisalign brand and are included in our Q3 quarterly presentation slides available on our website.
We're pleased with the strong engagement and activity we've seen on our consumer platforms over the last few months and believe it speaks to the strength of the brand and consumer interest in treatment even during the challenges in the last few months.
As you recall from last quarter, we launched our mom multi touch campaign with incremental support to drive reach awareness and foot traffic the practices. During the TT heating season. We also launched a new multimillion dollar TV campaign designed to reach mom and teens across a broad range of networks.
System wide, including cable and connected TV networks.
Line is always looking for new opportunities to reach consumers and be relevant to potential patients wherever they work live and play doh.
During the quarter, we announced that the Invisalign brand is the official clear aligner sponsor of the NFL football. They it's 11 NFL teams working with great sports brands like the NFL as another way to connect with consumers by leveraging the power of the NFL brand and its existing brand platforms.
NFL League partnership will help build awareness invisalign clear aligner treatment at a national level, while the team agreement will help us engage with key markets and connect consumers with doctors in those markets.
During the quarter, we also extended our innovation to drive engagement with new Invisalign stick a bulls designed to personalize invisalign clear aligners, especially for younger patients.
The innovative sticker accessories designed exclusively for use with smarttrack material are available in a variety of designs colors shapes and themes and reflect patients desire to show their personal flair during invisalign treatment.
For our systems and services business Q3 revenues were up 110% sequentially due to higher shipments in service revenues, we continue to see momentum with element five D imaging system, gaining traction in North America, and APAC region on a year.
On a year over year basis system and services revenues were up 24.5% due to higher shipments and service Q.
Cumulatively over 27.4 million Orthodontic scans 6 billion restorative scans had been performed with Itero scanners for Q3 total Invisalign cases submitted with a digital scanner in the Americas increased 83% from 79% in Q3 last year [noise] Internet.
International scans increased to 72% up from 63% in the same quarter last year were pleased to see that within the Americas, 95% of the cases submitted by North American Orthodontist were submitted digitally.
Our Q3 systems and services revenue also includes Ekso CAD CAD Cam products and services.
Okay. Its expertise in restorative dentistry implant apology guided surgery and smiled design extends our digital dental solutions and broadens Alliance digital platform toward a fully integrated enter to person Mary and workflows and we're excited about our continued integration progress and product plans.
In September Ekso cat celebrated its 10th anniversary in conjunction with Ekso Cat insights 2020, and annual event for manufacturers and users a dental CAD Cam technologies entitled a decade of digital innovation event attracted over 300, dental technicians dentist and over 40 partner companies as well.
1600 users of digital technologies, and laboratories and practices from 55 countries with.
With that I'll turn the call over to John.
Thanks, Joe now for our Q3 financial results total revenues for the third quarter were $734.1 million up 108.4% from the prior quarter and up 20.9% from the corresponding quarter a year ago for clear.
For clear Aligners Q3 revenues of $620.8 million were up 108.1% sequentially and up 20.2% year over year due to Invisalign volume growth in all regions, driven by North America, EMEA, APAC, and Latam, partially offset by lower Asps.
Historically, we have raised prices by approximately $50 per case in the third quarter, given our continued commitment to helping our customers in the recovery efforts, we did not implement a price increase this year Q.
Q3, Invisalign asps were down sequentially $75, primarily due to.
Higher mix of new cases versus additional aligner shipments as Joe mentioned earlier recall.
Due to ASP benefited from more additional aligner shipment as doctors were focused on maintaining treatment progress for existing invisalign patient. This trend reverse itself after practice as a preopening Q3 and demand for new cases ramped up significantly as a result, our deferred revenue balance increased 93 million.
Dollars from Q2 of which the majority of this increase is related to clear aligner and will be recognized with future additional aligner shipments.
The year over year basis, Q3, Invisalign Asps decreased.
Approximately $80, primarily reflecting higher promotional discounts and increased deferrals related to additional Aligners. In addition, we provided doctors with incentives designed it specifically aid them in the recovery during the pandemic.
Q3.
Total invisalign shipments of 496.1 thousand cases were up 123.6% sequentially and up 28.7% year over year our.
Our system and services revenues for the third quarter was $113.4 million up 110.1% sequentially due to an increase in scanner sales and increased services revenue from higher installed base year over.
Year over year systems, and services revenue was up 24.5% due to higher scanner sales services revenue and the inclusion of Ekso Qads CAD Cam services, partially offset by lower scanner asps.
Imaging systems, and CAD Cam services deferred revenue also increased 28% primarily due to the increase in scanner sales and the differ deferral of service revenues, which will be recognized ratably over the service period.
Moving on to gross margin.
Third quarter overall gross margin was 72.7% up 9.1 point sequentially and up 0.7 points year over year on a non-GAAP basis, excluding stock based compensation expense and amortization of intangibles related to Ekso CAD overall gross margin was 73.3%.
The third quarter up 8.9 point sequentially and up one point year over year.
Clear aligner gross margin for the third quarter was 74.7%.
Up 10.2 points sequentially due to increased volumes driving favorable manufacturing absorption of fixed costs, coupled with lower freight cost from increased domestic shipment.
Shipments, partially offset by lower ASP.
Clear Aligner gross margin was up 1.2 points year over year due to increased manufacturing volumes driving favorable absorption and lower doctor training, partially offset by lower asps.
Systems and services gross margin for the third quarter was 62% up 2.8 points sequentially, primarily due to favorable product mix to higher margin scanners higher services revenue, partially offset by freight and training costs.
Systems and services gross margin was down 2.1 points year over year due to lower asps and higher freight and training costs offset by higher services revenue and product mix shift.
Q3, operating expenses were $357 million up sequentially, 20.1% and up 15% year over year, the sequential increase in operating expense.
Is due to increased comp.
Compensation.
Marketing and media spend and favorable foreign exchange.
Year over year operating expenses increased by $46.6 million, reflecting our continued investment in sales and marketing and R&D activities. Additionally, prior year included a benefit of $6.8 million from the early termination of our discontinued invisalign store leases on a non.
On a non-GAAP basis operating expenses were $332.1 million up sequentially, 25% and up 12.8% year over year due to the reasons as described above.
Our third quarter operating income of $177.1 million resulted in an.
An operating margin of 24.1% up 44.8 points sequentially and up 3.2 points year over year. The sequential increase in operating income and operating margin are primarily attributed to higher gross margin and operating leverage on a year over year basis, the increases in operating income.
And operating margins reflect higher gross margin and operating leverage partially offset by our continued investment in R&D geographic expansion and go.
And go to market activities on a non-GAAP basis, which excludes stock based compensation acquisition related costs and amortization of intangibles related to exit CAD operating margin for the third quarter was 28% up 39 point sequentially and up 4.2 points year over year.
Year over year.
Interest and other income expense net for the third quarter was a gain of $7.5 million, primarily driven by favorable foreign exchange.
With regards to the third quarter tax provision our GAAP tax rate was 24.5%, which includes tax benefits of approximately $8 million related to the reserve release of certain previously unrecognized tax benefits as a result of the closure of an income tax audit third quarter tax rate.
On a non-GAAP basis was 16.6% compared to 27.8% in the prior quarter and 18.8% in the same quarter a year ago.
Third quarter non-GAAP tax rate was lower than the second quarter's rate primarily due to reduction in tax benefits, resulting from.
Considerable profit is recorded in Q3 as opposed to losses incurred in Q2.
Third quarter net income per diluted share was $1.76 cents up $2.28 sequentially and up 48 cents compared to prior year.
On a non-GAAP basis net income per diluted share was $2.25 for the third quarter up $2.60 sequentially and up 77 cents year over year.
Moving onto the balance sheet as of September Thirtyth, 2000, 2020, <unk> cash and cash equivalents were $615.5 million, an increase of approximately $211 million from the prior quarter, which is primarily due to higher cash flow from operations of our.
Of our $615.5 million of cash and cash equivalents $298.8 million was held in the U.S. and $316.7 million was held by our international entities.
Q3 accounts receivable balance was $626 million up approximately 32.3% sequentially. Our overall days sales outstanding was.
76.5 days down 44 days sequentially and down two days as compared to Q3 last year due to strong cash collections as doctors offices reopened from Q2 shutdowns.
Cash flow from operations for the third quarter was $211 million capital expenditures for the third quarter were $21.3 million, primarily related to our continued investment in increasing a liner capacity and facilities free cash flow defined it defined as cash flow from operation.
Less capital expenditures amounted to $189.8 million under.
Under our May 2018 repurchase program.
We have $100 million still available for repurchase of our common stock.
Now, let me turn to our outlook overall, we're pleased with our Q3 performance and the strong momentum in our business. We made investment decisions that helped drive and capture demand across all regions and all customer channels.
We see good return our best Smith, and strong revenue growth, which has contributed which has continued into October.
We are confident in the huge market opportunity our industry leadership and our ability to execute at the same time there.
There continues to be uncertainty around that pandemic and global environment. Therefore, we are providing specific guidance with that I'll turn it back over to Joe for final comments Joe.
Thanks, John in summary, we're certainly pleased with our progress in the third quarter, we have.
We've taken a very thoughtful approach to recovery.
And we have persevered in large part by living the values that are important to us as an organization agility customers and accountability.
In a time of great uncertainty when Swift actions have been required we've responded like no other company in our industry.
Most importantly, we have followed our guiding principles and supported our employees and customers protecting employee jobs in salaries and working to support the needs of our teams globally in supporting our customers with PPD extended payment terms postponed subscription fees for itero and numerous programs to help them through this crisis.
We also applied our manufacturing experience and resources to making testing swaps were hospitals and P. P for our own terms teams and also customers.
[noise] instead of going quiet or holding on a planned spend we accelerated our investments in marketing to drive consumer demand to our doctors offices and stay top of mind with consumers, we accelerated new technology to market. So that we could provide virtual tools to our doctors that enabled them to stay connected with their patients and.
Keep their treatment moving forward, we supported doctors and their teams with online education and digital forms that went beyond product and clinical education to help navigate the p. shortages and recovery planning and we continue to grow the business not just protecting jobs, but adding head count continuing our investments in R&D.
And product innovation as you saw in our Invisalign G. Eight announcement today developing our plans for manufacturing expansion.
Our action are a result of the conviction that we have in our business model.
Supported by the strength of our balance sheet to drive results that exhibit our accountability to our employees customers and shareholders even though.
Even in a time that required us to change and adapt we.
We maintained our long term focus I feel this is what good companies do and it's proof that being a good company and delivering on the types of results. We've seen this quarter can go hand in hand.
We have remained a growth business driving programs in anticipation of recovery will be the knowledge that there still remains uncertainly do do do to co bid 19.
Our plan is to counter future uncertainty by staying focused on our long term strategy living our values supporting our employees and customers and keeping the demand drivers we've identified over the last few months in mind. The redirection of disposable income for many consumers channel focused that allows us to reach and support a wider range of customers.
In each channel and most importantly that digital mindset that is really taking hold with more and more of our customers and that we are supporting through innovative products and programs that can help support their digital transformation. We are now.
We're not ignoring the reality of COVID-19 and how.
And how long it may be part of our lives, but we're also not going to stop driving the business forward for the good of customers there are patients our employees and stakeholders without him.
With that I want to thank you again for joining our call I look forward to updating you on our progress. This year continues to unfold on November Twentyth to 21st line will be hosting the Invisalign Ortho summit virtual edition with the theme digital is the answer is.
Is this line summit is the ultimate learning experience orthodontic practices from digital practice transformation to great patient experience, there's never been a more exciting time to learn about digital worth of dogs. A line also whos a host of virtual Investor day on November 23rd where I also look forward to sharing our views on the incredible market.
We have combined with the unmatched power lines digital platform technology innovation global reach and brand equity.
Now with that I'll turn it over to the operator for questions.
Operator.
Thank you ladies and gentlemen at this time, we'll be conducting a question and answer session.
We'd like to ask a question you May press star one on your telephone keypad a confirmation internal indicate your line is another question in queue. You May press are too if you would like to remove your question from the Q4 participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key our first question comes from the line of Nathan Rich what Colm.
Insects. Please proceed with your question.
Thanks, and good afternoon.
Joe and John obviously, great to see the volumes come back.
So nicely.
Sounds like the momentum continued in October could you, maybe just kind of help us understand.
Kind of the cadence of growth that you saw over the quarter and.
And any comments on how October has fared so far maybe relative to the type of case growth that you saw him through Q.
Yes, Nathan thanks.
Thanks for the question is that we just built through the quarter you know every.
Every month, we saw actually continue to enhance momentum.
And the short answer to your question is we've seen that build in October also.
That's great and Joe Obviously, you you kind of.
Talk through in detail about you know what has kind of driven the stronger utilization that you've seen in the value of digital tree men. When you kind of take a step back and kind of think longer term how is that kind of change your outlook or influence your kind of multiyear outlook for.
Of what you can see from this business over the next several years going forward.
Nathan you know in John and means really long enough I mean, we're incredibly enthusiastic about this business and bullish about this business and.
You can see we are even more so as obviously, we deliver the kind of results we haven't three q. I think.
I think you always have to keep in mind two things here. One is we're in a very volatile environment, we understand that and we've done some things we feel that's really helped our doctors through this and make the company stronger come out the other end, but always remember we're completely underpenetrated in this marketplace right, we're still less than 10% penetrated from an orthodontic procedures.
Endpoint that alone those 300 million patients, we talk about there that shouldn't read receive orthodontic treatment that aren't receiving orthodontic treatment. So.
We remain incredibly bullish with a digital format to be able to go after those patients and be able to continue to drive the growth of this business.
Thanks, Great. Thanks, Thanks, Yes.
Next question please.
Our next question comes from the line of Aaron right with Credit Suisse. Please proceed with your question.
Great. Thanks can you speak to some of the contributions from the recovery efforts in switching brackets and wires teach in search are you continuing to see those contributions and efforts into the fourth quarter and.
Do you think that will drive important longer term shift here or do you have any indication based on the responses I guess, you've seen from practitioners how sticky that is.
Well it's.
Overall hedge Joe and the overall is pretty sticky when we buy the other wires and brackets inventory back then.
When we introduced in the programs like adapt and different things at all really allow them to begin to a digital transformation within their practices. So I feel that part's very sticky I can't sit here and I, usually say that everyone who starts to move digital in this crisis is going to stay digital but.
But I can tell you that we have the tools the being able to drive consumer demand and a consumer awareness and all of those things.
Helps us to maintain that stickiness and I think over time, we'll just have to see how sticky. It is as we come out of this global crisis.
Okay, Great and then on equities in the quarter I guess is that the run rate, we should be thinking about I need it typically takes but any other mix dynamics.
We think about the next quarter and beyond.
Andy This is John yes, the mix that we saw you know we talked about some of the.
The dynamics of the all those new cases coming in and we saw that we also talked about not having a price increase given the conditions that we're in.
Well evaluate going forward as to you know any changes we might make in pricing and so on but I think from a run rate standpoint. This is.
A good starting point for going forward.
Okay, great. Thanks.
Our next question comes from the line of.
Steve Shaw with Wolfe Research. Please proceed with your question.
Hi, Steve Hi, good afternoon, and thanks for the time here.
I Wonder if you could expand a little bit on some of the numbers that you've given here this quarter and I believe you did in the prior quarter as well around not just the training numbers, but some of the data that you gave on people who are not just getting trained but who are new to invisalign.
I'm, sorry, I don't know what maybe some do but what would those numbers you know a year ago and do you have visibility into what those trading numbers look like out in to Fourq, you are or even beyond.
Yes, Steve This is John I think when you look at being able to train like we can now doing much more virtual be able to have that remote training as well as where you can in person gives us a lot of flexibility going forward to be able to expand out our training. So theres a lot of new K.
Capabilities, a lot of new tools that we've introduced this quarter to be.
To be able to help our customers and train new customers as well as our sales team be able to reach those so.
It's a key part as you know to our growth and we're going to continue to find ways to be able to connect with new doctors to be able to get them to understand the benefits of invisalign and and ultimately have them use it more.
Use it more and more to grow.
Okay. Thanks, John and then Joe one for you. So I'll, let you carry the.
I'll, let you carry the burden of being the CEO of the first big.
Big Dental company here in the U.S. to report and give a little bit of perspective on on how you imagine you know policy evolves as you talk to folks around the CDC A.O.L.D.A. any of their counterpart organizations in Europe do you see any sign that there might be a move toward.
Practice closures are we really past that now that we've got you know pp in place I asked because I think there's just a lot of folks who are looking at the growth not just that align but but at some other companies and it's it's really attractive growth, but people are just worried about the possibility that we see lockdowns again, so any perspective, you could offer there would be really.
Helpful. Thank you.
Yes, Steve Steve.
I'd tell you talking to obviously doctors all around the world or whatever I.
I don't see that there's any eminent no lot of closures in the industry. I mean, there is frustration with the closures and obviously a lot of disagreements sense of when they're told the clothes. Unfortunately, what we've seen with the cobot coming back here in the fall, we havent seen the institution of going back and closing these doctors offices, which help I can tell you Steve you know since I've been here five.
Years, there's always a certain segment of the dental industry that is looking to sell or looking to change and get out but not closed down you know so I honestly think that there's still optimism out there.
I've seen the doctors do a great job in a sense of being able to protect their employees to make sure that they protect their patients and do the things that are needed.
Nope I read in your mature and other materials that we've all picked up that most of the doctors are running at 70, 75% kind of the capacity, but they're finding a way to make it work so I'm I'm not look.
I'm not looking at any imminent demise in the business in a sense, the close downs or anything like that and I think the offices are getting better and better at being able to drive volume through their offices and again you know that this is the digital format that we feel that that's.
Sets a foundation for them to have a much better patient flow through a much fewer touches in this.
In this call that world, which we hope hopefully will carryover as we move out of this next year.
Really appreciate that thanks for all the time.
Thanks, Andy.
Our next question comes from the line of Jon Block with Stifel. Please proceed with your question.
Great. Thanks, John.
Hi, Joe actually first one for you.
Sort of qualitatively can you give us a beat or a signal on taking share and share in do you see a broadening out within your ortho customer base I think thats the key sort of broadening out in other words are you seeing some don't want from ortho is our always I don't know call it less than 5% of his line share share are they stepping up to the plate because it clearly.
In our work flow advantages and if so how do you try to ensure that you capitalize on that longer term.
Yeah.
Well I think as a couple of things John Obviously Cove. It has been an added incentive to move people out of analog in and the digital because of fewer touches and being able to maintain continuity of treatment. Even if things are shutdown. So there's no question, we saw share and share increase in that sense. I think also when you see new products like you know Invisalign first and those things we've introduced in the.
Last few years, that's as you know well that's extended our reach from a demo from an age standpoint within that specific demographic. That's helped US also and I you know I think there's a combination here of of further and further realization of how digital processes and orthodontics really can't help can help be more efficient, but also realization for the consumer.
Is that it is an offer.
And offering here that is better than wires and brackets and more efficient certainly in this cold that kind of environment. So how do we how do we how we certain do we maintain that so when you look at you know programs like adapting things those.
Those that switch on.
These backup for a second join you five years ago, we were fighting for clinical you know clinical I think relevancy in this industry, that's not a question anymore other.
Oh, the dot most of docs out there understand very clearly we can do 80, 90% of the cases out there it becomes a business formula can we really make money with a digital kind of the system and those are the programs that we've been putting together with doctors with outside experts that can really trained doctors as to how digital can work how can expand their practices how that actually can.
To be more profitable in a digital process and I'm confident with what we are building up in that area will be able to extend that going forward.
Got it fair enough ill shift over to GP.
Sorry for the other question and utilization of our four I think I've been waiting 10, or so years for that and I guess some of its probably pent up demand you talk to that a little bit on the call, but what about the other components isn't some scanner digitizing the front end the bifurcated the sales force I mean, essentially Joe have you given the tools that you needed to.
Through the GP is to finally sort of step function that utilization rate higher that was always sort of stuck right around that mid threes for a number of years. Thanks guys.
Yeah, John I feel the answer your question is yes, we have I mean, everything from Itero and it really the insides of Itero on the software programs all in conjunction with I go that make it much simpler for doctors that haven't been associated with digital orthodontics before our segmented salesforce for sure I mean, we piloted this in your first and somewhat in April.
So we knew what to expect.
We're just fortunate enough to launch it ahead of this issue head of the cobot issue and to have the sales people ready to have that touch with customers to make it work.
Well I'm excited about that you only have so much more that we can do to make that work also in.
And I think you know with the confidence that GPS are having in this kind of a system. It's a light touch system. It's a high revenue kind of a product and it's gaining more attention in that channel. So.
Yeah, I'm I'm really we're all thrilled here to see the utilization rates, but it is on the back of those kind of innovations in distribution and also product and we think we've been able to drive it.
Okay, and if I could just quickly slip in one more just wanted a clarification I think it was only back to David's first question just to be clear when you see momentum building I mean, do we take that to your October year over year growth rate was north of your worldwide Threed Q growth rate that you posted thanks guys.
John We you're right. We are we see momentum building and that continues it continues that growth.
From a revenue and a volume standpoint into October.
Thanks, John next question please.
Hey, John.
Our next question comes from the line of Elizabeth Anderson with Evercore. Please proceed with your question.
Hi, guys. Thanks. So thanks, so much for the question as we think about the outlook for.
For Q and as we come out of Covidien more broadly are there any I know you guys. Obviously didn't cut cost kept the sales force you know could you maybe flush out some of this growth coming back is there anything in terms of the investments of the ramp back that we should be considering.
Well you know this but I think we're just this continuity of investments is the way I'd answer your question about new investments will continue to invest in the consumer side pretty dramatically you'll see that we are doing that all around the world. This not just in the United States and Canada were also you'll see investment in Europe, and also Asia to the degree that we Havent made before we have a.
Series of new products that we're investing in that we kept that momentum in the third quarter, and where we hired engineers to keep that moving.
And then these specific programs for doctors like adaptive we're talking about an AI up in different things, they're really an important part of this because you have to make sure that these workflow changes in the way Clincheck works like Clincheck pro or whatever they have to be introduced the docs and you got to have the high touch kind of the system to given the confidence in those programs. So it's a long answer.
To your question, but I'd say, we maintain and enhance what we have been doing is.
Is what you'll see in the fourth quarter as we go into the first quarter to the added piece Elizabeth from Espen standpoint. It is investing in operations to stay ahead of the same.
The sad at a volume and making those investments we did so in Q3, we'll continue to make those investments in Q4.
Okay, but it doesn't sound like there's anything totally different.
The second thing, we could consider catch up or something on that.
Okay, No I don't I guess.
Yeah, Glenn as well.
Oh No I was just wondering just you talked about some of your continued spend on.
Social channels in terms of marketing and that seemed also a continuation plus obviously the buyback program back program in the quarter is there anything else you guys see chain.
Changing in terms of your marketing spend going forward and you say, it's sort of like a continuation of the types of programs that you were getting and the third quarter.
Well I think you know obviously right.
Raj in our marketing team are very innovative and it's not that we'll just keep with the same themes will we obviously we run we run trials, we do different things will change them up or whatever you know based on what we're experiencing in the marketplace. So our investments will continue to be very aggressive will continue to be innovative in a sense of how we do these things, but we start.
We certainly won't let off the gas in the sense of the focus that we've had in over the last few quarters.
Thanks, Elizabeth and question. Please our next question comes from the line of Steve Valiquette with Barclays. Please proceed with your question.
Hi, This is Jonathan young Jason.
Hi, there.
And so you just in relation to the backlog that you were talking about and that's not I guess from your perspective, how much backlog do you think it's kind of still out there with the docs before kind of normal before it normalizes out as big as we kind of move forward.
Yes, the big question, I mean from a backlog standpoint.
We really don't know when you.
When you talk from an empirical standpoint in talking to any of our docs will say they cleared out their backlog in July and August for.
Promote this the global business, it's hard to talk about.
All over the world, where it stands but and when things came out and lock down and when they did so.
So we.
We've struggled to be able to quantify number four units.
Okay, and just going back to the comment about the utilization of docs being at about 70, 75% capacity I guess.
That's from the capacity standpoint, but from your customer base are they all largely open at this point or is there still you know 10, 20% that still remains close to two.
Random shutdowns globally or locally.
In certain areas. Thanks.
Largely open.
Great. Thank you.
Yeah No welcome John.
Our next question comes from the line of John Kreger with William Blair. Please proceed with your question.
Hey, guys, Hey, Doug Hey, Todd.
Can you just talk a little bit more about again, the uncertainties that prompted you to not guide to Q4. After a very very good third quarter and one thing I was thinking about given the rebound in cases in Europe are you seeing any sign of maybe just patient traffic slowing down even if practices aren't closing per se.
[noise] jungle.
Yes, I think just wondering when you think about what we've seen.
You know in terms of the momentum we see it we tried to to lay that out. Obviously there is there are still unknown in the world I would say coat Cove and the global the global economy, and so on but for the things that we can control and what we tried to lay out around the R&D investments in manufacturing and marketing and sales.
We feel really good about our momentum and what we can drive in the future. We just have unknowns that are outside of our control and so that's the reason from out from a guidance standpoint that we didn't give specific guidance.
And but we said we wanted to highlight that we saw continued momentum as we went through the quarter, both for revenue and and volume and that continued past quarter end.
Great. Thank you Jim a question for you about sort of the strategy to get the attentiveness attention more of a g. piece can you just talk about how ekso cat is going and what else you're what other levers you're pulling to sort of become more that sort of daily thought process for the the typical general dentist.
I had John it's a good question look I feel great about ex cat and.
Obviously, when I talk about you know in my the highlights that we just went over is I mean, its digital dentistry on the GP side and you have to go around the world to understand how EXL Cat is X cat very embedded in Europe also.
Also in various parts of the far east.
And in some parts of the United States, but the key is just a digital workflow and its between indicate itero fronts. This.
It's in a obviously, a GPS office and that CAD Cam piece is either extended in office or primarily it goes to labs.
It's given us I think it's given us the initial boost that we wanted to in the sense of our relevancy and the GP is office in the sense of an itero scanner can do these kind of restorative scans and it's kinda were sort of workflow. What's really exciting is when you look at how you can integrate what EXFO CAD does in a seamless workflow away with Itero and also Invisalign if.
It gives us a lot of degrees of freedom to really change that kind of restorative dentistry.
I'm really I'm really excited about the progress even in a short amount of time.
Great. Thank you.
Thanks, John.
Our next question comes from the line of Brian then call here with Jefferies. Please proceed with your question.
Hi, Thanks, Good afternoon, Joe I think you said leads were up something like 120% year over year, how do we think about the relevancy of that metric as a leading indicator of revenue growth. The start of a metric I can recall you.
Discussing before.
Well you know it.
It's a good question I mean, we do I don't know how we.
We communicated that before but it certainly is the term we use internally here at align all the time and a lead as just what you would guess it didn't bring to strong lead in the sense of a customer.
You know wanting to turn into a patient and we have several ways of touching that customer then come through our Invisalign app.
They could be contacted by a concierge service concierge service can take the information to move it onto a doctor's office, but.
But its a lead and it's a great leading indicator of the interest of patients out there and it's again one of the major attributes of a line that we bring to the marketplace is to be able to excite consumers and move them into our doctors partner.
Dr partner firms.
Okay, and then Johnny chance you could spill.
Specifically speak to China growth in the third quarter, and then secondly, the financial and.
The financial impact of opening the new permanent manufacturing facility as opposed to the temporary site you have an operating profit in terms of revenue growth or more profitability expenses. You think you can share there.
In China, we saw good sequential growth continues to grow I mean, obviously they were the first ones kind of in the pandemic or to start in Q1, we saw some growth in Q2 and significantly more growth in Q3, the manufacturing or like you said is gone live it's it's now.
A greenfield facility, where everything is up and running and we're adding more capacity there to to meet our demands but it was a very smooth transition we learned a lot from having that temporary facility and learning.
You know kind of the manufacturing to scale up that we needed and that transition very well into the new facility.
Great. Thank you.
Our next question comes from the line of Jeff Johnson with Baird. Please proceed with your question.
Thank you can I guess.
Hey, Joe So Joe.
Joe wanted to start with you gain a same thing John blocks trying to feel out here, but.
Was there anything different in your North American ortho customer mix, the Diaman and double diamond guys come back much faster than the lower end guys anything at all like that and I guess, what I'm trying to get at same thing like I said, John is sustainability of that 24% North American Ortho utilization number you know Sam.
Yes that number is that our evidence is that our proof point there of this move from analog to digital as you keep talking about is that the number to focus in on there and then obviously the GP number as well.
Yeah, I think I think if you.
If you're if your real question is about utilization being a key metric I mean, certainly is who led that you know our diamond Diamond plus docs are already having a big digital aspect of what they were doing where april function extremely well in this environment.
Remember our virtual care told that we brought out really six months before we wanted to do with it wasn't the best tool in the world, but we've made a better over time really gave him that digital interface with their patient base that allow us to be able to track their patients without having come back to the office that was closer to us all the time, so but it does say that it was okay.
To say that it was only those practices would be wrong.
We saw no matter what tier they weren't our advantage program, we saw them reaching for training wanting to work on the digital standpoint north.
The orthodontist recognize the advantages of digital during this whole sequence and Uh huh.
And again, that's why the program the things that we've had in place the investments, we've made or whatever or they were very timely to help support that interest.
Yeah understood and then maybe just a follow up for John So John you seem to imply that maybe ASP here at this level or a good way to think about the next few quarters does that means some of the incentives kind of sustain here do you leave them in place and I just want to understand the accounting does the bracket buybacks is that go against ASP is in any way or is that a cost buried somewhere else.
And the piano.
Okay. Thanks.
No that is a cost against against you know as a promotion. So it goes against revenue for the brought bracket by Bakken and we'll look we'll evaluate as we do on a normal basis with promotions what promotions are working what's driving that right level of utilization and engagement, whether you're a new doctor to to a doctor to.
As a lot of volume we did.
We did mention that we didnt increase price and and that was that was.
That was something that is a reflection of what's happening in the marketplace and and look we were very pleased with when you look at Invisalign Asap that at 74.7%, we haven't seen that in in several quarters. So you know, we're very aware of the dynamics around promotions and what that drives but ultimately it's driving profitability.
And we saw great gross margin growth.
Understood. Thanks.
Thanks, Jeff.
Our next question comes on the line of Glen Santangelo with Guggenheim. Please proceed with your question.
Hi, Glenn.
[laughter] well hook.
Hey, Glenn you there, we maybe not hear your line clearly.
Hello can you hear me well.
Yeah, We can't Hey, Joe how are you.
Well listen thanks, so much I just want to take a step back and with a lot of the questions were already asked but I wanted to follow up to response, you said earlier question, what's your sense going on with the organic growth rate of this business. I mean are you seeing that the organic growth rate or just the ortho business in general accelerate through the parent.
And then as you think about sort of the penetration to clear aligners versus total cases.
You know you sort of size of that you still think were less than 10% penetrated can you maybe talk about the penetration in North America and international and maybe how you see those sort of penetration rates you know evolving over the over the next couple of years.
Well I mean, we obviously, we measure ourselves from a penetration rate standpoint, overall and you know we spent the market up obviously and teens and adults ortho versus the general segment with GPS but.
If I mentioned your question right Glenn I mean, you know, we have increasing penetration and utilization we call on different parts of the marketplace.
The digital platforms and things that we put in place a.
Really enhancement the doctors to get on these digital platforms and use the tools and things that we have so im glad I think youd.
Glenn I think again as I mentioned in the other question on like this is that remember we're still underpenetrated. There really is digital orthodontics has such a long runway.
But it is a different workload for doctors and it's a different ex.
A different expectation from a patient based understanding really can use you know digital plastic in order to move teeth, as efficiently or better than wires and brackets and so [noise].
It's so important that we have a strong digital platform that unites the work flow between us and doctors and doctors and patients that you have a breadth of product you know everything from Invisalign first all the way to express and comprehensive products retainers and things in between.
Sales forces are incredibly important for that penetration in the sense of how you talked about how you touched docs, how you move things forward. So theres.
Theres I would say plan to answer your question here. There is no magic on this on this penetration piece. It's a lot of work. It's a lot a lot of work and a lot of friction you have to overcome there's no escaping it but.
But it's inevitable digital is better than analog and a coven environment or not in the cold environment, That's our position and that's what we'll continue to drive.
And Joe It seems like you may be expanded your your sort of technology lead again with sort of this latest development on the G. eight side could you maybe just give us a quick update on the competitive embark landscape are you seeing any anything else in the market that that is starting to get any traction or or is it still.
What kind of really just an execution issue for you.
Oh this is all about execution with us it's a you know from a.
I have nothing.
I'm an update from a competitive standpoint really to report number our competition is about expanding a marketplace.
That is what it's all about this is this is not a scrum of a bunch of people, making you know plastic aligners.
This is a scrum about what can you do to reduce the friction of getting dentist and orthodontists to move forward in a digital process.
The growth of this marketplace that is really the material difference here, it's not individual competition in the trenches that we're focused on are concerned about how do we expand the marketplace Quinn.
Okay. Thanks for the comments.
Yes. Thank you.
Our next question comes from the line of Richard Newitter with SVB Peak SVB Leerink. Please proceed with your question.
Hi, Thanks for taking the question I hate on job.
Good I wanted to just start off.
You know just looking back over there.
The 20 year journey that you had or or longer than that.
Uh huh.
Not really but.
Just in Aligners and what you see in your tenure and what what you know before you can.
Can you you know, they're probably an inflection point moments or Oh, and I'm, just curious where and how kind of this pulled it opportunity which is clearly on some level, creating an inflection point at some level, whereas it stacks up and you know a year or two years from now do you think we're going to be saying this was probably the.
You know one of the defining.
<unk> for for you guys to capitalize on converting the team ER segment and getting that that accelerated kinda digital boost that you needed to really kind of move this market conversion opportunity in a step function fashion just trying to put it in perspective are we kind of at the demarcation.
Sure.
This is kind of defining period for the company.
Well you know Richard it's always really it's high.
It's hard to always call, you're asking about the tipping point and John has a great saying you never know the tipping point until it fits right. So but I would tell you that obviously in the current environment that we have right. Now were infection is a concern digital becomes predominant in that sense of doctors looking at it but I think another good signal that you can say that this can become.
More permanent is what's really unusual here is take a look at it.
Taro growing 25% right you see capital goods in a situation like this are going to lag because doctors aren't going to make that kind of a capital outlay when their businesses are under pressure and what we.
And what we saw in this cases, you know Itero grew phenomenally and then what we know and you see that 93% of the cases in United States right now for ortho as are coming through digitally is when you get an itero scanner into an office, whether it's a GP ortho they become really committed on the digital piece of normal burn so I think that kind of that.
Kinda demand for Itero scanner, what I call a hurricane right now from a doctors cash flow standpoint.
Really shows that they are interested in the sense of this digital transformation and want to stick with it.
That's helpful and maybe just.
Maybe just one follow up on.
Additive comments and questions.
In the prior.
[music].
Just curious your ability to train virtually <unk>.
Remotely and your your customer base the advantage rather.
Competitors able to kind of get into the channel even as effectively as they might have otherwise been or are you basically kind of.
Converting on your own right now I'm just curious if there's just an inherent.
An inherent structural advantage that you have there during that period and its competitors or sales reps, even allowed to engage us as Ah accurately.
As you are.
Yeah.
If I'm yeah forgive me if I don't answer your question properly, but when I drive from that is the importance of a salesforce versus competition and the importance of training and there's no company in the world. It can provide digital training, whether its virtual or if it's you know allowed in the future, which will be obviously face to face.
Across a number of platforms that align can provide adapters another kind of training adaptors aligned digital practice transformation program.
That kind of their experts that we put in place to understand doctorate office workflow and economics, and how we can work through them.
Our salesforce is I've since I've been in this business five years now and I've run sales forces you know and businesses.
Pretty much my entire adult life I have never seen such a high touch salesforce and I like the importance of touch with the sales team with those doctors is incredibly important because of how different digital is from a workflow standpoint in a clinical standpoint, and what are the analog procedure is so there's no way around that and then the last part as you know maybe.
We're taking advantage of our competitors or something and I don't say this in any gear arrogance or whatever.
The competitions competition I actually welcome it to a certain extent because it helps to legitimize the digital space.
Our job broadly is how do we go.
Dennis and orthodontists to move from analog to digital not so much what the next competitor product is out there and that we're fighting for that extra ounces share that's not where we are right. Now this is about an expensive marketplace.
Thank you.
Yes. Thank you.
Our next question comes from the line of Ravi Mishra with <unk> capital markets. Please proceed with your question.
Hi team to go and I hope everyone is well.
Just around that.
To take a pivot to.
Pivot to the G. eight for second.
And you know remembering correctly prior versions of the systems have been seen as you know these step function advancements that have opened the door to more cases and more comfort with doing the system [noise], which.
But she just curious in terms of number one how do you see it kind of increasing the addressable market for the number of cases, you can treat I mean is this opening up stores that can be done before by the sort of average dentist and and number two do we have any sort of IP protection around this I mean looking at the press.
This release, it seems like a pretty powerful.
Set of innovations and the way you're staging and or is this kind of a function or development on top of the existing technologies in that sense from an IP perspective.
Yeah, Hey, Robby good question first of.
First of all when you think how we got the G. eight as we've done 9 million patients right and.
Probably deep bite cases are 30% of those cases and G.H. around deep bite and when you do deep bite, there's a lot of extrusion and deep bite not want to get too clinically into this thing, but extrusion. This means you're pulling a tooth down pushing a 2000 and those are the most difficult movements that we make the hardest move ins to do when you talk about.
IP it has to be with the specific kind of attachment, it's where you place that attachment that interfaces that attachment with the aligner and how the aligner actually that's what we call. It the activator part of this thing and I'd say do we have IP around that sure. We do do you have.
Do we have IP around doing a deep bite cases, though but our products are specifically geared to be able to do that and so we use a lot of AI and machine learning the mine that database to figure out where these deep bite cases, one finishing as fast as they could be at times and the new GH supposed to make this.
Make this better its been tried in different areas and.
And in the end what it does it gives doctors more confidence to be able to get into those cases and know they can finish in the way they want to finish them and that's the purpose of the product.
Great and then maybe if I can.
Build on that.
Yeah sure so one more pre.
Pre pandemic you guys were on a kind of case growth basis somewhere in the Thirtys high Twentys range.
Yeah I appreciate that it's very difficult to look past, what's going on in the world right now but.
We do kind of normalize at some point in the future post pandemic with.
With these innovations and the sales force touch points that you mentioned is that 20%.
That 20% to 30% case growth you know given where we are on the adoption curve still kind of reasonable proxy for where this market can go. Thanks.
Hey, Rob This is John good question, when we think about.
When we think about the investments that we make and the as we've described the vastly underpenetrated market that we're in.
We look at our investments to say look we could we can grow revenue and in the 20% to 30% and that's how we think of things and that's what we think that we can control the investments that we're making to be able to grow in this market to that we did guide to that because there is unknowns out outside of outside of what we.
You can control and we've kept it at that but certainly when we look at investments in this market and the opportunities that we have we we look at those investments with the long term growth lot of from a revenue standpoint of 20% to 30%.
Thanks, Rob.
Our next question comes from the line of Michael Ryskin with Bank of America. Please proceed with your question.
Hey, guys. Thanks for fitting me in place so I'll just keep it.
So I'll just keep it to one.
Obviously see the strong really strong utilization numbers and the Americas for the Orthos and GPS, but obviously, that's only half the equation. Because you also got the number of docs actually receiving those so I'm just wondering if you could provide any additional color on the split between ortho and GP, which really drove the volume in the quarter.
In the Americas, what I'm getting at is you know what the rebound you something you commented on it some of that pent up demand was there one part of your customer base that really accelerated better than the others or was it pretty broad based.
Yeah, I can take that Michael this is John.
I think when we look at the utilization and the growth that we saw was very broad it was cross GP and ortho a it was across multiple tiers. We just saw good adoption of our technology. As these practices opened you know patients ask for it by name doctors used I product.
They many doctors that were higher up.
Higher up on the tiers accelerated their their cases and then even new doctors are doctors that are at lower tiers, we're able to increase the year of utilization. So we're very happy with the results that we saw from a newer Dr.
Newer doctors to more experienced doctors and felt really good about how they were in that recovery mode. It as we said, it's tough to understand to break out the piece of how much is pent up demand versus versus run rate, but you know as we went through the quarter. As we said, we got we got stronger and stronger. So we feel good about the situation that that will.
Q3 with.
Thanks, Michael.
Oh I, we've got time for one more question operator.
Our next question comes on the line of Jason Bazinet with Piper Sandler. Please proceed with your question.
Great, Jason Greece man here, either congrats on a nice quarter, everyone have a clear.
Have a clarification question just real quick and then another I'll ask upfront here I'll just that enhance momentum building comment that you made for October Joe can you just confirmed that that holds for all major reporting channels, you have with GPS and and orthodontists.
And then I know, it's early days for I go quite sad, but curious if you could just talk about initial feedback on the system and the first markets you entered in Europe.
Learnings you can draw on the early days of that launch before he wants to take that system into additional markets.
Thanks.
Yes, Jason.
First of all I can confirm that it's across all channels all markets.
There's nothing really like insight its not without momentum that we.
I'm on I Pro plus you know Apple pluses about just enhancing the ability of doctors that on I'm proud to be able to do more enhanced cases and the feedback is great. We started.
We started in Europe, because that's where I pro really started from in a big way and those are the first talk doesn't really ask for that and then.
We've rolled that out in general and it's really on the back of a bucket Clincheck 6.0, the cloud based product.
These pocket we've done that's one of the great things about you know digital platforms, you can expand them to be able to sit specifically in different markets at different times, and that's what I flow I pour plus really represents so I hope that helps you.
Yes, that's true.
Yes take care.
There are no other questions in the queue I'd like to hand, it back to management.
Thanks, everyone. We appreciate your time today, if you have any follow up questions. Please contact investor Relations and look forward to speaking you at our Investor Day November 20, Threerd every night.
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