Q1 2021 Align Technology Inc Earnings Call
Yeah.
Greetings and welcome to the align and Q1 'twenty one earnings call. At this time, all participants are in a listen only mode.
Question and answer session will follow the formal presentation.
Should anyone require operator assistance during the conference call. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded I would now like to turn the conference over to your host sure. They Stacy Vice President Corporate Communications and Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us I'm, Shirley Stacy Vice President of corporate Communications and Investor Relations. Joining me for today's call is Joe Hogan, President and CEO and John Morici CFO, we issued first quarter 2021 financial results today via Globe Newswire, which is available on our website at Investor data line check Dot com today's.
Conference call is being audio webcast and will be archived on our website for approximately one month and telephone replay will be available today by approximately 530 P. M. Eastern time through 530 P. M. Eastern time on May 12 to access the telephone replay domestic callers should dial eight seven and 76606853 with conference number.
<unk>, one and 3718065, followed by pound International caller should dial 20161 to seven and 415 with the same conference number.
As a reminder, the information provided and discussed today will include forward looking statements, including statements about align with future events and product outlook. These forward looking statements are only predictions and involve risks and uncertainties that are described in more detail and our most recent periodic reports filed with the Securities and Exchange Commission available on our website and.
And at SEC Gov and.
Actual results may vary significantly and align expressly assumes no obligation to update any forward looking statements.
We have posted historical financial statements, including the corresponding reconciliations, including our GAAP to non-GAAP reconciliation, if applicable and our first quarter 2021 conference call slides on our website under quarterly results. Please refer to these files for more detailed information. Please note as of Q1 'twenty. One we are no longer including number of das.
Trained clearer line of shipment volume by region and total worldwide average selling price. We will continue to share information management uses to evaluate the business and metrics to help investors and analysts assess our financial performance with that I'll turn the call over to align technology's President and CEO, Joe Hogan Joe.
Thanks, Shirley good afternoon, and thanks for joining us on our call today I'll provide some highlights from the first quarter and then briefly discuss the performance of our two operating segments clear liners and systems and services John.
And I'll provide more detail on our financial results and discuss our outlook for the full year following that I'll come back and summarize a few key points and open the call to questions.
I'm pleased to report another strong quarter with record revenues and volumes, reflecting strong growth for both invisalign clear liners, and I Taro systems and services across products and customer channels worldwide Q1 sequential invisalign clear aligner growth was driven by strength in both adult and tea market segments across products customer channels, especially.
And in North America, and the EMEA region.
The year is off to a great start and Q1 reflects increasing momentum and the benefit from continued and investments and our strategic initiatives focusing on <unk>.
Expanding our operations globally, and existing and emerging international markets, increasing ortho adoption and utilization of and Invisalign treatment, especially with teens training and education, GP dentist and increasing conversion to clear liners and building Invisalign brand preference with millions of consumers do advertising PR digital social.
And influencer marketing to drive demand and conversion to Invisalign trained doctors.
For Q1 total revenues were 89 point 89, and $4 8 million up seven 2% sequentially and 62, 4% year over year to one system and services were 141 5 million up 5.8 sequentially.
And up 104% year over year.
Q1, 'twenty one clear line of revenues of $753 3 million were up seven 5% sequentially and increased 56, 4% year over year.
And Q1, we shipped a record 595.8 thousand Invisalign cases, and increase of four 9% sequentially and 65, 8% year over year. In addition, we shipped to a record $78 6000, Invisalign doctors worldwide of which approximately $6 6000 were first.
And customers.
During the quarter, we reached a significant milestone with our 10 millionth Invisalign patient Gabriele Silva, who recently began her treatment with Doctor units blind and Invisalign trained orthodontists and Sao Paulo, Brazil, one of our fastest growing country markets. It's remarkable to think about the pace of growth and adoption that we are experiencing.
Worldwide, especially we're considering it took 10 years to achieve our one millionth invisalign patient milestone and now we're adding one 1 million new invisalign patients and less than six months, we're grateful to our doctor partners and their patients and to our 20000 employees around the world who have helped us reach this milestone.
And recognition of our 10 millionth Invisalign milestone, we've donated 10 million to the adult line Foundation donor advised fund are kicking off a campaign called 10 billion smiles and 10 million. Thanks centered around the transformative power of Invisalign treatment through the eyes and Invisalign patients.
From a product perspective, Q1, and clear aligner revenues reflect strong growth across the invisalign portfolio for both comprehensive and non comprehensive products Q1 comp volume increased four 9% sequentially and 62, 3% year over year and Q1 non comp and non comprehensive volume increased 5.0%. So.
<unk> and 74, 4% year over year, Invisalign clear liners address a wide range of case complexity and can treat approximately 90% of case starts for adults and teens.
And phase one treatment for kids as young as six years old Q1, adult patients increased five 8% sequentially and 68, 5% year over year Q1 teens, you're younger patients increased 2.7% sequentially 58, 9% year over year teenage cases made up nearly 75% of.
The $15 million or those starts each year and despite our rapid growth and adoption invisalign treatment is still only single digits worldwide. So we continue to see significant runway here.
Our strong Q1 results also reflect our multimillion dollar consumer marketing investment across key media channels with broad reach to drive consumers to Invisalign Doctor practices are Tina mom focused consumer campaign generated a 138% year over year increase and unique visitors to our websites and third.
5% increase and leads generated in addition, invisalign social media and Influencers like Charlie Demilio, Ivana, Greg and Tom and France, and many others content creators Influencers enabled delivery of 4.2 billion impressions in Q1, 'twenty, one delivering exciting new content and increased engaged.
And then from the Invisalign brand among their millions of followers and the consumer.
Insights and data we receive from our programs suggest adults are also continuing to invest more and themselves for their overall health and wellbeing and have more disposable income to do so they are seeking invisalign clear aligner treatment from our invisalign doctors and sharing their positive experiences with their friends family and social networks, becoming influencers.
Cells.
Now, let's turn to the specifics around our first quarter results starting with the Americas.
For the Americas region, Q1 was another strong quarter with Invisalign case volume up 8.4% sequentially and 53, 8% year over year, reflecting increase and Invisalign submitters and utilization growth for both orthodontic and GP channels Q.
Q1 results also reflect continued investment and digital marketing sales programs, our channel focus around G. P's worth those and Dsos and other initiatives to help drive utilization.
And the GP channel and Invisalign moderate and Invisalign go continue to gain traction this was especially true for GP dentists that enrolled and the IPO program as well as doctors that are installed <unk> scanners. The G. P. Accelerator program designed exclusively for GPS provides an all encompassing support plan based on practice needs.
That is centered around maximizing I taro integration clinical support needs and implementing new marketing strategies DSO utilization also increased and continues to be a strong growth driver and outpace non DSO practices today.
Today, we announced that we have extended our relationship with Deca Dental group and have signed a new multi year agreement for the Invisalign system through early 2025, and addition, Deca dental group is extending utilization of Vitaros element Fived imaging system across its affiliated practices and the United States.
And this provides deca dental doctors and clinical support team members with access to aligns customized clinical education for the Invisalign system and the <unk> element Fived imaging system to support practices and adopting new workflows for restorative dentistry and for digital orthodontics and.
And the ortho channel the teen Awesomeness centers program direct patients to Invisalign doctors, who are experts at trading teams and are seen as the go to doctors and their markets, helping to drive increased a comprehensive treatments within the North American Ortho channel Tomorrow.
<unk> opens for the 2021 team form virtual edition to be held on June 10th and 11th which combines two days of all new dynamic sessions focused on Invisalign teen patient journey sessions will focus on building clinical competence efficient workflows teen and parent conversion and the overall digital treatment experience at teens expect.
The timing of the form is designed as a strong lead to the busy teen season, and attendees will have the option after post form mentoring by Invisalign teen experts to help with those and their staff apply the tools from the team for them to their practices and get additional support through the busy summer.
For our international business Q1, Invisalign case volume was up sequentially <unk>, 9% on a year over year basis International shipments were up 83, 2%.
And EMEA Q1 volumes were sequentially three 7% up 74, 9% year over year with strong broad based growth across all markets led by the UK, France, and Italy, along with continued growth and our expansion markets led by Turkey, Russia C. I S and Benelux, we also saw strong performance.
<unk> from both ortho and GP channels with momentum and the GP channels with adults reflected and strong utilization and shipments from Invisalign go.
They had growth programs are customized by market and customers.
And to encourage invisalign utilization such as professional 360, ortho and advanced 360, ortho programs with over 2000 orthodontists and role.
We also had G. P moved $3 60, a program designed to be able to help move doctors along their developmental journey with an increase and GP cohorts of over 117 per cent compared to a prior year. We're also continuing to offer online and on demand education events, which have reached over 15000 Gp's cumulatively.
And the reason we hosted several successful summit and forms for Invisalign doctors this quarter and all virtual formats. The U K G P form and Ortho summit, French Ortho summit and the ITER element plus launch media event and in addition, we just held the Italian and dock or German and Ortho summit last week.
International expansion and remains one of our key strategic pillars last week, we announced plans to open a new manufacturing facility in Poland, which would be our first aligner plant and the EMEA region, and our third plant worldwide, joining whereas Mexico and as young China.
The new facility are expected to be supplying customers in the EMEA region and early 2022.
Helping address the large and relatively untapped market of more than 5 million annual orthodontic case starts and more than 150 million and may have customers, who could benefit from treatment the investment as part of our strategy to bring operational facilities closer to our customers and reflects our commitment to invisalign trained doctors and their patients and EMEA region and extends.
Our local operations and the region.
Date of the yard and they are planning and work law is expected to add more than 2500 jobs by the end of 2020 five making it the company's largest investment and may have to date and the largest three D printing operation and the region.
And for APAC Q1 volumes were down sequentially, three 9% as expected, reflecting seasonality on a year over year basis, APAC was up 101% three.
And 3% compared to the prior year, reflecting continued strong growth across the region led by China, Japan, and ANZ and.
Invisalign volume growth drivers were young adults with young kids ramping faster than any other age groups.
And the teen segment and Invisalign volumes accelerated during the quarter and were driven by increased invisalign utilization and case submissions from Invisalign doctors. We also continue to see good adoption of Invisalign moderate product for non comprehensive treatment and the GP channel during the quarter, we continued to offer online and on demand and education events, which reached over 14.
Thousand Gp's cumulatively.
Invisalign volume from China were flat sequentially and up over 200% year over year.
And Q1, China volumes gained momentum throughout the quarter.
Your line clinical education site has to go to digital hub for Invisalign doctors and team education and training. The digital learning environment was re launched in February 2020 for Invisalign doctors offering a comprehensive learning platform, which role specific content for Orthos and GPS and their teams.
The site enables more online learning opportunities with spotlight features for whats trending now recommended learning paths based on doctors experiences and expanded categories, including digital treatment planning comprehensive dentistry and team education.
During the quarter over 102000 unique users.
First the records lecture completed self paced learning modules and watch how to videos doing more than 3 million pages of learned content.
And when the ortho channel over 38000 unique users and engaged with a digital learning site and additional 63000 unique users from the GP channel.
We also continue to see good adoption of the adapt program, which is an expert and independent fee based business consulting service offered by a line to optimize clinics operational workflow and processes to enhance patient experience customer and staff satisfaction.
As a result of the adapt service practices experienced higher growth and greater efficiencies from orthodontic practices as well as improved profitability after implementation.
To date, we've seen a 50% increase and Invisalign cases, among doctors cohorts within six months of participation and the adapt program. In addition, while still early in the program. We're also seeing a strong correlation of our halo effect on teen utilization among adapt doctor cohorts.
Oh and consumer marketing is focuses on educating consumers about the invisalign system and driving that demand to our invisalign doctor offices, ultimately capitalizing on the massive market opportunity to transform 500 million smiles and.
And Q1, and we continue to see strong digital engagement globally with more than 138% increase and unique visitors, 95% increase and doctor locator searches and 35% increase and leads created on a year over year basis, driven by our global adult and mom focused campaigns and team focused influencer content our U S.
Mom teen multi touch multimillion dollar campaign with Influencer led Youtube videos of mom focused TV spot.
Custom Twitch activation and Mega teen sensation and such as Charlie do you mail, they go and our bond and Greg continued to perform well and garnered $4 2 billion impressions and Q1.
This is the statistics I shared previously you speak to the continued success. This marketing campaign is having to not only drive demand with consumers, but also educate them on the benefits of invisalign treatment through a doctor's office.
Your line digital platform continues to gain traction globally, our consumer and patient App. My Invisalign is now available and 58 markets, resulting in a more than and Forex increase.
And app downloads and three X increase and patients actively using our app and Q1 'twenty one versus the same period, a year ago, our consumer and patient feature usage continues to increase for example, invisalign virtual appointment tool was used 86000 times and our insurance verification feature was used 27000 times and Q1.
Further we received more than 575000 patient photos and our virtual care feature to day globally, providing us rich data to leverage our AI capabilities to improve our services for doctors and patients.
Lastly, our new consumer website has been rolled out to more than 50 markets and continues to drive increased effectiveness and Lee creation.
And the EMEA region, and we built on the tremendous success, we saw with the consumer marketing pilot in Q4, and the U K and expanded our media investments across the UK, Germany, and France to driving greater engagement, resulting in more than 335% increase and unique visitors and and 95% increase and leads we also expanded our consumer.
Rising and the APAC region, and Australia, Japan, and China and saw more than a 2000% increase and consumer engagement and and 298% increase and leads.
Several key metrics that show increased activity and engagement with the Invisalign brand are included and into our core our Q1 quarterly presentation slides available on our website.
And our NFL partnership continues to do well generating over $23 5 million impressions during the quarter and continues to be another major integral channel to reach adults considering clear line of treatment do and Invisalign trained doctors during the quarter, we expanded our sports partnership marketing strategy with the Invisalign brand named the official Smile partner the Golden State Warriors.
As part of the agreement with the six times NDA Gold champion Golden State Warriors and Invisalign brand also the official smile partner of the Santa Cruz lawyers, the Golden State's G League affiliate and the Golden Guardians, its esport affiliate and the sponsorship includes and omni channel activation across TV and digital media and social.
A jersey partnership with the Golden Guardians and the Santa Cruz Warriors.
And finally on the consumer marketing front, we also launched our first ever social purpose initiative and Q1 called Invisalign change makers and award program. We developed in partnership with a national four H Council. This celebrate and highlight teens and making impact and their communities. We were blown away by the number of recommendations and storage we received about <unk>.
And from redistributing excess food to combat hunger and their communities to donating weighted blankets to those and the autism spectrum overall, it's been heartwarming to learn about each of these amazing teenagers, who bring a unique approach to positively impacting your communities and following their passion to create change and.
Total received nearly 800 change maker applications on June 28, we will announce a hunter winters each of whom will receive 5000 to help them continue their goodwill efforts will also celebrate these young forces of change with a virtual ceremony currently stated from mid July.
We are continuing to invest and creating consumer demand for invisalign and liners and markets around the world. Our global campaigns include a multichannel media strategy using digital video social media Influencer marketing and TV.
For our systems and services business Q1 revenues were up five 8% sequentially, reflecting slightly lower scanner volume following a record fourth quarter. This is primarily due to the seasonality of capital equipment sales at year end and higher services revenue on a year over year basis systems and services revenues were up 104% reflecting strong.
Scanner shipments and services yes.
<unk> element Fived imaging system continues to gain traction across all regions element <unk> is the first integrated dental imaging system that simultaneously records three D and oral optical impressions two day color images and near infrared technology or and Neary technology for scans can be completed and as little as 60 seconds and near.
Technology scans and structure of the tooth and real time without harm per weight radiation acting as digital aid for detection of entoprocta mental caries or cavities above the gingiva line.
And APAC the element and flex is doing well with its wind only configuration that provides needed mobility. So doctors can see patients anywhere they choose and also were performed full arch scans and even the smallest office during the quarter, we announced availability of the <unk> element plus series, which expands the <unk> portfolio.
To serve a broad range of the dental market. The new element plus series offers faster processing time, and advanced visualization capabilities for a seamless scanning experience and a new sleek ergonomically designed package. It's also engineered with the latest computing power a dedicated AI chip and new AI based features as well as EPS.
And the upgrade path for future innovation.
And towards a digital scans use for Invisalign case submissions and Q1 total digital scans increased to 89% from 75, 8% in Q1 last year.
International scans increased to 75, 1% up from 68, 7% and the same quarter last year for the Americas 85, 5% of cases submitted digitally compared to 85% a year ago.
Cumulatively over $35 4 million and orthodontic scans and seven 5 million restorative scans have been performed with <unk> scanners.
Turning to XO CAD, a year ago and April we welcomed <unk> into the line family I want to thank the entire team for their continued progress on integration and roadmap development together, we're working to extend XO cash position as a key technology provider for the dental cadcam industry and to drive continuous innovation with the open and integrated approach.
That is the foundation of XO cash during Q1, the new release of XO Cads dental CAD three D. Galloway with successfully rolled out globally with very positive customer feedback a record number of over 70000, and verified prosthetic components recreated and dental CAD Galloway, one of the largest prostatic law.
<unk> and the industry extra cat also reached a new milestone for the XO planned database, which now supports nearly 10000 implants from over 90 manufacturers. The new release also includes a unique and highly innovative dental CAD feature incident on anatomic morphing that reduces design time by up to 30%.
Compared to previous version and it also includes new new AI technology for extra cat smell creator, which enables time saving automatic detection and facial features.
In addition, the new <unk> connector was launched directly the XO Cath labs, the bioterror connector creates and easy and integrated way to receive interval scan cases from thousands of Vitaros doctors worldwide. New cases are downloaded automatically and will show up directly and the dental DB case list X.
And the Cat also co hosted a joint dentistry event and the U K to showcase and showcase full workflow with share side titled Digital Dentistry hands on a virtual roadshow and that general dentist showcases a full digital workflow for the clinical environment with chair side CAD XO Cats complete open architecture CAD software.
Our platform for single visit Dentistry hosted by Dr. Gilson Mercury the participants of the road show series learn how to use the software for a single visit restorations and implant planning and a dental practice along the entire digital dentistry workflow.
These are just a few milestones and we're excited about the opportunities ahead to shape, the dental industry with technology and expertise that benefits all customers labs partners and users. We look forward to sharing more about ongoing <unk> developments with that I'll now turn it over to John.
Thanks, Joe now for our Q1 financial results total revenues for the first quarter were $894 8 million up seven 2% from the prior quarter and up 62, 4% from the corresponding quarter a year ago for clear liners Q1 revenues of $753 3 million.
We're up seven 5% sequentially and up 56, 4% year over year, reflecting invisalign volume growth in most geographies clear aligner revenues.
Growth was favorably impacted by foreign exchange of approximately $14 4 million or approximately $2, one point sequentially and on a year over year basis by approximately $22 3 million or approximately four six points.
For Q1, Invisalign comprehensive and not comprehensive asps were both up sequentially.
On a year over year basis, Q1, Invisalign comprehensive and non comprehensive ASP decrease overall on a sequential and year over year basis, Asps were favorably impacted by foreign exchange.
On a year over year basis, Asps were impacted by higher net revenue deferrals and all regions and.
Higher promotional discounts.
Aligner deferred revenue on the balance sheet increased $79 million sequentially and $256 million year over year and will be recognized as the additional liners are shipped.
Total Q1 clear aligner shipments of 595, 8000 cases were up four 9% sequentially and up 65, 8% year over year.
Our systems and services revenues for the first quarter was a record $141 5 million up five 8% sequentially due to product mix and increased services revenues from our larger installed base and exit path Cadcam services year over year systems and services revenues was.
Up 104%.
Due to higher scanner shipments and services and the inclusion of XO cast Cadcam services from the April 2020 acquisition and increased services from our larger installed base.
Our systems and services deferred revenue was up 17% sequentially and up 102% year over year, primarily due to the increase and scanner sales and the deferral of service revenues, which will be recognized ratably over the service period.
Moving on to gross margin first quarter overall gross margin was 75, 7% up two five points sequentially and up four one points year over year.
And a non-GAAP basis, excluding stock based compensation and amortization of intangibles related to our <unk> acquisition. Overall gross margin was 76, 1% for the first quarter and up two five points sequentially and up four two points year over year overall gross margin was favorably impacted by.
<unk> 0.5 sequentially and <unk> seven points on a year over year basis due to foreign exchange.
Clear Aligner gross margin for the first quarter was 77, 6% up two seven points sequentially due to increased manufacturing efficiencies from higher production volumes and higher asps.
And lower freight partially offset by higher additional aligner volume.
Clear Aligner gross margin was up four six points year over year due to increased manufacturing efficiencies from higher production volumes and lower freight partially offset by lower asp's.
Systems and services gross margin for the first quarter was a record 65, 4% up one two points sequentially, primarily due to manufacturing efficiencies from higher production volumes and higher asps.
The offset by increased freight.
Systems and services gross margin was up three six points year over year due to manufacturing efficiencies from increased volume higher Asps and services revenues.
Q1, operating expenses were $451 $7 million up sequentially, 13, 7% and up 39, 2% year over year.
Quite shall increase and operating expenses is due to increased compensation, primarily from additional head count and incentive compensation and consumer marketing spend and other general and administrative costs.
Year over year operating expenses increased by $127 2 million.
Reflecting our continued investment and sales and R&D activities and investments commensurate with business growth.
On a non-GAAP basis, which excludes stock based compensation and amortization of intangibles related to our <unk> acquisition and acquisition costs related to our.
And <unk> acquisition operating expenses were $424 $8 million up sequentially, 14, 1% and up 49% year over year.
Our first quarter operating income of $225 4 million resulted in an operating margin of 25, 2% down 0.3 points sequentially and up 12 five points year over year. The sequential decrease in operating margin is attributed to operational investments the year over year increase in <unk>.
Operating margin are primarily attributed to higher gross margin and operating leverage on a non-GAAP basis, which excludes stock based compensation and amortization of intangibles the acquisition costs related to our <unk> acquisition operating margin for the first quarter was 28, 6% down <unk>.
Four points sequentially and up 11, five points year over year, our operating margin was favorably impacted by approximately <unk> eight points sequentially and one five points on a year over year basis due to foreign exchange.
Interest and other income and expense net for the first quarter was a gain of $36 $2 million.
Primarily driven by the FCC Arbitration award gain excluding the SEC Arbitration award gain interest and other income and expense net was a $7 $2 million expense and a non-GAAP basis.
With regards to the first quarter tax provision our GAAP tax rate was 23, 4%, which includes tax expense of approximately $11 million related to U S taxes on the FTC Arbitration award received and approximately $14 million of excess tax benefits related to stock based compensation.
Our GAAP tax rate this quarter was lower than the prior quarter rate of 25, 9%, primarily due to the higher excess tax benefits from stock based compensation, partially offset by foreign income taxes at different rates, our GAAP tax rate was higher than.
The same quarter last year, which was negative two 2000, and 745% primarily due to a onetime tax benefit of approximately $1 5 billion.
Associated with our corporate structure reorganization completed during the first quarter of 2020 day.
First quarter tax rate on a non-GAAP basis was 22% compared to 14, 5% and prior quarter and 33, 2% in the prior year.
The first quarter non-GAAP tax rate was higher than the prior quarter rate, primarily due to lower tax benefit from foreign income taxed at different rates.
And comparison to prior year, the non-GAAP tax rate for the first quarter was lower primarily due to higher tax benefits from foreign income tax and different rates.
First quarter net income per diluted share was $2 51 net.
Up 51.
Sequentially and down $16.70 compared to prior year.
And a non-GAAP basis net income per diluted share was $2 49 for the first quarter.
Down, 12% sequentially and up $1 76 year over year.
Moving onto the balance sheet as of March 31, 2021, cash and cash cash equivalents were $1 1 billion.
And increase of approximately $179 million from the prior quarter, which is primarily due to cash flow from operations of our $1 1 billion of cash and cash equivalents $684 4 million withheld and the U S and $447 3 million was held by <unk>.
International entities.
You want an accounts receivable balance was $719 million up approximately nine 3% sequentially.
Our overall day sales outstanding was 72 days up approximately one day sequentially and down approximately 15 days as compared to Q1 last year.
Cash flow from operations for the first quarter was $227 $2 million cash.
Capital expenditures for the first quarter were $43 4 million.
Primarily related to our continued investment and increasing our line of capacity and facilities free.
Free cash flow defined as cash flow from operation less capital expenditures amounted to 183 $8 million.
We also have 300.
Million dollars available under our revolving line of credit.
Under our May 2018 repurchase program, we have $100 million remained available for repurchase of our common stock.
Now, let me turn to our outlook overall, we are very pleased with our first quarter results and our continued strong momentum across regions and customer channels. It has been over a year since the pandemic began began and I want to briefly recap the actions we took to support our employees by protecting employee jobs and salaries and by <unk>.
<unk> and our customers with PPE extended payment terms and training and many other areas of assistance.
Instead of going quiet, we accelerated our investments and marketing to drive consumer demand to our doctors offices and stay top of mind with consumers, we accelerated our digital technology investments. So that we could provide virtual tools to our doctors, enabling them to stay connected with their patients and keep their treatment moving forward with.
Continue to grow the business increased our investments in R&D and product innovation and developing our plans for manufacturing expansion and EMEA.
We did all these things for our customers partners employees and shareholders, because we believe and the industry and the size of the market opportunity. Our results are the outcome of our conviction and our business model focus and ability to execute.
While there continues to be uncertainty around the pandemic and global environment. The strength in our business reflects the purposeful decisions, we made through the pandemic and fuels, our confidence and continued to invest into growth to drive demand and conversion globally.
Q2 is off to a great start and momentum has continued through April and consumer demand trends and patient traffic across the dental industry are favorable and continue to improve.
Given these factors and the positive trends, we continue to see across the business. We believe it is important to share our current outlook and provide guidance for the full year.
Note that the outlook, we are providing does not reflect any potential significant disruption or additional costs related to any supply constraints.
With that let's turn to our full year 2021 outlook and the factors that inform our view, we have growing confidence in our digital platform and how it is driving growth across all regions and market segments. We expect 2021 revenues up three seven to $3 9 billion.
Up $50 to 58% year over year consistent with past years, we expect second half revenue to make up more than half of the full year revenue and our second half revenue to grow year over year around the midpoint of our long term operating model target of 20% to 30%.
As discussed during our last earnings call, we are increasing our investments and sales marketing innovation and manufacturing capacity.
To continue to drive our growth programs and accelerated adoption and a vastly underpenetrated market.
And on a GAAP basis, we anticipate 2021 operating margin to be between 23, five and 24, 5%.
On a non-GAAP basis, we expect 2021 operating margin to be approximately three points higher than our GAAP operating margin after excluding stock based compensation and intangible amortization.
In addition, during Q2 'twenty, one we expect to repurchase $100 million of our common stock through either open market repurchases or and accelerated stock repurchase agreement, we intend to enter into on or prior to May three 2021. The repurchase is intended to complete the $600 million stock.
Repurchase authorization announced on May 23, 2018.
For 2021, we expect our investments and capital expenditures to exceed $300 million.
Capital expenditures, primarily relate to building construction and improvements as well as additional manufacturing capacity to support our international expansion and this includes our planned investment and a new manufacturing facility and Rockall Poland.
Poland.
Our first one in the EMEA region, we intend to fund these needs with cash generated from operations that I will turn it back over to Joe for final comments.
Thanks, John and summary were very pleased with our first quarter results of 2021, our strong growth and continued momentum and reflect our strategic initiatives and investments, including support for doctors to ensure treatment and business continuity ramping.
<unk> ability of virtual tools to keep doctors and patients connected throughout treatment and increased consumer marketing and <unk> programs and the benefits of digital treatment and digital tools and the limitations of outdated old analog approaches continue to drive adoption of Invisalign clear liners, and tiro scanners and services over the past year.
<unk> more doctors have experience aligns digital platform, which made it possible for thousands of invisalign practices and patients to continue treatment throughout global disruption. Thanks to Invisalign aligner digital treatment planning virtual monitoring and care as well about <unk> scanners.
But the shift from traditional analog wires and brackets to a fully end to end digital platform is not easy cannot be done without very complex technology.
And this technology is prevalent touching every aspect of what we do from manufacturing excellence, where we currently manufacture over 700000 unique aligner is per day to expanding our geographic footprint to over 100 markets to building a network of over 200000 trained and Invisalign doctors and providing the technology to our doctors and a complete.
Digital system, the align digital platform as.
As the market leader and the clear Aligner space. We've been building this industry over 24 years to get to where it is today and yet the majority of the market opportunity remains largely untapped.
With over 500 million potential case starts globally and line is and a rare positioned to address this market with the align digital platform powered by two decades of clinical data based on more than $10 2 million patients with AI and machine learning and digital tools to help our doctors efficiently communicate with their patients shown.
Explain any issues and visualize potential treatment outcomes and together with doctors, we're going to leverage the power of digital dentistry and orthodontics more than ever.
<unk> focused on our strategic execution agility customer service excellence and continuing to make investments to grow our business to drive utilization of the Invisalign system.
Ultimo returning value to our shareholders. This is a multi variable equation that we talk about and there is no other company and a market today that has all these capabilities combined.
Finally throughout the pandemic, our priority has been the health and safety of our employees and their families and our doctor customers and their staff and that has not changed we remain dedicated to the wellbeing and I want to reiterate our commitment to all invisalign practices and our employees around the world, especially those in areas recently affected by a surge in COVID-19, India.
Brazil, France, Poland, and Ukraine, Mexico, Thailand, and Japan.
We are continuing to monitor the situations and are providing support and resources for those impacted employees. Thanks for your time today and look forward to updating you on our progress as the year unfolds now I'll turn the call back over to the operator.
Thank you at.
At this time and will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad and <unk>.
<unk> John will indicate your line is and the question queue. You May Press Star two if you would like to remove your question from the queue for those using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
And no ma'am, please mildly poll for questions.
The first question is from Nathan Rich from Goldman Sachs. Please go ahead.
Good afternoon, and thanks, so much for the questions.
Maybe starting with the guidance for the year and your expectations over the balance of the year I. Appreciate the detail that you gave I guess.
Should we think about the revenue cadence as being similar to a normal year and Joe I mean, it certainly seems like the the shift and market share that you've been highlighting his accelerated.
During the pandemic I guess I'd be curious to know if you have any way of kind of quantifying the magnitude of this shift as we think about the ability of.
You just kind of sustain this this momentum going forward and the gains and that obviously clear liners have had during the pandemic.
And then Nathan we're obviously optimistic I mean, given the guidance we had today and the strong first quarter results, we really feel good about where we are.
Great thing about this growth as it's been broad and deep okay. It is across every region, we see it whether it's in APAC or whether it's EMEA, whether it's in the Americas overall, and then across the GP spectrum Cross the ortho spectrum too.
It's been terrific and it's.
And it's also up and down and that's why we're giving you a comprehensive non comprehensive now all different kinds of cases. So we just felt we feel great about the demand patterns and the depth and breadth of this rebound and that's why we have some clarity now we decided to give guidance and we're excited about this year and going forward, John any thoughts and to add to your question and Nate.
And the seasonality and things that we've seen in the past and we'll continue we would expect those to continue as we go through this year. So it's hard to compare year over year, especially in the first half.
But going forward.
And it makes sense to look at it quarter over quarter.
Great and if I could just ask a quick follow up on the it seems like there's going to be more discussion around comprehensive versus non comprehensive instead of the regional breakout going forward. So I was wondering if you could just level set us on the current mix of business between comprehensive and and non comprehensive cases, and how youre thinking about the growth of those two categories going forward.
Thanks, a lot.
Okay.
Yeah. When you look at it Nathan it's yeah, it's about 75% comprehensive 25% non comprehensive it can vary by quarter based on teen season, and so on.
But thats roughly the split there and we're investing in both areas to be able to grow whether it's on the ortho side or the GP side for those categories.
And I think you know the margin on those products also so there is not this is not like a margin split I mean, you still have higher margins on them.
Les and comprehensive product line too so.
It's a good mix makes sense. Thank you yes, okay.
The next question is from Jason Bednar from Piper Sandler. Please go ahead.
Hey, guys. Good afternoon, Hey, Hey, congrats congrats on another really nice quarter here I actually wanted to start on guidance as well.
And the second half of the year, maybe when comps tend to normalize a bit and use the midpoint of that 20% to 30%.
Long term guide you've got out there and are you able to talk about how this comes together from a regional or channel perspective is it safe to assume that it teams and international still grows above that mid twenty's level and then is it right to think about imaging and cadcam growing at that mid 20 level as well.
Hey, Jason This is John we would look at Invisalign and our systems and services to grow.
At that midpoint and the second half.
Around that 25% year over year.
Across the business and we're making investments and continued investments as we've talked about to really establish and continue our growth.
Okay, and John just started the anything from a regional channel perspective international or teens or just how that all comes together.
Thank you.
We're not forecasting by each at each of the regions and solar and from that I think he can you know from our business. We're trying to grow team. It's a great indicator for the penetration there and Europe those side and we'll continue to grow that.
But not giving specifics by region.
Okay understood and then just one other follow up I mean, the clear aligner gross margin was extremely strong this quarter.
Your line of revenue that grew $50 million sequentially, but cogs that felt like $10 million.
John I know you step through some of the factors you just.
Incorporated there, but is this a sustainable level that we should be thinking about for clear aligner gross margin going forward kind of and that's upper seventies level or maybe they were there. Some other factors that help push that gross margin higher here just in the first quarter.
What we did see some FX benefit as we called out, but it's a reflection of investing and this business, adding capacity added in places, where we see the growth and and this was leveraging some of those investments.
It's a reflection of the work that we have the productivity that we can drive across the business.
Utilizing some of the facilities that we have and had benefited a bit from FX on a quarter over quarter basis.
And sorry, if I understood.
Thanks, Jason.
Yeah.
The next question is from Elizabeth Anderson from Evercore. Please go ahead.
Hey, guys.
Hey, Thanks, so much for the question and congrats on a nice quarter and can you.
And talk about any changes and yesterday and your DSO stat, and DNA and St.
Renewal and up quite a bit I just didn't know if there as we come out of COVID-19 anything to think about there in terms of how you're working with that group of customers.
No it doesn't but actually we do we can we bring the tire and align digital platform together with <unk> the different.
So on Dsos, one approaches thing from a comprehensive standpoint somewhat non comprehensive so we just basically gear, our digital platform and our product line based on what a DSL wants to do and what they want to accomplish and not just in the U S are really all over the world.
Got it that's helpful and then in Canada, and the new facility and Poland should we think about the potential impact on the gross margin line to be similar to when you open as he Yang facility or is there a different way day. This one is different.
I think what and we look at that.
We will leverage to the ramp up that facility as fast as possible.
<unk>.
Volume can come through from EMEA, and so I wouldn't look at that as a model for that and remember what we did in China with a temporary facility to move to a greenfield and this is a greenfield new facilities and Starwood.
Got it okay. Thanks.
Thanks Nathan.
The next question is from John Block from Stifel. Please go ahead.
Thanks, guys, Hey, Joe got and thanks, Chris.
Quarter, two relatively quick ones I guess to start Joe you called out.
EMEA and North America is the primary case volume call. It upside drivers not APAC and just maybe if you could talk to APAC, a little bit more and we sort of first and Colgate and I think everyone was thinking first and first out but it seems like amusement stronger I mean, it wasn't a two year stack basis. Despite all the headlines talk that we hear in EMEA and.
Details on APAC, obviously, you've got a pretty big competitor and in China any more granularity there would be very helpful. And then I've got a little bit of a tighter follow up thanks John.
First of all I mean, it was amazing and that way, but I wouldn't let it eclipse APAC rate, we feel really good about APAC across the board, China, obviously be and big area of the sequential growth of China. When you look at fourth quarter versus first quarters, right and that seven and seven 5% range like the entire businesses and then obviously APAC.
Extremely diverse but from Japan ANZ those key areas that we have and APAC, it's really strong growth. So I really feel great about APAC. It's just there is somewhat of an eclipse right now because you know EMEA was extremely strong, but you shouldnt that yourself think and any way that that means APAC was weak and some way we feel good about APAC.
As we go into the first quarter and the whole year.
Okay. Yeah, I guess good problem to have second one is sort of a derivative of nathan's question, but the biggest question I get from investors is this pull forward of demand right and in other words is the 121 volume call. It success is that at the expense of future quarters and it seems like your guidance suggest youre not too worried about that John but can you give us more details here.
Aren't you worried about any pull forward what are you hearing from sales reps, what are docs, saying about sustaining the momentum throughout the year. Thanks.
Yeah, John John first of all it's the breadth of this growth right. It's not like it's a singular region like we just talked about with EMEA and APAC and <unk>.
Australia. The Americas is we're seeing great uptake and the GP side, we see terrific growth there the orthodontic society share our teen numbers are good and respectable we're moving into teen season, and so what we feel good about is just the breadth and depth of this business. It's not just leaning on one or two legs from a strategy standpoint.
It really is well positioned going forward.
And we hear the same thing about demand pull forward or whatever we doctors aren't talking like that and remember the questions back and the third quarter fourth quarter was backlog right. How much of this was backlog that wasn't consummated and second quarter early third quarter and when we got way past that obviously, we got into the fourth quarter or whatever so I think we're just seeing a realization and the.
And the teen market of what digital Orthodontics can do and our company is very well positioned to take advantage of that when you look throughout the world John anything to add okay.
John Thanks, Thanks, guys.
The next question is from Kevin Caliendo from UBS. Please go ahead.
Thanks, Thanks for taking my call and talk a little bit about how to think about seasonality with regards to teens.
And you typically you gear up the summer is a big teen season, historically hetzler do you expect that again next year and sort of back to school might be a little more normal and and what how should we think about your gearing up for.
Another incremental teen season, and what might be different any expectations around incremental share for teens, just love to hear the strategy.
Well I think we have a strategy really based on every region because the teen season is different by region from a calendar standpoint, and doctors apply our technology and different ways with teens, but let's just take the U S and Canada for a second obviously and the second quarter beginning of third quarter. Those are the really strong areas.
See our advertising program really kick in and a big way and we've talked about the teen awesomeness centers that we put in place that's with making sure that we have doctors that are really well equipped to handle teens and we directed leads to that teens with confidence that they can be serviced properly.
Overseas, we understand what those timing are to the teens also and we put those those programs together to.
Honestly, Kevin we have a great portfolio right and we can we can go across teams and a lot of different ways all the way from six year olds.
To really older teens, and when you get to 16% to 19 years old and the tooth movements associated with those two so it's just having those doctors ready, it's having the communications with the teams and the moms to make sure. They are aware of digital orthodontics option and they really asked for that as they go into the doctors and that's a strategy we apply just in different ways and different.
Seasons around the world, but it's specifically applies to teams.
That's helpful.
And one just one follow up on margin. The gross margin number was match you covered that already should we think about any of that flowing down to the operating margin or any sort of target for operating margins over the next couple of years, you've historically always look to spend to grow and it's always you've always been reward.
<unk> four and there's no reason to change, but just thinking sort of where you are now maybe if you do have a little bit of an uptick and the gross margin that you can let's more of it flow through to the operating side, how do you think about that.
I think when you look at it Kevin This is John I mean, we're looking to balance our growth opportunities with our margin and in certain countries you might be a different parts of that equation, but on balance. We're pleased with the gross margin we've talked a lot about the investments the productivity and other things that we see and and that.
And it gives us a lot of flexibility to be able to invest but.
Lastly, underpenetrated market that we're in.
Making these investments to grow volume makes a lot of sense to us, but we're always mindful of that balance between volume and margin.
Great. Thanks, so much yes, thanks John.
The next question is from Ravi Misra from Darrin <unk> capital markets. Please go ahead.
Hi, good afternoon, and thanks for taking the drug and so just.
Wanted to press, a little bit more on kind of and said some of the marketing opportunities that you are highlighting and.
Just curious you know you have the ski team now Youre talking about the Golden State Warriors and I'm sure Dream on Green, So very happy about that but just can you help us understand like what what what you go after when you look at the marketing opportunity like in terms of the return that you are searching for the particular brands that you're aligning with.
And then I will follow up.
After that thanks.
We do a lot of work on this Ravi and figuring out what channels, what kind of return we get by channel how much you put and social media sports team how much do you put and TV.
But overall, John and I expect a certain return and we know what those returns are by region. We invest a dollar here, we know when we get back and necessarily want to convey exactly what those returns are what we make sure their poverty positive and.
You've seen us increase our advertising pretty dramatically outside the United States. A response for that has been really good and obviously, we use a lot of what we learned here in North America to apply that around the world. So.
Invisalign is incredibly well known brand not just in North America, but all around the world and being a leverage that and having that as kind of a common name around the world is very helpful for us and a sense of driving volumes, giving doctors competence and patients' confidence too. So we really feel good about our investments and when obviously, we balance that well with increased sales people with.
Technology investments.
And the things you have to do when you run a business like this but it is something that obviously gains a lot of attention and a lot of analysis from us.
Great and then maybe just one on on the press release, something caught my eye around and you're kind of.
No summit case shoot out where.
So it was around kind of a class III class III Invisalign case presentation and historically that's been.
Something.
I think maybe and that.
And that unless you're a bleeding edge kols and our doctor that you weren't doing the fact that thats kind of winning the kind of peer award now does that suggest that youre getting deeper into these more complicated cases, and just more specifically do you feel that you have and edge versus your competitors and the space that allow you to do this or is this kind of a class effect that you'd.
And has to do with comfort and ease of use of the technology as a whole. Thanks.
Yeah, Robert it's a good question.
Remember, we have done what we said $10 2 million cases and.
And so those $10 2 million cases, we've learned a lot and we learn more every day and we run AI and machine learning across those cases, and that's how we just launched <unk> as we understood and deep bite cases.
Some issues with posterior open bite and different clinical kind of issues. It would bore you to death, but we understand based on millions of cases, we've done which the best way to move those teeth to ensure that they end up and the right positions with the right smile at.
Obviously, you want to do this as quickly as you, possibly can because patients don't want to be and treatment and over five years. So I feel we have and incredible advantage you look at smart track, we looked at how we initiate that with over 4 million lines of code that we have and Clinton check.
You look at the accuracy of <unk> and a sense of transferring information through.
Overdoor manufacturing facility and in order to make this.
It's so I feel very confident about a 24 year first mover advantage and what we've done and obviously, there's competitors out there and competitors are coming up but a lot of them have to crawl through the friction that we did in order to learn this and a lot of the IP that we have put down that.
Makes us unique and a sense of how we position ourselves and the marketplace. So back to your what you started with when you do these shoot outs and all its really great to sit and the audience and looked at the before and after photos and it's amazing when I first joined this business I just said.
Hard to believe that you can do this what's happening today, and it's becoming more common and.
And you go all around the world. It wasn't it's not one or two doctors doing this there's hundreds of thousands and they're doing an incredible kinds of cases, and so which I think that more and more it just lends credibility to this product line and you can do what we say now 90% of all the cases that are out there.
That's not just because it's the classic right. It is the whole system from Howie <unk> print what path. We can use the algorithms we use how we constantly tweak it by the information that we have driving a brand like this have any kind of training and we talked about 200000 doctors that we've trained and gone through these things. It takes time to do it takes X expertise and.
Doctors need that confidence and understanding and we feel we can give it to them better and anymore.
And that technology has brought about by investments and we will invest over $250 million this year alone.
And in R&D to improve our systems and and Invisalign for our customers and that's it and advantage its advantaged like Joe said over a period of time, but we're continuing to invest to make things better and better for our customers.
Thanks Ravi.
The next question is from Richard <unk> from SVP Leerink. Please go ahead.
Hi, This is Jamie on for Rich and just one question from me and appreciating that you guys are obviously focused on driving higher ortho teen utilization overall GP adoption at the same time I'm just curious in your view.
Which of the two is likely to be the bigger make-or-break and driver of growth.
Over the near and intermediate term.
It just sounds like a terrible answer to you.
Both really you talked we talked about 500 million patients out there that could use invisalign treatment and we know the other 15 million orthodontic cases, roughly 75% to 80% of the teens.
All of those there they're both and they are both huge opportunities and there's not a difference from a technology standpoint, and how you apply that technology to either of those would make one easier to do a more beneficial than another so honestly both of those are great reservoirs of growth force.
Got it Okay and then just.
Oh go ahead, one last one from me just on the DSO kind of the business model and strategy that you guys have for Inc.
King.
And dsos across all practices kind of how do you approach that and when you do see dsos, where the large majority of their practices Abu Dhabi eyecare with scanner.
And what sort of pickup that you guys see in terms of utilization. Thanks, so much.
Well, where you use <unk> scanner as you train the doctors properly you have the right products and the GP channel like I go and different products like that we get terrific uptake I mean, you can't measure it the way you do share and cheerful and orthodontic office, but we get our DSO business is significant now.
Meaningful and that way and.
It's one where that digital platform strategy would you kind of outlined and your question is what we employ but again, we employ it in different ways, depending on how a DSO really wants to engage with us.
Thank you next question please.
Next question is from Jeff Johnson from Baird. Please go ahead.
Hey, Jeff Hey, guys, good evening, and John I want to go back you mentioned, the $250 million and R&D and I think the number we've discussed over the last I don't know probably somewhere in the last six or nine months or so it was like 500 million total and what you guys spend not only on R&D, but channel support advertising.
Social media, all that stuff and you don't know.
Our mind, that's one of your bigger.
Barriers to entry, even probably more so than some of the IP and what have you but.
It sounds like with some of the stuff you were taken up EMEA, you're taken up APAC advertising now more and more sports teams and things like that is that 500 million dollar number a dated number at this point and is that barrier to entry and that spend even even go and well above that number in the near to intermediate term you will see that that's a good question.
And when we talked about that at our last investor day of up to $500 million combined.
Marketing and go to market plus the.
R&D and what Youll see is as in success and we've talked about a lot, but as you know where we see returns where we see volume where we see profitability, we're going to continue to make those investments so.
As we go through this year that.
That number will most likely go up as as we find success in these investments and and find that right return.
Yes, fair enough and and Joe I'd be interested I mean.
COVID-19 case counts and restrictions, even and the <unk> and some of the markets you called out and EMEA as being so strong U K France.
And I'm sure some others you called out other areas, obviously, India that were all <unk>.
<unk> closely but a lot of other markets as well that are still dealing with COVID-19 case, count and and heightened risks or does that even matter Takeda to case shipments to invisalign and at this point I guess, what I'm trying to figure out is is that stuff holding back some volumes that could come through next year are we all just with COVID-19 fatigue, and still comfortable going in and getting.
Clear aligner cases, even in those markets. So.
Is COVID-19 a risk factor I guess that you've had to build and some some caution in the guidance for in some of those markets or cases, just as strong and those markets as they are and in markets, where maybe COVID-19 is a little more under control.
Yeah.
Jeff It's a good question, it's just what we've seen there's one definitive if offices were shut down.
And patients aren't allowed to go to offices and we saw that that happened and the second quarter. It happened all around the world and.
And then the term lockdown is used very loosely all around the world with a lockdown and what isn't.
And the situations like in India, right now are a disaster, obviously and.
People are very cautious, but the rest of the way around the world. What we see is it looks like communities and people being able to manage this okay is there any kind of a backlog of patients not going into dental offices because of that I think in certain countries around the world. There is but we can't really quantify that right now and again, the breadth and depth of our demand pattern and gives us confidence that we.
We can predict around it.
Thanks, Jeff.
The next question is from Erin Wright from Credit Suisse. Please go ahead.
Great. Thanks can you speak a little bit about what youre doing differently in terms of promotions or other initiatives around day, Carol and that's really breath and meeting with customers, maybe and differently now and in.
And whereas the traction mostly tied to and the ortho and GP channel and in and do you anticipate any lumpiness quarter to quarter across that.
<unk>.
Yeah, well I Taro has been great for US right, yes, good services business, there, we announced a plus series <unk>, which is Aaron's and it's a breakthrough I mean, it sounds like it's a derivative as far as you know and incremental.
But it is really a strong platform and we talk about the artificial intelligence and being able to embed and that machine.
And.
And you see doctors, both on the GP side, and orthodontics side really excited about it but this is not a promotional discussion and a sense of when you ask your question about how to promote it and Theres nothing tricky there. What we do is we have a broad number of products.
The nearer product plus which is the very high and product line and then you have the flex system, which I mentioned in my opening which is basically a wind itself and it's used with the normal kind of a computer that's adapted to that and it helps to get flexibility and a sense of what a customer wants to use our doctor wants to use on both and so I feel it's like how we take this to mark.
And the different products that we have and are different.
We segment that is and then obviously if you want to do Invisalign and this is the front end and key and of our digital platform and that's very attractive to both GPS and orthos that really want to do invisalign. They know that <unk> is critical for that.
Thanks next question, Okay, great and.
Yes.
Next question is from Brandon Couillard from Jefferies. Please go ahead.
Hey, Thanks for squeezing me and John.
John maybe just a two part question around guidance.
The operating margin outlook would suggest.
Just kind of moderate a bit over the balance of the year from <unk> levels, you sort of elaborate on your expectations for gross margins for the balance of the year and then what should we how should we think about the trend of Asps.
Over the next few quarters.
And just leave it there.
And when we look at and we're pleased with our gross margin and margin that we had in the first quarter.
Lot of things came together on that.
When we look at the investments and the growth opportunities. We have we're not giving specific guidance around our own gross margin, but you can see it as it translates to op margin is a reflection of the growth opportunities. We have investment opportunities that we have to be able to and <unk>.
Best and grow and this business and.
And we can update as we go forward based on based on what we see.
And your other part of the question regarding <unk>.
Kind of Asps and so.
When you look at.
We have a breakout and we show that John on a regular basis between comprehensive and non comprehensive.
We don't expect any major fluctuations across our asps.
And the only thing that that comes up and we saw it and this quarter a bit was.
With currency changes, but in terms of the promotions and how we go about the business and how we're trying to drive growth. There is nothing out of the ordinary that would impact <unk>.
Thanks, Brandon next question please.
The next question is from John Kreger from William Blair. Please go ahead.
Hey, Jeff just wanted to follow up on Jeff's question of that so if you move beyond the office closures as you look at certain regions of the world, becoming hotspots and then that fading does that impact demand levels that youre seeing.
Yeah.
It's not a great answer for John It's yes, and no okay, depending on the severity and where it is but I can say yes.
For the most part we say no and Thats after the second quarter when again definitive piece, if you shut offices down and you won't let patients and there were going to have an issue, but actually after the second quarter early third quarter, we've been dealing with lockdowns.
And that are basically lockdowns of timeframe, lockdowns, and where people can travel, but not specific lockdowns and doctor offices, if the market stays away from that we feel were pretty good.
Okay. Thank you thanks John.
Operator next question.
It sounds good. The next question is from Michael and my skin of Bank of America. Please go ahead.
Thanks for squeezing me and Hey, guys and I'll just ask a quick one.
Want to expand a little bit on the on the ASP question that was just asked I'm. Just wondering you cited a little bit and in your prepared remarks in terms of promotional and things like that.
Discounts are you, referring specifically to the advantage program and if you could talk about.
Some of the some of the Orthos and GPS are falling and with those teams and have you seen any movement over the last couple of quarters where people.
And he bought fallen more and to the platinum and the diamond grouping there.
And kind of also backing into sort of the numbers on utilization between ourselves and I've seen some really nice numbers. The last couple of quarters is that indicative of that a higher portion of ortho and GPS fallen at those higher tiers, and therefore walking and those are the hyper promotional discounts.
And certainly that is that is the impact of what you have is doctors of growth through the two year to date.
And they become more proficient they had to take out more cases, whether they are.
And the ortho side or the GP side, we see them work their way to tiers. They do more cases, do we get that volume benefit and.
And then they'll they'll see those discounts there we've had those programs in place that those programs and really help drive utilization and really.
<unk> talked to the utilization growth that you noted there. So those are programs that we've had there are there too.
And two to drive utilization and it's up to net.
And we've used and our business and expect to continue to use.
Thanks, Michael.
This concludes the question and answer session I would like to turn the call back over to Shirley Stacy for closing remarks.
Well. Thank you everyone for joining us today. We appreciate your time and look forward to seeing you were speaking with you and upcoming financial conferences and industry meetings and events. If you have any follow up questions. Please contact our Investor Relations Department and have a great day.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
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