Q4 2023 DexCom Inc Earnings Call

Ladies and gentlemen, welcome to the decks com fourth quarter and fiscal year 2023 earnings conference call.

Operator: Ladies and gentlemen, welcome to the Dexcom fourth quarter and fiscal year 2023 earnings conference call. My name is Abby, and I will be your operator for today's call. At this time, all participants are in a listen-only mode, and later we will conduct a question and answer session. During the question and answer session, if you have a question, please press star 1 on your touchtone phone. If you would like to withdraw your question, press star 1 a second time.

Abby: My name is Abby and I will be your operator for today's call.

Abby: At this time all participants are in a listen only mode and later, we will conduct a question and answer session.

Abby: During the question and answer session. If you have a question. Please press star one on your Touchtone phone.

Abby: If you would like to withdraw your question Press Star one a second time.

Operator: As a reminder, the conference is being recorded. And I will now turn the call over to Sean Christensen, Vice President of Finance and Investor Relations. You may begin.

Abby: As a reminder, the conference is being recorded and I will now turn the call over to Sean Christiansen, Vice President of Finance and Investor Relations you may begin.

Sean Christensen: Thank you, Abby, and welcome to DexCom's fourth quarter and fiscal year 2023 earnings call. Our agenda begins with Kevin Sayer, DexCom's chairman, president, and CEO, who will summarize our recent highlights and ongoing strategic initiatives, followed by a financial review and outlook from Jeremy Sylvain, our chief financial officer. Following our prepared remarks, we will open the call up for your questions. At that time, we ask analysts to limit themselves to one question so we can provide an opportunity for everyone participating today. Please note that there are also slides available related to our fourth quarter and fiscal year 2023 performance on the DexCom Investor Relations website on the events and presentations page. With that said, let's review our Safe Harbor State.

Sean Christensen: Thank you Abby and welcome to <unk> fourth quarter and fiscal year 2023 earnings call. Our agenda begins with Kevin Sayer, <unk>, Chairman, President and CEO, who will summarize our recent highlights and ongoing strategic initiatives, followed by a financial review and outlook from Jeremy Sylvain <unk>, our Chief Financial Officer.

During our prepared remarks, we will open the call up for your questions at that time, we ask analysts to limit themselves to one question. So we can provide an opportunity for everyone participating today.

Sean Christensen: Please note that there are also slides available related to our fourth quarter and fiscal year 2023 performance on the <unk> Com Investor Relations website on the events and presentations page with that let's review our safe Harbor statement.

Sean Christensen: Some of the statements we will make in today's call may constitute forward-looking statements. These statements reflect management's intentions, beliefs, and expectations about future events, strategies, competition, products, operating plans, and performance. All forward-looking statements included in this presentation are made as of the date hereof based on information currently available to DexCom, and are subject to various risks and uncertainties, and actual results could differ materially from those anticipated in the forward-looking statements. The factors that could cause actual results to differ materially from those expressed or implied by any of these forward-looking statements are detailed in DexCom's annual report on Form 10-K, most recent quarterly report on Form 10- Except as required by law, we assume no obligation to update any such forward-looking statements after the date of this presentation or to conform these forward-looking statements to actual results. Additionally, during the call, we will discuss certain financial measures that have not been prepared in accordance with GAAP with respect to our non-GAAP and cash-based results. Unless otherwise noted, all references to financial metrics are presented on a non-GAAP basis.

Sean Christensen: Some of the statements we will make in today's call may constitute forward looking statements. These statements reflect management's intentions beliefs and expectations about future events strategies competition products operating plans and performance.

Sean Christensen: All forward looking statements included in this presentation are made as of the date hereof based on information currently available to <unk> com are subject to various risks and uncertainties and actual results could differ materially from those anticipated in the forward looking statements.

Sean Christensen: Factors that could cause actual results to differ materially from those expressed or implied by any of these forward looking statements are detailed in <unk> annual report on Form 10-K. Most recent quarterly report on Form 10-Q, and other filings with the Securities and Exchange Commission, except as required by law, we assume no obligation to update any such forward looking statements. After the date of this presentation.

Sean Christensen: Asian or to conform these forward looking statements to actual results. Additionally, during the call we will discuss certain financial measures that have not been prepared in accordance with GAAP with respect to our non-GAAP and cash based results unless otherwise noted all references to financial metrics are presented on a non-GAAP basis the.

Sean Christensen: The presentation of this additional information should not be considered in isolation or as a substitute for results or superior to results prepared in accordance with GAAP. Please refer to the tables in our earnings release and the slides accompanying our fourth quarter and fiscal year earnings presentation for reconciliation of these measures to their most directly comparable GAAP financial measure. Now, I will turn it over to Kevin.

The presentation of this additional information should not be considered in isolation or as a substitute for results or superior to results prepared in accordance with GAAP. Please refer to the tables in our earnings release and the slides accompanying our fourth quarter and fiscal year earnings presentation for a reconciliation of these measures to their most directly comparable GAAP financial measure now I will.

Sean Christensen: I'll turn it over to Kevin.

Kevin Ronald Sayer: Thank you, Sean, and thank you, everyone, for joining us. 2023 was an incredible year for DexCom. I'd like to start by reviewing some of our key accomplishments. Total revenue grew by 24% on an organic basis, driven by another year of record customer acquisition.

Kevin Ronald Sayer: Thank you Sean and thank you everyone for joining us two.

Kevin Ronald Sayer: 2023 was an incredible year for <unk> com and I'd like to start by reviewing some of our key accomplishments total revenue grew by 24% on an organic basis driven by another year of record customer starts this translates into more than $700 million of organic revenue growth compared to last year.

Kevin Ronald Sayer: This translates into more than $700 million of organic revenue growth compared to last year as we built strong commercial momentum through recent coverage expansion and the performance of DexCom's CGM systems. In 2023, we added over 600,000 DexCom users to our base and ended the year with approximately 2.3 million customers globally. Importantly, we delivered this level of growth again while enhancing the scale and efficiency of our operations. A key milestone here was the opening of our Malaysian manufacturing facility around mid-year. Production at this site is ramping quickly, and the team is already delivering yields on par with our more established U.S. facilities.

Kevin Ronald Sayer: As we build strong commercial momentum through recent coverage expansion and the performance of <unk> CGM systems. In 2023, we added over 600000 decks com users to our base and ended the year with approximately $2 3 million customers globally. Importantly, we delivered this level of growth again.

Kevin Ronald Sayer: While enhancing scale and efficiency of our operations.

Kevin Ronald Sayer: A key milestone here was the opening of our Malaysia manufacturing facility around mid year.

Kevin Ronald Sayer: Production at this site is ramping quickly and the team is already delivering yields are on par with our more established U S. Facilities. This facility will help support our growth and cost ambitions for years to come.

Kevin Ronald Sayer: This facility will help support our growth and cost ambitions for years to come. As a measure of our success for 2023, we not only generated $1 billion in Q4 revenue, but we also delivered $1 billion in adjusted EBITDA for the year and generated record levels of free cash flow, which is up nearly 70% compared to 2022. By establishing a disciplined cost culture that focuses years in advance, we are striking the right balance of margin progression while still investing strategically in platforms to support our significant growth opportunities. From a strategic perspective, 2023 will go down as one of the most transformational years in our company's history. We launched G7, and DexCom went into multiple new markets, significantly expanding our global access and advancing key technical and clinical work that will provide the foundation for the future of DexCom. This started with the rollout of G7 in the U.S. in February.

Kevin Ronald Sayer: As a measure of our success for 2023, we not only generated $1 billion. In Q4 revenue. We also delivered $1 billion in adjusted EBITDA for the year and generated record levels of free cash flow, which is up nearly 70% compared to 2020 to.

Kevin Ronald Sayer: By establishing a disciplined cost culture that focuses years in advance we are striking the right balance of margin progression, while still investing strategically and thoughtfully to support our significant growth opportunities.

Kevin Ronald Sayer: From a strategic perspective, 2023 will go down as one of the most transformational years in our company's history, we launched <unk> into multiple new markets significantly expanding our global access and advancing key technical and clinical work that will provide the foundation for the future of <unk> com.

Kevin Ronald Sayer: This started with the rollout of <unk> in the U S in February.

Kevin Ronald Sayer: G7 is the most accurate CGM ever launched, and the market's reception to G7 has been exceptional. Customers and clinicians have been thrilled with the new form factor, product performance, and ease of use, and payers wasted no time establishing coverage as they recognized the clear value proposition that G7 provides. We immediately started to see a change in prescribing patterns once this product reached the market, and this trend became even more pronounced as we completed the largest expansion of coverage in our company's history. In mid-April, Medicare coverage went live for people with type 2 diabetes using basal insulin only, as well as certain non-insulin-using individuals with a risk for hypoglycemia.

Kevin Ronald Sayer: <unk> seven is the most accurate CGM ever launched and the market's reception to <unk> seven has been exceptional.

Kevin Ronald Sayer: Customers and clinicians have been thrilled with the new form factor product performance and ease of use and payers wasted no time, establishing coverage as they recognize the clear value proposition that <unk> seven provides.

Kevin Ronald Sayer: We immediately started to see a change in prescribing patterns wants his private reached the market and this trend became even more pronounced as we completed the largest expansion of coverage in our company's history and.

Kevin Ronald Sayer: In mid April Medicare coverage went live for people with type two diabetes using basal insulin only as well as certain non insulin using individuals' with hypoglycemia risk.

Kevin Ronald Sayer: Between this decision and the broad commercial coverage that quickly followed for the basal markets, we have effectively doubled our reimbursed population in the U.S. This has completely changed the market landscape in the U.S. With broader coverage available and a new product that greatly simplifies the prescribing process, we've attracted a sizable new cohort of clinicians to our ecosystem. In fact, in 2023, we expanded our prescriber base by approximately 40%. And we're not stopping there.

Kevin Ronald Sayer: Between this decision and the broad commercial coverage that quickly followed for the basal markets. We have effectively doubled our reimbursed population in the U S.

Kevin Ronald Sayer: This has completely changed the market landscape in the U S.

Kevin Ronald Sayer: With broader coverage available in a new product that greatly simplifies the prescribing process. We've attracted a sizable new cohort of clinicians to our ecosystem. In fact in 2023, we expanded our prescriber base by approximately 40%.

Speaker Change: We're not stopping there.

Kevin Ronald Sayer: We have always known that the primary care channel would become increasingly important as our business evolves. Much of the work our commercial team has done in recent years has been tailored to this market, and we are now seeing the direct result of that effort as more than 70% of our new scripts are being written by primary care physicians.

Speaker Change: We have always known into the primary care channel would become increasingly important as our business evolves much of the work our commercial team has done in recent years has been tailored to this market and we are now seeing the direct result of that effort as more than 70% of our new scripts are being written by primary care physicians. These.

Kevin Ronald Sayer: These relationships are not only critical to help us reach the millions of insulin-using individuals who have not yet started using CGM, but also the tens of millions with type 2 diabetes, prediabetes, and beyond. Based on the success of our team in 2023 and the magnitude of these future opportunities, we are excited to continue our investment in our U.S. sales force this year. When we have a presence with prescribers, we win. Now it is up to us to continue to expand that prescriber pool. We are already seeing more clinicians want to incorporate DexCom CGM earlier into patients' care plans as they recognize our unique ability to drive behavior change, sustainable outcomes, and greater accountability. This is why we are thrilled to be introducing our newest product, Stelo, later this summer. Stelo will be the first CGM designed specifically for people with type 2 diabetes who are not on insulin.

Speaker Change: These relationships are not only critical to help us reach the millions of insulin using individuals who have not yet started out on CGM, but also the tens of millions with broader type two diabetes pre diabetes and beyond.

Based on the success of our team in 2023 and the magnitude of these future opportunities. We are excited to continue our investment in our U S. Sales force. This year when we have a presence with prescribers we win.

Speaker Change: Now it is up to us to continue to expand that prescriber pool.

Speaker Change: We are already seeing more clinicians want to incorporate <unk> CGM earlier into patient care plans as they recognize our unique ability to drive behavior change sustainable outcomes and greater accountability. This is why we are thrilled to be introducing our newest product Stello. Later this summer stellar will be the first CGM does.

Speaker Change: And specifically for people with type two diabetes, who are not on insulin leveraging our leading sensor platform. We have built a custom software experience that is tailored to the needs of this population.

Kevin Ronald Sayer: Leveraging our leading sensor platform, we have built a custom software experience that is tailored to the needs of this population. Stella will feature a 15-day wear time and launch as a cash-paying product while we build our case with payers for broader coverage. With several trials currently underway, we will continue to add to the growing body of evidence demonstrating DexCom's unique ability to drive greater health and economic outcomes for all people with diabetes. The launch of Stello also presents a great opportunity to bolster our evidence with a large collection of real-world data as we see the impact this product is having on our customers. We filed Stella with the FDA in the fourth quarter of 2023, leaving us well on track for our highly anticipated launch this summer.

Speaker Change: Hello will feature a 15 day wear time and launches a cash pay product, while we build our case with payers for broader coverage.

Speaker Change: With several trials currently underway, we will continue to add to the growing body of evidence demonstrating <unk> unique ability to drive greater health and economic outcomes for all people with diabetes.

Speaker Change: The launch of CLO also presents a great opportunity to bolster our evidence with a large collection of real world data as we see the impact this product is having on our customers.

Speaker Change: We filed stellar with the FDA in the fourth quarter of 2023, leaving us well on track for our highly anticipated launch this summer.

Kevin Ronald Sayer: As our product portfolio continues to grow, it provides a greater glimpse into the future potential of our company. We have built a platform technology that we can customize to provide creative solutions for different populations. Our redesigned software infrastructure is a key component to this, as it enables much quicker iteration and greater connectivity. Connectivity has always been a distinct advantage for DexCom, and with our recent filing of direct-to-watch with the FDA and new G7 pump integrations, we are further advancing this leadership position.

Speaker Change: As our product portfolio continues to grow it provides a greater glimpse into the future potential of our company.

Speaker Change: We have built a platform technology that we can customize to provide creative solutions for different populations.

Speaker Change: Our redesigned software infrastructure as a key component to this as it enables much quicker iteration and greater connectivity.

Speaker Change: Activity has always been a distinct advantage for decks com and with our recent filing of direct to watch with the FDA and new G. Seven pump integrations. We are further advancing this leadership position.

Jeremy Sylvain: We will also continue innovating on our hardware technology, with our current efforts focused on launching an extended wear sensor across all of our product offerings. As we look at the significant opportunity ahead of us, we are as excited as we've ever been. As I said at our Investor Day this past summer, we are just getting started. With that, I will now turn it over to Jeremy for a review of the fourth quarter financials. Jeremy?

Speaker Change: We will also continue innovating on our hardware technology with our current efforts focused on launching an extended wear sensor across all of our product offerings.

Speaker Change: As we look at the significant opportunity ahead of US we are as excited as we've ever been as.

Speaker Change: As I said at our Investor Day. This past summer we are just getting started.

Speaker Change: With that I will now turn it over to Jeremy for a review of the fourth quarter financials Jeremy.

Jeremy Sylvain: Thank you, Kevin. As a reminder, unless otherwise noted, the financial metrics presented today will be discussed on a non-gap basis. Reconciliations to GAP can be found in today's earnings release as well as on our IR website. For the fourth quarter of 2023, we reported worldwide revenue of $1.035 billion, compared to $815 million for the fourth quarter of 2022, representing growth of 27% on a reported basis and 26% on an organic basis. As a reminder, our definition of organic revenue excludes currency in addition to non-CGM revenue acquired or divested in the trailing 12 months.

Jeremy Sylvain: Thank you Kevin as a reminder, unless otherwise noted the financial metrics presented today will be discussed on a non-GAAP basis reconciliations to GAAP can be found in today's earnings release as well as on our IR website for.

Jeremy Sylvain: For the fourth quarter of 2023, we reported worldwide revenue of $1, <unk> 5 billion compared to $815 million for the fourth quarter of 2022, representing growth of 27% on a reported basis and 26% on an organic basis. As a reminder, our definition of organic revenue excludes currency.

Jeremy Sylvain: In addition to non CGM revenue acquired or divested in the trailing 12 months.

Jeremy Sylvain: U.S. revenue totaled $769 million for the fourth quarter, compared to $606 million in the fourth quarter of 2022, representing growth of 27%. Between the ongoing success of G7 and our significantly improved access in recent months, the momentum in our U.S. business continues to grow. In fact, we delivered our fastest quarterly U.S. growth rate since the beginning of 2021, as our revenue accelerated for the third quarter in a row. International revenue grew 27%, totaling $265 million in the fourth quarter.

Jeremy Sylvain: U S revenue totaled $769 million for the fourth quarter compared to $606 million in the fourth quarter of 2022 representing growth of 27%.

Jeremy Sylvain: Between the ongoing success of <unk>, seven and our significantly improved access in recent months the momentum in our U S business continues to grow.

In fact, we delivered our fastest quarterly U S growth rate since the beginning of 2021 as our revenue accelerated for the third quarter in a row.

Jeremy Sylvain: International revenue grew 27% totaling $265 million in the fourth quarter International organic revenue growth was 23% for the fourth quarter, we continued to execute very well across our international footprint and again took share in Q4 as our global access work and product portfolio strategy have helped.

Jeremy Sylvain: International organic revenue growth was 23% for the fourth quarter. We continued to execute very well across our international footprint and again took share in Q4 as our global access work and product portfolio strategy helped broaden our reach in many markets. Our fourth-quarter gross profit was $664 million, or 64.2% of revenue, compared to 66.7% of revenue in the fourth quarter of 2022. This year-over-year decline in gross margin was expected, as G7 was a much larger percent of our product and customer mix in Q4 compared to a year ago.

Jeremy Sylvain: Our reach in many markets.

Jeremy Sylvain: Our fourth quarter gross profit was $664 million or 64, 2% of revenue compared to 66, 7% of revenue in the fourth quarter of 2022.

Jeremy Sylvain: This year over year decline in gross margin was expected as <unk> seven was a much larger percent of our product and customer mix in Q4 compared to a year ago as.

Jeremy Sylvain: As a reminder, G7 has a higher cost profile than G6 today, but we expect this to change in the coming quarters as we drive greater volume through our G7 lines. As it reaches scale, we continue to expect G7's margin profile to improve upon that of our G6 platform. Operating expenses were $421 million for Q4 2023 compared to $372 million in Q4 2022.

Jeremy Sylvain: As a reminder, <unk> has a higher cost profile than <unk> today, but we expect it to change in the coming quarters as we drive greater volume through our <unk> seven lines as it reaches scale. We continue to expect <unk> margin profile to improve upon that of RG six platform.

Jeremy Sylvain: Operating expenses were 421 million for Q4, 2023 compared to $372 million in Q4 of 2022.

Jeremy Sylvain: This quarter was another demonstration of our commitment to being disciplined and thoughtful with our spend. Our operating expenses grew at half the rate of revenue this quarter, and we delivered nearly 500 basis points of operating expense leverage compared to last year. This extended our streak to eight straight quarters of at least 250 basis points of year-over-year OPEX leverage. Operating income was $242.7 million, or 23.5% of revenue, in the fourth quarter of 2023, compared to $172.1 million, or 21.1% of revenue, in the same quarter of 2022. Adjusted EBITDA was $321.5 million, or 31.1% of revenue for the fourth quarter compared to $237.1 million, or 29.1% of revenue for the fourth quarter of 2022. Net income for the third quarter was $202.8 million, or $0.50 per share.

Jeremy Sylvain: This quarter was another demonstration of our commitment to being disciplined and thoughtful with our spend our operating expenses grew at half the rate of revenue this quarter and we delivered nearly 500 basis points of operating expense leverage compared to last year.

Jeremy Sylvain: This extended our streak to eight straight quarters of at least 250 basis points of year over year Opex leverage.

Jeremy Sylvain: Operating income was $242 7 million or 23, 5% of revenue in the fourth quarter of 2023 compared to $172 1 million or 21, 1% of revenue in the same quarter of 2022.

Jeremy Sylvain: Adjusted EBITDA was $321 5 million or 31, 1% of revenue for the fourth quarter compared to $237 1 million or 29, 1% of revenue for the fourth quarter of 2022.

Jeremy Sylvain: Net income for the third quarter was $202 8 million or <unk> 50 per share.

We remain in a great financial position closing the year with greater than $2 7 billion of cash and cash equivalents.

Jeremy Sylvain: We remain in a great financial position, closing the year with greater than $2.7 billion of cash and cash equivalents. Having financial flexibility allows the organization to take advantage of opportunities. Case in point, we executed the 500 million accelerated share repurchase program mentioned in our Q3 results. Through this transaction, we were able to offset the remaining dilution related to our maturing 2023 converts while purchasing our stock at what we viewed as an attractive price. As Kevin mentioned earlier, our free cash flow grew by 70% in 2023, as our business continues to scale and become more efficient. As our cash flow profile continues to grow, it only adds to our significant financial flexibility. This allows us to continue to invest in our meaningful organic growth opportunity while assessing strategic uses of capital on an ongoing basis.

Jeremy Sylvain: Having financial flexibility allows the organization to take advantage of opportunities case in point, we executed the $500 million accelerated share repurchase program mentioned on our Q3 results through this transaction, we were able to offset the remaining dilution related to our maturing 2023 converts all purchasing our stock at what we viewed as neutral.

Jeremy Sylvain: Active price.

Jeremy Sylvain: As Kevin mentioned earlier, our free cash flow grew by 70% in 2023 as our business continues to scale and become more efficient as our cash flow profile continues to grow it only adds to our significant financial flexibility. This allows us to continue to invest behind our meaningful organic growth opportunity.

Jeremy Sylvain: Assessing strategic uses of capital on an ongoing basis.

Jeremy Sylvain: Turning to 2024 guidance as we stated last month, we anticipate total revenue to be in the range of $4. One five to $4 35 billion, representing organic growth of 16% to 21% for the year.

Jeremy Sylvain: Turning to 2024 guidance. As we stated last month, we anticipate total revenue to be in the range of $4.15 to $4.35 billion, representing organic growth of 16 to 21 percent for the year. This guidance assumes continued momentum in the Type 2 basal-only population in the U.S., the expansion of DexCom 1 on the G7 platform into new geographies, and the launch of Stello in the summer of 2024. It also assumes the divestiture of our non-diabetes distribution business in Australia and New Zealand this quarter, which represented around $30 million of revenue in 2023. From a margin perspective, we expect full-year non-GAAP gross profit margin to be in a range of 63 to 64 percent, operating profit margin to be approximately 20 percent, and adjusted EBITDA to be approximately 29 percent.

Jeremy Sylvain: This guidance assumes continued momentum in the type two basal only population in the U S. The expansion of decks com won on the G. Seven platform into new geographies and the launch of Stello in the summer of 2024.

Jeremy Sylvain: It also assumes the divestiture of our non diabetes distribution business in Australia, and New Zealand this quarter, which represented around $30 million of revenue in 2023.

Jeremy Sylvain: From a margin perspective, we expect full year non-GAAP gross profit margin to be in a range of 63% to 64%.

Jeremy Sylvain: Operating profit margins to be approximately 20% and adjusted EBITDA of approximately 29%.

Jeremy Sylvain: Our gross margin guidance reflects the ongoing conversion from G6 to G7 within our customer base and the associated scale that comes with that process. Below gross margin, we'll continue to be very diligent with our spend in 2024 while investing strategically behind multiple growth opportunities. With that, I will pass it back to Kevin. Thanks, Jeremy. I would now like to open up the call for Q&A.

Jeremy Sylvain: Our gross margin guidance reflects the ongoing conversion from <unk> six to <unk> seven within our customer base and the associated scale that comes with that process.

Jeremy Sylvain: Below gross margin will continue to be very diligent with our spend in 2024, while investing strategically behind multiple growth opportunities with that I will pass it back to Kevin.

Kevin Ronald Sayer: Thanks, Jeremy I would now like to open up the call for Q&A Sean.

Kevin Ronald Sayer: Thank you, Kevin. As a reminder, we ask our audience to limit themselves to only one question at this time and then re-enter the queue if necessary. Abby, please provide the Q&A instructions.

Sean: Thank you Kevin as a reminder, we ask our audience to limit themselves to only one question at this time and then reenter the queue if necessary Abby please provide the Q&A instructions.

Abby: Thank you.

Operator: Thank you. We'll now begin the question and answer session. If you have a question, please press star 1 on your touchtone phone. If you wish to be removed from the queue, press star 1 a second time. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers.

Speaker Change: We will now begin the question and answer session. If you have a question. Please press star one on your Touchtone phone.

Abby: If you wish to be removed from the queue Press star one a second time.

If you are using a speakerphone you may need to pick up the handset first before pressing the numbers. Once again. It is star one if you would like to ask a question.

Robbie Marcus: Once again, it is star number one. If you would like to ask a question, and we will take our first question from Robbie Marcus with JP Morgan. Your line is open.

Abby: And we will take our first question from Robbie Marcus with Jpmorgan. Your line is open.

Kevin Ronald Sayer: Oh great, I'll offer up for the second time, congrats on a really good quarter. I wanted to tie two ideas together. The first is that the great operating margins we saw in the fourth quarter came in well above the street. And in the slide deck presentation, you have the slide about making progress on the 15 day sensor. And the question here is, really, one, any updates on the timeframe of when that G series 15 day sensor will be approved and how to really think about where that could take the good operating margins you put up here and what you've got for next year and where that could really take it in the future. Thanks. Thanks, Ravi. This is Kevin.

Robbie Marcus: Oh great.

Robbie Marcus: I'll offer up for the second time, congrats on a really good quarter.

Robbie Marcus: I wanted to tie two ideas together. The first is the great operating margins we saw in the fourth quarter came in well above the street and in the slide deck presentation, you have the slide about making progress on the 15 day sensor and the question here is.

Robbie Marcus: Really one any updates on the timeframe of when that G series 15 day sensor will be approved and how to really think about where that could take.

Robbie Marcus: The good operating margins you put up here and what you have guided for next year, and where that could really take it in the future. Thanks.

Robbie Marcus: Yeah.

Robbie Marcus: Thanks, Robbie this is Kevin I'll take the 15 day sensor timing then Jeremy can talk about the numbers and the effect on operating margins going forward.

Kevin Ronald Sayer: I'll take the 15-day sensor timing, then Jeremy can talk about the numbers and the effect on operating margins going forward. As we've said earlier this year, we're in the middle of clinical testing and scientific evaluation of some fundamental science changes to the center that will make it more reliable for that 15-day period. One of the reasons that we've done so well is two things: the accuracy of our sensor and the performance of our sensor over time, but combined with the fact people expect to get a certain number of days from a sensor, and we deliver what we tell them we're going to do. And we want to make sure that the 15 day experience is every bit as good as the 10 day experience that we offer now. So we're making a few slight changes on a scientific basis. We'll run a clinical study, file that, and we certainly would expect you to approve.

Robbie Marcus: As we said earlier this year, we're in the middle of clinical testing and scientific evaluation of some.

Kevin Ronald Sayer: Fundamental science changes to the center that will make it more reliable for that 15 day period, one of the reasons that we've done so well.

Jeremy Sylvain: Two things the accuracy of our sensor and the performance of our sensor overtime, but combined with the fact people expect to get a certain amount of days from our center and we deliver what we tell them we're going to do.

Jeremy Sylvain: And we want to make sure that 15 day experience is every bit as because the 10 day experience that we offer now so we're making a few slight changes on our science basis will run a clinical study.

Jeremy Sylvain: All of that and we certainly would expect to get approval right now we're still evaluating some of the technologies and we really won't provide a lot of color until.

Jeremy Sylvain: But right now, we're still evaluating some of the technologies, and we really won't provide a lot of color until we're filed and we see we're on a path towards approval. Yeah, and then to your question longer term on operating margins, you know, we've done a really nice job to date of creating leverage and opportunities within our operating margin profile. And despite some of the moves in the channel exchanges we've made, you know, on the top line, we've been able to maintain a gross margin based on a lot of the work we've done around design to value and a lot of the scale that we've been able to achieve. But when you think about 15 days, it provides a really big opportunity for us to think about both leverage from a gross margin and then So, it is absolutely the number one effort going on in the organization.

Jeremy Sylvain: Were filed and we see we're on a path towards approval.

Jeremy Sylvain: Yes, and then to your question longer term on operating margins.

Jeremy Sylvain: Done a really nice job to date.

Jeremy Sylvain: Great leverage and opportunities within our operating margin profile and despite some of the moves and the channel mix changes we've made on the top line, we've been able to maintain our gross margin based on a lot of the work we've done around design to value and a lot of the scale that we've been able to achieve but when you think about 15 day. It provides a real big opportunity for us to think about.

Jeremy Sylvain: Both leverage from a gross margin and then operating margin profile, but also opportunities to grow the business in areas.

Jeremy Sylvain: Profitably that maybe it would be a little bit more of a challenge with the 10 day products. So it is absolutely the number one effort going on in the organization. It does provide us lots of flexibility to either a continue to grow the business or B <unk>.

Jeremy Sylvain: It does provide us with lots of flexibility to either A, continue to grow the business, or B, deliver operating margins that can be world class over time. So, I think, longer term, there's a lot of opportunities there. We're not ready to particularly lay out what that is.

Jeremy Sylvain: Deliver operating margins that can be world class over time.

Jeremy Sylvain: I think longer term, there's a lot of opportunities there, we're not ready to particularly lay out what that is we've obviously given our 2025 MRP and we'll execute to that but I do think it provides real long term opportunities for this company.

Danielle Antalffy: We've obviously given our 2025 LRP, and we'll execute on that, but I do think it provides real long-term opportunities for this company to deliver back to shareholders and take advantage of opportunities globally. And we will take our next question from Danielle Antalffy with UBS. Your line is open. Hey, good afternoon, everyone.

Jeremy Sylvain: To deliver back to shareholders and take advantage of opportunities globally.

Jeremy Sylvain: Okay.

Jeremy Sylvain: And we will take our next question from Danielle <unk> with UBS. Your line is open.

Hey, good afternoon, everyone. Thanks, so much for taking the question congrats on a really strong.

Kevin Ronald Sayer: Thanks so much for taking the question. Congratulations on a really strong end to the year. It's great to see. You know, I'm going to ask this question about, you know, we're hearing more about potential competition coming to the market. And I would just love, Kevin, if maybe you could highlight for us the competitive modes that DexCom has built. Obviously, we don't know much about what this competitor is planning to bring to market. But maybe if you could just highlight where DexCom is from a competition perspective and how defensible your share is here. Thanks so much.

Danielle: It's great to see.

Danielle: I'm going to ask this question.

Danielle: We're hearing more about potential competition coming to market.

Danielle: And I would just love Kevin if maybe you could highlight for us the competitive mode.

Kevin Ronald Sayer: So obviously, we don't know much about.

Kevin Ronald Sayer: Add to this competitor is planning to bring bring to market.

Kevin Ronald Sayer: But maybe if you could just highlight where you think <unk> is.

From a competition perspective.

How defensible your share is here thanks, so much.

Speaker Change: No I appreciate that question first and foremost we can start with the core technology and the fundamental belief we've had here as a company. The performance of our sensors has been unparalleled we've got over 1 billion years for example.

Kevin Ronald Sayer: Well, I appreciate that question. First and foremost, we can start with the core technology and the fundamental beliefs we've had here as a company. The performance of our sensors has been unparalleled.

Kevin Ronald Sayer: We've got over a million years, for example, in AID systems with great outcomes and patients who have done very well there. We built our platforms on connectivity. You know, one of the features that I talked with the engineers about and kind of complained about because it took a lot of time to engineer, we can connect up to three devices at the same time.

Speaker Change: I'd systems with great outcomes in patients who have done very well there we built our platform designed connectivity.

Speaker Change: One of the features.

Speaker Change: Now that I've talked with engineers about Encana complained about it because it took a lot of time to engineer, we can connect up to three devices at the same time.

Kevin Ronald Sayer: This is the type of connectivity that our competitors have not put into their platforms, and it's a feature that's very important to our patients, which is the reason, for example, why we just filed our direct-to-watch features with the FDA. One of the other things our competition thinks about as they look at us today is whether or not we're going to stay. We certainly have new pipeline efforts across all fronts on the technology side, better connectivity, communications, software investments. We've had to evolve from being literally a medical device software company to being a world-class software organization over the past couple of years, and it has been an evolution for us, and it's been a big investment. So we've looked at the areas to invest in to make ourselves stronger and made investments there. Now that's on the technology side. Here's the other piece to this.

Speaker Change: This is the type of connectivity to our competitors not put into their platforms and as a future. That's very important to our patients which is the reason for example, why we just filed our direct to watch features with the FDA.

Speaker Change: One of the other things are.

Speaker Change: Our competition thinks about as they look at us today and they think this is where we're going to stay.

Speaker Change: We're not we certainly have new Pi.

Speaker Change: Pipeline efforts across all fronts on the technology side better connectivity communications.

Speaker Change: Software investments, we've had to evolve from being literally medical device software company to being a world class software organization over the past couple of years and it has been an evolution for us and it's been a big investment. So we've looked at the areas to invest to make ourselves stronger and made investments. There now that's on the technology side, here's the other piece to this.

Kevin Ronald Sayer: We've spent hundreds of millions of dollars over the past, three years getting fully automated factories up and running both here in the United States and our new factory in Malaysia that opened mid-year and that is a tremendous facility but we built out those automated lines there and we've just turned ground on what will be our next world-class factory over in Ireland that would open in 2026. There's a huge investment that has to be made to play in the CGM business going forward particularly at the scale and the performance that we see now and we've made those investments and done those things and evolved as a company so we think we're very well positioned and we'll see where everybody else comes but we're comfortable well let me rephrase that we're never, But we believe we've done all the right thing. And we will take our next question from Larry Biegelsen with Wells Fargo. Your line is open. Good afternoon.

Speaker Change: We have spent hundreds of millions of dollars over the past three years getting fully automated factories up and running both here in the United States and our new factory in Malaysia that opened mid year and that is a tremendous facility, but we built out those automated a lion's share and we've just turned ground on it will be our next world class factory over in Ireland.

Speaker Change: It opened in 2026, there is a huge investment that has to be made to play in the CGM business going forward, particularly at the scale.

Speaker Change: And the performance that we see now and we've made those investments and done those things and evolved as a company. So we think we're very well positioned and we'll see where everybody else comps, but we're comfortable.

Speaker Change: Well, let me rephrase that we're never comfortable.

Speaker Change: But we believe we've done all the right things.

Speaker Change: Okay.

Speaker Change: And we will take our next question from Larry <unk> with Wells Fargo. Your line is open.

Larry: Good afternoon. Thanks for taking the question I wanted to focus on Stello you expect this product to add approximately I think 100 basis points to your growth in 2004, which is almost $40 million in six months. So that's a pretty healthy number for only half a year.

Lawrence H. Biegelsen: Thanks for taking the question. I wanted to focus on Stello. You expect this product to add approximately 100 basis points to your growth in 24, which is almost $40 million in six months. So that's a pretty healthy number for only half a year. Kevin, what's informing your confidence in the lodge?

Larry: Kevin what's informing your confidence in the large how big can this product be over time and what are the margin implications. Thank you.

Kevin Ronald Sayer: How big could this product be over time, and what are the margin implications? Thank you. Larry, thanks for the question. And we have got it at 1%. The purpose of this launch is to get this product out there and large. And as we look at that 1% of revenue number, we certainly have models to build and support that. And we believe in designing this product for the type 2 non-insulin user and others that we're targeting the right segment to go after that.

Kevin Ronald Sayer: Larry Thanks for the question and we have got it at 1%. The purpose of this launch is to get this product out here and learn.

Kevin Ronald Sayer: And as we look at that 1% of revenue number we certainly have models that build and support that and we believe in designing this product for the type two non insulin user.

Kevin Ronald Sayer: And others.

Kevin Ronald Sayer: We're targeting the right segments to go after that are most important experience with Stella was learning and getting it out there and starting to develop and grow this new market. We're confident that this product over time can become a very very large portion of our business and this can be a very large segment within our markets.

Kevin Ronald Sayer: Our most important experience with Stelo is learning and getting it out there and starting to develop and grow this new market. We're confident that this product, over time, can become a very, very large portion of our business, and this can be a very large segment within our markets. This year's launch is all about learning more than anything else. And we have a model for that 1%. I would love to exceed it.

Kevin Ronald Sayer: This year's launches all about learning more than anything else and we have a model for that 1% I would love to exceed it but if we've learned all the lessons that we need to learn.

Jeremy Sylvain: But if we learn all the lessons that we need to learn, this is not a backbreaker for our company and our guidance either. So the most important thing is to get the product out there and learn more than anything else. Yeah, and then to your question on margin, we're not necessarily talking about it from a gross margin perspective. That'll come in time when we start to release more details around it, Larry. From an operating margin, yes, this is something we're going to invest in. And so when you think about it from an overall company margin, certainly, as we invest in this and we invest in launching it, there will be some sales and marketing, but it's an investment we're going to make.

Kevin Ronald Sayer: This is not a back breaker for our company and our guidance either so the most important thing is to get the product out there and to learn more than anything else and then to your question on margin, we're not necessarily talking about it from a gross margin perspective that will come with time, when we start to release more details around it Larry from an operating margin. Yes. This is this is something we're going to invest and so when you think about it.

Kevin Ronald Sayer: And overall company margins certainly as we invest in this and we invest in launching it there will be some sales and marketing, but it's an investment we're going to make this year and we're going to make that investment in this product because we believe in the future and we're going to do so and still expand operating margins as a company. So you can be safe that we're going to be very very careful and measured about how we invest our dollars, but know that this is part of the <unk>.

Jeremy Sylvain: And we're going to make that investment in this product because we believe in the future. And we're going to do so while still expanding operating margins as a company. So you can be safe that we're going to be very, very careful and measured about how we invest our dollars. But know that this is part of the investments we've set aside as an organization while still, again, improving profitability. And we will take our next question from Matthew Blackman with Steeple. Your line is open.

Kevin Ronald Sayer: Since we've set aside as an organization, while still again improving profitability.

Kevin Ronald Sayer: Okay.

Kevin Ronald Sayer: And we will take our next question from Mathew Blackman with Stifel. Your line is open.

Mathew Justin Blackman: Oh, Great I appreciate you taking my question.

Mathew Justin Blackman: Oh, great. Appreciate you taking the time to answer my question. And maybe for Kevin and Jeremy, you obviously mentioned Salesforce and the PCP channel. Can you just remind us, at least today, what kind of PCP Salesforce coverage you have and, more importantly, sort of leaning into your comments, Kevin, about investing seemingly incrementally in that channel this year? What does that mean in terms of spend magnitude, spend timing, and how much more coverage you're expecting to add with these investments? Or any other way to frame what you're trying to accomplish? Thank you.

Mathew Justin Blackman: Maybe for Kevin and Jeremy.

Mathew Justin Blackman: Obviously, you mentioned sales force in the PCP channel can you just remind us at least today, what kind of PCP sales force coverage you have and then more importantly sort of leaning into your comments, Kevin about investing incrementally.

Mathew Justin Blackman: Incrementally in that channel. This year, what does that mean in terms of spend magnitude and timing and how much more coverage you're expecting to add with these investments or any other way to frame what we're trying to accomplish thank you.

Jeremy Sylvain: Yeah, so thanks for the question, Matt. So, you know, you think about the investment. We are going to expand that sales force. And today we have a good amount of coverage. It's 10s of 1000s of primary care physicians, predominantly the entirety of the endocrinologist space. But as you start to think about basal coverage expanding, the opportunity ahead of us certainly stello out on the horizon, we found there was an opportunity to continue to expand. And as we know, CGM, specifically DexCom CGM, can play a very important role in how folks manage their diabetes.

Kevin Ronald Sayer: Yes. So thanks for the question, Matt. So when you think about the investment we are going to expand that salesforce and today, we have a good amount of coverage, it's tens of thousands of primary care physicians.

Speaker Change: Harmony of the entirety of the endocrinologist space, but as you start to think about basal coverage expanding the opportunity ahead of us certainly stello out on the horizon and we found there was an opportunity to continue to expand and as we know CGM.

Speaker Change: Specifically <unk> CGM can play a very important role in how folks manage their diabetes, we know that having those call points is helpful. So we are going to expand and you can take a look at Linkedin for the amount there is theres quite a few openings out there in terms of the size of it. So we will expand our sales force and we will get more coverage in terms of in terms of the cadence.

Jeremy Sylvain: We know that having those call points is helpful. So we are going to expand, and you can take a look at LinkedIn for the number. There are quite a few openings out there in terms of the size of it.

Jeremy Sylvain: So we'll expand our sales force, and we will get more coverage. In terms of the cadence, you know, the LinkedIn, you know, recommendations are out there right now, so you'll see us grow higher over the course of the first quarter. You'll see then that the fully loaded burden associated with those reps will take place over the back half of the year, so Q2s through four. So that's how you think about the cadence of that.

Speaker Change: So.

Speaker Change: The Linkedin.

Speaker Change: Rex are out there right now so youll see us hire over the course of the first quarter, obviously than the fully loaded burden associated with those reps will take place over the back half of the year. So Q2 through four.

Speaker Change: So thats how to think about the cadence of that but again, that's all contemplated in the overall guidance. We provided the 20% operating margin. So expected as part of typical work that we do around creating leverage in the business and investing where we need to but if youre thinking about FERC cadence over the course of the year expect the hires to be made over the course of the first quarter and then for.

Jeremy Sylvain: But again, that's all contemplated in the overall guidance we've provided, the 20% operating margin. So expect it as part of the typical work that we do around creating leverage in the business and investing where we need to. But if you're thinking about it for a cadence over the course of the year, expect the hires to be made over the course of the first quarter, and then for folks to ramp up and be part of our run rate, really Q2 through the round. And we will take our next question from Marie Thibault with BTIG. Your line is open. Thanks. Good evening.

Speaker Change: Folks to ramp up and be part of our run rate really Q2 through the balance of the year.

Speaker Change: And we will take our next question from Marie Thibault with BP IAG. Your line is open.

Marie Thibault: Thanks, Good evening, thanks for taking the questions I wanted to ask a question here on international I think you reminded us that.

Marie Thibault: Thanks for taking the questions. I wanted to ask a question here on international. I think you've reminded us that you'll be selling a non-CGM business in Australia and also going direct in Japan. Wanted to understand the cadence for Q1 versus the rest of the year, and also any sort of comments you could make on G7 being on the DexCom One platform. Just an all-around international question there. Well, yes, of course. Thanks, Maria.

We'll be selling in non PGM business in Australia, and also going direct in Japan wanted to understand the cadence for Q1 versus the rest of the year and also any sort of comments you could make on G 70 being on the decks com one platform just all around international question there.

Speaker Change: Sure. Thanks, Mariana and we'll give you some context so the non CGM business that effectively has gone at this point. So that's why we've been comfortable pulling it out.

Jeremy Sylvain: And we'll give you some context. So the non-CGM business is effectively gone at this point. So that's why we've been comfortable pulling it out, you know, and talking about it organically. So this quarter, you can expect, we talked about about 30-ish million dollars last year. You know, the math on that, you can kind of do the allocation by quarter. That's out as of this, for the most part. And so think about that in the quarter. Japan is certainly a similar type thing.

Speaker Change: And talking about it to organic growth.

Speaker Change: This quarter you can expect we talked about $38 million last year. The math on that you can kind of do the allocation by quarter. That's out as of this point for the most part and so and so think about that in the quarter, Japan, certainly a similar similar type thing we talked about it in Q4 being effectively nil I'd expect a similar contribution in the.

Jeremy Sylvain: We talked about it in Q4 being effectively nil. I'd expect a similar contribution in the first quarter. And then as we start to take that book of business or that business live in the second quarter, I expect it to start to contribute as we build that business back up over the course of the year. So those are really the international kind of timing.

Speaker Change: Our first quarter and then as we start to take that book of business or that business line in.

Speaker Change: In the second quarter I expect it to start to contribute as we build that business back up over the course of the year. So those are really the international kind of timing. So Q1 will be the heaviest burden in terms of as we transition through that.

Jeremy Sylvain: So Q1 will be the heaviest burden in terms of as we transition through that. As it pertains to DexCom 1 on G7, the great news is, I think we press released it a couple days ago, four countries have launched it. And so that has come out. It is now out there today.

Speaker Change: As it pertains to <unk> com one on G. Seven Great News is as I think we press released it a couple of days ago four countries have launched and so that has come out it is now out there today.

Jeremy Sylvain: Those four countries, you know, are our first foray, and we're getting great feedback from early adopters within those countries. The expectation is that we will have a cadence of launches of DexCom 1 on a G7 form factor really over the course of the year. So I'd expect a lot more press releases around where and when we're launching that, but expect that to really take place over the course of the year, which gives us a lot of confidence again and DexCom 1 to be a really incredible growth driver. We will take our next question from Jeff Johnson with Baird. Your line is open. Hey guys. Good afternoon,

Speaker Change: Those four countries.

Speaker Change: Our our first foray and we're getting great feedback from early adopters within those countries. The expectation is we have a cadence of launches of decks com won on a <unk> form factor really over the course of the year. So I'd expect a lot more press releases around where and when we are launching that.

Speaker Change: That to really take place over the course of the year, which gives us a lot of confidence again in <unk>, one being a really incredible growth driver for the long term.

Speaker Change: Okay.

Speaker Change: We will take our next question from Jeff Johnson with Baird. Your line is open.

Jeffrey D. Johnson: Hey, guys. Good afternoon, maybe just keeping on that international point.

Jeffrey D. Johnson: Maybe I'll just keep it on that international point. You know, I think this is the first quarter in a while we've seen international growth below U.S. growth. And, you know, if I look back at the last few quarters, I think you've gone 40, 30, 23 here on the organic growth rate. You know, just help us understand kind of where that international versus U.S. growth might settle out here in 2024. Would we expect them to be, you know, similar to each other?

Jeffrey D. Johnson: The first quarter in a while we've seen international growth below the U S growth.

Jeffrey D. Johnson: If I look back the last few quarters I think you've got 40 30 23 here on the organic growth rate just help us understand kind of where that international versus U S growth might settle out here in 2024.

Jeffrey D. Johnson: We expect them to be similar to each other does does international continued to slow for any reason.

Jeffrey D. Johnson: Does international continue to slow for any reason? And as I think about some of the competitive AID approvals that have happened over in Europe, especially with a competitive CGM, just how are you thinking about the stability of your maybe installed base on the AID side over there versus win rate for new AID systems there? Thank you. Hey, thanks, Jeff.

Jeffrey D. Johnson: As I think about some of the competitive AIG.

Jeffrey D. Johnson: Approvals that have happened over in Europe, especially with linear with a competitive CGM. Just how are you thinking about the stability of your maybe installed base on the AI side over there versus win rate for new AI systems. There. Thank you.

Speaker Change: Sure. Thanks, Geoff So as you think about the cadence. So thanks for the question on International as you think about the cadence over the course of the year.

Jeremy Sylvain: So, you know, as you think about the cadence, so thanks for the question on international business, as you think about the cadence over the course of the year, you know, certainly Q4 was buoyed by a few different things or weighed down, I guess, let's say, by a few different things. You know, we talked a little bit earlier about the Japan business, and really, you know, the revenues were effectively nil as we made that transition. And so that's a negative grower for the quarter. And then, you know, the non-diabetes businesses were really a flat.

Speaker Change: Certainly Q4 was buoyed by a few different are way down I guess I'd say by a few different things.

Speaker Change: A little bit about earlier about the Japan business and really the revenues were effectively nil as we make that transition and so thats a negative grower in the quarter and then the non diabetes business is was really a flat and so when you think about the business being historically, a pretty significant grower those pull you down as you start to exclude those things.

Jeremy Sylvain: And so when you think about the business being historically a pretty significant grower, those pull you down. But as you start to exclude those things, we are still growing quite well. In fact, all of the core businesses where we operate today, UK, Germany, Australia, et cetera, all continue to grow relatively consistently between Q2, Q3, Q4. There are some ebbs and flows, but for the most part, those all should do well.

Speaker Change: We are still growing quite well in fact, all of the core businesses, where we operate today.

Speaker Change: Germany, Australia et cetera, all continue to grow relatively consistency consistently between Q2 Q3 Q4, there are some ebbs and flows but for the most part those all should do well.

Jeremy Sylvain: So as you think about what that means going forward, we haven't changed our stance that the OUS business, the international business, as a percentage of revenue by the end of 2025 will be bigger than it is today, about two-thirds, one-third, where that split today is more like 70-30 or 72-28. So I think, on the whole, expect international business, with all of the opportunities out there and certainly the underpenetration we have today, to grow faster than that of US business over the coming years. That's not to say that we're not incredibly bullish on US business. Look, if we can outperform on both of those, we'll do the work on both. But at least that's what's in our LRP.

About what does that mean going forward.

Speaker Change: We haven't changed our stance that the O U S business International business as a percentage of revenue by the end of 2025 will be bigger than it is today.

Speaker Change: Two thirds, one third or that split today is more more like 70, 30 or $72 28. So I think on the whole expect the international business with all of the opportunity out there with certainly the under penetration we have today to grow faster than that of the U S business over the coming years.

Speaker Change: That's not to say that were not incredibly bullish on the U S business look if we can outperform on both of those will do the work on both but at least that's been our LLP as.

Jeremy Sylvain: As you think about competitive systems and AID, we are highly confident in what we have to offer. Our product, there are multiple different reasons why we believe our product is special in that space. Kevin alluded to a little bit about it earlier, around Bluetooth connectivity as one. I'll just give you an example there. Someone can be on a pump, can talk on their phone, and can be on a direct-to-watch application, all while on our product.

Speaker Change: As you think about competitive systems and AIG.

Speaker Change: We are highly confident in what we have to offer.

Speaker Change: Our product Theres multiple different reasons, why we believe our product is special in that space, Kevin alluded to a little bit about it earlier around Bluetooth connectivity is one I will just give you. An example, there.

Speaker Change: One can be on a pump.

Speaker Change: Talk to their phone and can be on a direct to watch application all while on our product no one else can offer that.

Jeremy Sylvain: No one else can offer that. We are the only one that can do that, and as you think about this population, which really needs and deserves, quite frankly, the technology to manage their diabetes, we believe that that is a differentiator and a meaningful differentiator going forward. Add to that the millions and millions of years that we're compiling on these systems. We feel highly confident that when we sit in front of a physician, we sit in front of an endocrinologist, and we sit in front of a parent, a child that needs an AID system, we feel confident that we are the choice. We'll continue to battle and make sure that that message continues to go out there, but as we think about that international book of business, we continue to feel very confident, even post-launch of a competitive And we will take our next question from Matt Taylor with Jeffries. Your line is open.

Speaker Change: Are the only one that can do that and as you think about this population, which really needs and deserves quite frankly, the technology to manage their diabetes.

Speaker Change: We believe that that is a differentiator and a meaningful differentiator going forward add to that the millions and millions of years that we're compiling on these systems, we feel highly confident that when we sit in front of US position, we sit in front of an endocrinologist and we sit in front of a parent or child.

Speaker Change: That needs an AI system, we feel confident that we are the choice. We will continue to battle and make sure that that message continues to go out there, but as we think about that international book of business. We continue to feel very confident and even post launch of a competitive system will do incredibly well there.

Speaker Change: Okay.

Speaker Change: And we will take our next question from Matt Taylor with Jefferies. Your line is open.

Matthew Charles Taylor: Hi, thanks for taking the question. I was hoping you could update us on the cadence of data that we could expect to see this year, not only around, as you mentioned before, GLP-1 data that could come from you or from investigators, but then also on Stella. Are we going to see anything on that at upcoming conferences or from you, you know, before, during, or after the launch? No, this is Kevin.

Matthew Charles Taylor: Hi, Thanks for taking my question.

Matthew Charles Taylor: I was hoping you could update us on the cadence of data that we could expect to see this year not only around you've mentioned before.

Matthew Charles Taylor: <unk>, one data that could come from from you or from investigators and then also on stellar or are we going to see anything on that.

Matthew Charles Taylor: Upcoming conferences or from you before during or after the launch.

Kevin Ronald Sayer: I'll take that. We don't really need a clinical trial for stelo as far as getting that product approved goes. There is a lot of data on the use of continuous glucose monitoring, particularly DexCom systems, in this type 2 diabetes world that will be published by investigators over the course of the next several months. And we'll refer to that, and we'll talk to you about that. We know, you know, we have a very good idea where this data comes out because, in all our studies, patients have better outcomes, they're healthier, and we end up saving the system money. And those are the outcomes that we're hoping to drive with Stelo over time. With respect to GLP-1s, again, the list of studies ongoing is very large, and there are studies where CGM is an element.

Matthew Charles Taylor: No. This is Kevin I'll take that we don't really we don't need a clinical trial for <unk> as far as getting that product approved there is a lot of data on use of continuous glucose monitoring, particularly decks com systems. In this type two diabetes world that will be published by investigators over the course of the next several months and we will reference to that.

Matthew Charles Taylor: And we'll talk to you about that we know we have very good idea of where this data comes out because we've seen in all our studies patients have better outcomes are healthier and we ended up saving the system money and those are the outcomes that we're hoping to drive with fellow over time with respect to <unk> again the list of studies.

Matthew Charles Taylor: Ongoing is very large.

Matthew Charles Taylor: And there are studies, where CGM is an element again, we expect those studies when theyre published to demonstrate the same things that we've talked about before that the use of CGM with <unk> provides a better result.

Kevin Ronald Sayer: Again, we expect those studies, when they're published, to demonstrate the same things that we've talked about before, that the use of the CGM with GLP-1 provides a better result than a study without it. And those studies will be published over time. We don't control those investigators, but we expect good data over the course of the year. And we will take our next question from Travis Steed with Bank of America. Your line is open.

Matthew Charles Taylor: And then as study without it.

Matthew Charles Taylor: And those studies will be published over time, we don't control those investigators, but we expect good data over the course of the year.

Matthew Charles Taylor: Okay.

Matthew Charles Taylor: And we will take our next question from Travis Steed with Bank of America. Your line is open.

Travis Steed: Hey, thanks for the question. I guess I wanted to understand a little bit more, Kevin, if you could give some more clarity on how you think a reimbursement pathway for Estella could look over the next couple of years. What do you think is needed to open reimbursement up for that product? And how do you think that would look?

Travis Steed: Hey, Thanks for the question I guess wanted to understand a little bit more Kevin if you could give some more clarity on how you think a reimbursement pathway for stellar to look over the next couple of years. What do you think is needed to open a reimbursement for that product and how do you think that would look at what could be done kind of a more traditional way or do you think could be done and kind of more one off.

Kevin Ronald Sayer: Would it be done in a more traditional way? Or do you think it'd be done kind of more one-off, like the levels program with UnitedHealthcare? Our goal is to do this in a more traditional way over time. As we've said earlier, we'll launch the product as a cash-pay product and have a cash-pay option, you know, a cash-pay option that people can get into and purchase the product. We will accumulate data from those users over time. We'll also accumulate data, again, from the clinical trials that we see out there, and ultimately build a case for reimbursement for this product. I think that over time.

Travis Steed: The levels program with Unitedhealthcare.

Travis Steed: Our goal is to do this in a more traditional for time.

Travis Steed: As we've said earlier will launch their product just a cash pay product and have a cash pay option cash pay that people can get into and purchased the product. We will accumulate data from those users over time will accumulate data again from the clinical trials that we see out there.

Travis Steed: And ultimately build a case for reimbursement for this product I think over time.

Kevin Ronald Sayer: We certainly expect to go to CMS and have people with type 2 diabetes who aren't on insulin covered at some point in time by that group because, again, our goal is to spend less money in the healthcare system, and we're one of the few technologies that enables an outcome of that nature. So we see it being more traditional and working with payers and the various government agencies over time. The programs we will continue to support. We're happy to support them and be partners with them. But I think over time, we need a more traditional reimbursement path, and partnerships and relationships can be the only way.

Travis Steed: We certainly expect to go to CMS and have people with type two diabetes, who are on insulin covered at some point in time by that group because again, our goal is to spend less money in health care system.

Travis Steed: A few technologies that enables.

Travis Steed: Now come of that nature, So we see it being more traditional and working with payers and.

Travis Steed: The various government agencies over time.

Travis Steed: Programs, we will continue to support we're happy to support them and be partners with them, but I think over time, we need to add more traditional reimbursement path and that it can be.

Travis Steed: The partnerships and relationships.

Travis Steed: B the only way on top of that we'll continue to develop our tools around stello. This first generation that we launch is going to be our first pass half we will have numerous iterations over the course of the first 24 months of that product that really make a much more inviting and engaging product and lead people to better experiences so stay tuned for.

Kevin Ronald Sayer: On top of that, we'll continue to develop our tools around Stello. This first generation that we launch is going to be our first pass app. We will have numerous iterations over the course of the first 24 months of that product that really make it a much more inviting and engaging product and lead people to better experiences. So stay tuned for what we have to say on that front over the next 12 months. It's going to be very exciting, and we will take our next question from Joanne Wuensch of Citigroup. Your line is open. Good afternoon, and nice quarter. A couple of questions; two are really boring.

Travis Steed: We have to say on that front over the next 12 months, it's going to be very exciting.

Travis Steed: And we will take our next question from Joanne Wuensch with Citigroup. Your line is open.

Joanne Karen Wuensch: Good afternoon, and nice quarter.

Joanne Karen Wuensch: Couple of questions to a really boring can you sort of give us the guidance for tax and how to think about net interest expense and then the one that strikes me as somewhat more interesting is I think your LLP is for 21% operating margin and hence as the second quarter in a row, where you've.

Joanne Karen Wuensch: Can you sort of give us the guidance for tax and how to think about net interest expense? And then the one that strikes me as somewhat more interesting is that your LRP is for 21% operating margins, and this is the second quarter in a row where you've missed that number, so why is 21% still the right number to be had? Thank you.

Joanne Karen Wuensch: Bypassed that number so.

Speaker Change: As Tony 1% still the right number to be had thank you.

Speaker Change: Sure Yeah. So we'll start with tax and I think this year, we kind of drops down to closer to that 26% range. While we don't necessarily guide year by year to tax. The goal is over the course of the next three to five years to get down into the low twenty's.

Jeremy Sylvain: Sure, yeah, so we'll start with tax. You know, I think this year we kind of dropped down to closer to that 26% range. But we don't necessarily guide year by year on tax.

Jeremy Sylvain: The goal is over the course of the next three to five years to get down into the low 20s. So I would expect it to continue to come down every year as we grow into the tax structure that we've put in place. In terms of net interest income, you know, some of that, it's one of those, it's, you know, it's a bit of a difficult one, but just given, you know, where our interest rate is going to go over time, but it's pretty straightforward that our cash interest cost is pretty low, just given our converts, and so you can basically take a look at the cash on the balance sheet, multiply it by about 4%, and that gets you to about where you'd be for the year.

Speaker Change: So I would expect it to continue to come down every year.

Speaker Change: As we grow into the tax structure that we've put in place.

Speaker Change: In terms of net interest income some of that it's one of those.

Yeah.

Speaker Change: It's a bit of a difficult one, but just given where interest rates going to go over time, but.

Speaker Change: It's pretty straightforward that our cash interest cost is pretty low just given our converts and so you can basically take a look at the cash on the balance sheet and multiply it by about 4%.

Speaker Change: That gets you to about where you'd be for the year again, we will have to keep you updated as interest rates change over time, but that's the way to think about it and then from an operating margin perspective.

Jeremy Sylvain: Again, we'll have to keep you updated as interest rates change over time, but that's the way to think about it. And then from an operating margin perspective, you know, we gave the 2025 LRP, that's 21%. Your point is valid. If you take a look at our guide this year at 20% and our gross margin of 63 to 64, if we hold true to our 65% gross margin in 2025, which is absolutely our belief, you're already there. So I absolutely understand the mathematics.

Speaker Change: We gave the 2025 LLP that's a 21% your point is valid if you take a look at our guide this year at 20% and our gross margin of 63 to 64.

Speaker Change: If we hold true to our 65% gross margin in 2025, which is absolutely. Our belief you are already there at a 21% op margin.

Speaker Change: Absolutely understand the mathematics. It just means we're ahead or ahead of our MRP, but were not necessarily willing to update at this point, we will come forward and we'll update it at some point in the future, but I think it's a good thing we've done a lot of work around this joanne around getting lean.

Jeremy Sylvain: It just means we're ahead. We're ahead of our LRP, but we're not necessarily willing to update it at this point. We'll come forward, and we'll update it at some point in the future. But I think it's a good thing.

Jeremy Sylvain: We've done a lot of work around this, Joanne, around getting lean and making sure we drive leverage into the business. And the great news is, we are ahead. And so that's a good spot to be in, and we'll continue to do so. One other caveat, just I think it's important to note the year. I think you asked the question a little bit about the year and why we are on the year.

Speaker Change: Lean and making sure we drive leverage into the business and the Great News is as we are ahead and so that's.

Speaker Change: That's a good spot to be in and we will continue to do so one other maybe caveat just I think it's important to note on the year I think you asked the question a little bit about the year and where are we on the year, we're making some good investments this year in the organization, we're launching Stella and we've talked about that being a significant investment in the business. We're certainly doing a lot of work around our <unk>.

Jeremy Sylvain: You know, we're making some good investments this year in the organization. We're launching Stella, and we talked about that being a significant investment in the business. We're certainly doing a lot of work around our sales force. And if you recall, a few years ago, we did some work on that, and we took a step back on margin. We're going to do all that and still step forward. We're going to go direct to Japan this year.

Speaker Change: Sales force and if you recall a few years ago, we did some work around that and we took a step back on margins, we're going to do all that and still step forward, we're going to go direct in Japan. This year.

Jeremy Sylvain: That's another thing that we're making an investment in. And then all the work Kevin referenced around the clinical work that we're doing to continue to improve our product. We're going to make all those investments and still deliver an expansion of operating margins. So, I think it just goes to show you we're building the levers in here that you can see that we're building and that you can rely on us longer term to continue to drive that. Thanks for watching!

Speaker Change: Another thing that we're making an investment in and then all the work Kevin referenced around the clinical work that we're doing around continuing to improve our product we're going to make all those investments and still deliver an expansion of operating margin. So I think it just goes to show you were building the levers in here, but I think you can you can see that we're building in that you can rely on us longer term to continue to drive that through the business.

Speaker Change: Yeah.

Speaker Change: And we will take our next question from Matthew O'brien with Piper Sandler Your line is open.

Matthew O'brien: And we will take our next question from Matthew O'Brien with Piper Sandler. Your line is open. Afternoon, thanks for taking my question. Looking at the domestic performance, there's been a clear acceleration in the back half of 23 on a two-year stack basis. And I'm wondering specifically if that's just Basel that's helping there. It looks like it's as much as 200, maybe 250 basis points of the acceleration.

Matthew Charles Taylor: Good afternoon. Thanks for taking my question looking at the domestic performance there has been a clear acceleration in the back half of 'twenty three.

Matthew Charles Taylor: On a two year stacked basis and I'm wondering specifically if that's just basal that's helping there it looks like it's as much.

Matthew Charles Taylor: 200, maybe 250 basis points of the acceleration.

Jeremy Sylvain: Is that the primary contributor to the domestic acceleration? What should we think about in terms of basal contribution to the top line this year? And are we inflecting right now as far as basal adoption goes with CGM here in the state? Yeah, that's a good question.

Matthew Charles Taylor: Is that the primary contributor.

Matthew Charles Taylor: Two the domestic acceleration what should we think about in terms of basal contribution to the top line. This year and are we at a REIT inflicting right now as far as basal adoption goes.

With CGM here in the states.

Yeah. It's a good question, let me maybe just give some some color as to how we're thinking about the guidance.

Jeremy Sylvain: Let me maybe just give some color as to how we're thinking about the guidance. You know, as you see the performance in the back half of the year, a lot of that has to do with being the most accurate sensor, launching with the G7 form factor, and then, of course, having the Bazel coverage there. And so, when you think about it, and you can see the share taking when you look at the script data, we are taking share and having the sensor, the most advanced sensor on the market, is the driver there. So, that's taking share. Now, within those spaces, Bazel is a contributor, no question.

As you see the performance in the back half of the year.

Matthew Charles Taylor: A lot of that has to do with being the most accurate sensor launching with a <unk> form factor and then of course, having the basal coverage there and so when you think about it and you can see the share taking when you look at script data we are taking share.

Matthew Charles Taylor: And having the sensor the most advanced sensor on the market is the driver there. So that's taking share now within those spaces basal as a contributor no question.

Jeremy Sylvain: As that category expands and we take share within that category, that does contribute to the overall numbers. And so, you are right, Bazel is a contributor, but it has as much to do with us taking share as it does with category expansion. So, think about both of those as contributors. You know, as you think about 2024, we've talked a little bit about the adoption rate, basal and total. Adopting in this back half of the year around 9 to 10 percent per year on a per annum basis. The guide assumes about 8% there. And so, you know, I think you can assume that was the case.

Matthew Charles Taylor: That category expands and we take share within that category.

Matthew Charles Taylor: That does contribute to the overall numbers and so you are right Basil is a contributor but it has as much to do with us taking share as it does with category expansion. So think about both of those as contributors.

Matthew Charles Taylor: As you think about 2024, we've talked a little bit about the adoption rate basal and total.

Matthew Charles Taylor: Ducting in this back half of the year around 9% to 10% per year on a per annum basis.

The guide assumes about 8% there.

Matthew Charles Taylor: I think you can assume that was the case our long range plan was more like 6% to 7% per year. So we are seeing basal going faster than what was in our long range plan and what's great about that is as we continue to take share in the category grows a little faster than expected that will help contribute over the longer haul. So hopefully that gives you some context.

Jeremy Sylvain: Our long-range plan was more like 6 to 7% per year. So we are seeing Basel going faster than what was in our long-range plan. And what's great about that is, as we continue to take share, and the category grows a little faster than expected, that will help contribute over the longer haul. So hopefully, that gives you some context to how we're seeing Basel. It absolutely is a contributor.

Matthew Charles Taylor: Now we're seeing basal it absolutely is a contributor I don't want to overstate. The fact, though that basal because quite frankly, our intensive insulin businesses continue to do really really well and you see us taking share there as well.

Kevin Ronald Sayer: I don't want to overstate the fact, though, that Basel, because quite frankly, our intensive insulin businesses continue to do really, really well, and you see us taking share there as well. And I just add to Jeremy's comments, Matt, if you look at the second half of the year, that's when G7 rolled out, there is a direct correlation between G7 launch and the acceleration of our growth. It really was an important event.

Yes, I'd just add to Jeremy's comments, Matt if you look at the second half of the year. That's when <unk> rolled out there is a direct correlation to G seven launching and the acceleration of our growth.

Speaker Change: It really was an important event and the other thing that just.

Kevin Ronald Sayer: And the other thing that, just as a consequence of what you saw, again, this supports what we're doing in the US with respect to our field sales expansion. We do need to spend more time with physicians who aren't as familiar with our technology as they would have been in the past. As I said on the call earlier, when we call on somebody, we win. We do very well. So we need more calls. We needed more feet on the street and more voices, given the acceleration that we saw and the good things that we saw happen over the second half of the year. So it all flows together nicely. Thanks for watching!

Speaker Change: Just as a consequence of what you saw again this supports what we're doing in the U S with respect to our field sales expansion.

Speaker Change: We do need to spend more time with physicians, who aren't as familiar with our technology as they would've been in the past and as I said on the call earlier, where we call on somebody we win.

Speaker Change: We do very well so we need more calls we needed more feet on the street and more voice given the acceleration that we saw I think good things.

Speaker Change: Things that we saw happen over the second half of the year. So it all flows together nicely.

Ben Andrew: And we will take our next question from Margaret Andrew with William Blair. Your line is open. Hey, good afternoon, guys. Thanks for taking the time to answer the question. I wanted to maybe spin back to non-insulin insulin. When we kind of run our market models, non-insulin adoption seems to have meaningfully increased, you know, probably for you as well as certainly for the market in the last couple of years. And again, our numbers probably aren't perfect, but you know, maybe the market's not at a million users in the US but could get there this year. That's a pretty sizable amount.

Speaker Change: And we will take our next question from Margaret Andrew with William Blair. Your line is open.

Ben Andrew: Hey, good afternoon, guys. Thanks for taking the question.

Ben Andrew: I wanted to maybe spend back for non insulin.

Ben Andrew: Yes, when we kind of run our market models not implant options meaningfully increase.

Ben Andrew: Probably for you as well it certainly for the market the last couple of years.

Speaker Change: Number its probably aren't perfect, but yes.

Speaker Change: It's not at a 1 million users.

Speaker Change: Could get there this year, but that's a pretty sizable amount.

Kevin Ronald Sayer: So, I guess, one: are these meaningful patient ads for DexCom already in 2023, and what drove that? And, you know, going back to the Stellar guidance of $40 million per year, we can obviously throw some assumptions around ASPs or patient ads, but regardless of what those inputs can be, it pretty quickly gets you to $200 million plus sales in 2025, which is a pretty meaningful chunk of the chain. So, I guess. Is that correct? Why could it be right or wrong?

Speaker Change: So I guess one are these meaningful patient <unk> already in 2023, and what drove that and Neil going back to this fellow guidance of $40 million per year.

Speaker Change: Obviously throws some assumptions around asps, either patient adds but that regardless of what those inputs can be it pretty quickly gets you to $200 million plus sales in 2025.

Speaker Change: A pretty meaningful chunk of change so I guess is there.

Speaker Change: That correct like would it be right or wrong and how much of that could be incremental to the initial our P. That you provided in 'twenty three.

Kevin Ronald Sayer: And how much of that could be incremental to the initial LRP that you provided in 2023? Jeremy can probably get into more detail than I can. It is a part of our business today, Margaret. We do have some non-influent users for our product. We have some plans that actually cover non-influent users for CGM, and we've had wonderful experiences there. We also have, not an aggressive cash pay program, but a cash pay program nonetheless, where non-insulin users have access to our product through some very traditional distribution channels outside the pharmacy and outside traditional DME.

Speaker Change: Jeremy can probably get into more detail than me.

Jeremy Sylvain: It is a part of our business today Margaret we do have some <unk> current product we have some plans that actually cover non insulin users for CGM and we've had.

Jeremy Sylvain: <unk> had wonderful experiences there we've also have.

Jeremy Sylvain: Not an aggressive cash pay program that are cash pay program. Nonetheless for non insulin users have access to our product through some very traditional distribution channels.

Jeremy Sylvain: The pharmacy and outside traditional.

Kevin Ronald Sayer: So some of those individuals have purchased CGM and use it on the non-insulin front as well, and we continue to support programs. But it is not a remarkable chunk of our business, nor has it been a tremendous driver of our growth.

Jeremy Sylvain: So some of those individuals have purchased CGM and use it.

Jeremy Sylvain: On the non insulin front as well and we continue to support programs, but it is not a remarkable chunk of our business has not been a tremendous driver of our growth that has grown but it hasnt been a significant percentage as we look going forward certainly again, we gave guidance of 1% for 2024, and we're committed to that and that certainly is.

Kevin Ronald Sayer: It has grown, but it hasn't been a significant percentage. As we look going forward, certainly, again, we gave guidance of 1% for 2024, and we're committed to that, and that certainly is our forecast and what we've guided. We're most committed to learning because what we're really interested in is a number like 200 million, like you're talking about, for 2025, and to be positioned with the right product there. With respect to pricing and how we'll offer that product, we're going to have tremendous flexibility as this is a cash-pay program. And it's not labeled for the current population where we have reimbursement and where we are reimbursed for our products.

Jeremy Sylvain: Our forecast and why we've guided where most committed to learning because what we're really interested in as a number like $200 million like youre talking about for 2025 and to be positioned with the right product.

Jeremy Sylvain: There with respect to pricing and handle offer that product, we're going to have tremendous flexibility. As this is a cash pay program and it's not labeled for the current population, where we have reimbursement.

Jeremy Sylvain: And where we are reimbursed for our products. So we believe we will have again flexibility to grow that.

Kevin Ronald Sayer: So we believe we'll have, again, the flexibility to grow that and grow it profitably. Again, we have a 15-day product going into that market, so we will have lower COGS. And we're developing a lot of things around that, but as it rolls out, as you see, we really are changing the business model to serve this type of individual versus those we've served up to this point in time. We're going to offer a different experience that will definitely meet their needs across the board. So we're bullish on it over time, and it could be a very big number in 2025. That's what we're planning. We'll take our next question from Jayson Bedford with Raymond James. Your line is open. Good afternoon. Excuse me. Just on gross margin, I think we came in last year thinking gross margin would be lower in the second half. It wasn't.

Jeremy Sylvain: And growing profitably as again, we have a 15 day product going into that market. So we will have lower Cogs and we're developing.

Jeremy Sylvain: A lot of things around that as it rolls out as you see we really are <unk>.

Jeremy Sylvain: Changing the business model to serve this type of individual versus those we've served up to this point in time, we're going to offer a different experience that will definitely meet their needs.

Jeremy Sylvain: Across the board. So we're bullish on it over time and it could be very big number in 'twenty Drive fact, that's what we're that's what we're planning on.

Jeremy Sylvain: Yes.

Jeremy Sylvain: We will take our next question from Jason Bedford with Raymond James Your line is open.

Jayson Bedford: Good afternoon excuse me just on gross margin, we came into last year thinking gross margin would be lower in the second half wasn't I'm guessing revenue levels play a part there but outside of price and mix weighs on gross margin in 'twenty four and then just.

Jayson Bedford: I'm guessing revenue levels play a part there. But outside of price and mix, what weighs on gross margin in 24? And then just as a related question, you had some encouraging comments on Malaysia, and I think you alluded to it, but at what point do we see Malaysia and G7 starting to have a positive impact on gross margin? Hey, Jayson, yeah, thanks for the question. You know, last year, when we made the assumption on, you know, what the margin looked like, the assumption was, is the G6 to G7 transition, we had a range of assumptions. But the assumption was the G6 to G7 transition would take place perhaps a little bit earlier. And some of that had to do with timing of when, you know, the AID systems were available in the market and coverage, you know how that that goes over time and so it took a little bit longer and as a result we outperformed on margin and it gets back to G6 cost less to make than G7 today and it's still a majority of our users our legacy base still sit on the G6, With the launch of Tandem and Control IQ integrated with G7 and obviously the limited launch with the Omnipod 5 coming out here in the back half of Q1, and then obviously a launch sometime later in the year, we do believe that base starts to move over quicker.

Jayson Bedford: Related question, you had some encouraging comments on Malaysia, and I think you alluded to it but at what point do we see Malaysia, seven starting to have a positive impact on gross margin.

Speaker Change: Hey, Jason Thanks for the question last year, when we made the assumption on the.

Jayson Bedford: The margin looked like the assumption was as the <unk> six to <unk> seven transition, we had a range of assumptions, but the assumption was the <unk> seven transition would take place, perhaps a little bit earlier and some of that had to do with timing of when the AI systems were available in the market and coverage.

Jayson Bedford: How that goes over time, and so it took a little bit longer and as a result, we outperformed on margin and it gets back to <unk> cost less to make the G. Seven today and it's still a majority of our users our legacy base still sit on the <unk> system.

Jayson Bedford: With the launch of tandem and control IQ integrated with <unk>, seven and obviously the limited launch with Omnipod and you've got five coming out here in the back half of Q1.

Jayson Bedford: And then obviously our launch sometime later in the year, we do believe that base starts to move over quicker and so what you have there as that takes place Jason you have that shift from a lower cost to a higher cost product Wang and the start of the year.

Jayson Bedford: And so what you have there is, as that takes place, Jayson, you have that shift from a lower cost to a higher cost product weighting at the start of the year, and hence that's why the margin goes where it goes. Now in the back half of the year, assuming that base transitions and our models show that over the course of the year that should, that equilibrium should balance then tilt in the favor of G7, it puts us in a position exiting the year where G7 should be, and we'll have to give you updates on the base as the year progresses, but it should be lower than G6, but then at that point, it should be accretive. And that would be the exit rate leading now to 24, and then, of course, it bodes well as we move into 2025. So that's the big driver. It's just when that base transitions, and when it does, when do we have that cost kind of equilibrium? So again, we thought it was gonna happen in the back half of 2023. It didn't take place.

Jayson Bedford: And hence that's why the margin goes where it goes now in the back half of the year, assuming that base transitions in our models show that over the course of the year that should the equilibrium should balance then tilt in the favor of G. Seven it puts us in a position exiting the year, where G. Seven should be and we will have to give you updates on the base as the year progresses, but it should be lower.

<unk> will then at that point, it should be accretive and that would be the exit rate leading out of 24, and then of course, then bodes well as we move into 2025 and beyond so that's the big driver is just when does that base transition and when it does when do we have that that cost kind of equilibrium. So again, we thought was going to happen in the back half of 2023.

Jayson Bedford: It didn't take place we outperform there in 2023 as a result, probably going to take place here in the first half of 2024.

Jeremy Sylvain: We outperformed them in 2023 as a result. Probably gonna take place here in the first half. And we will take our next question from Bill Plovanyk with Canaccord Genuity. Your line is open. Great, thanks for taking my question. Congratulations on the quarter. Just a kind of a follow-up, just trying to get as much color granularity as possible on, you know, as you look at the growth in the business and kind of Matt O'Brien's question, but, you know, the contribution from Basel, Basel, and Hypo, you know, Intensive, and Type 1, just is it kind of shifting to that order these days where it's more Basel and Hypo and Intensiv And then, if so, how should we think about that cadence as you continue to move forward?

Jayson Bedford: And we will take our next question from Bill <unk> with Canaccord Genuity. Your line is open.

Jayson Bedford: Yes.

Bill: Great. Thanks for taking my question congratulations on the quarter.

Bill: Just kind of a follow up just trying to get a color granularity as possible.

Bill: If you look at the growth in the business and kind of the motto Brian's question, but the contribution from baby so basal hypo.

Bill: Intensive in type ones yet.

Bill: Is it kind of shifting to that order these days, where it's more of the basal and hypo in the intensive type two is really the new patient growth and then if so how should we think about the cadence as you continue to move forward. Thanks.

Bill Plovanyk: Thank you. Yeah, I mean, if you think about 2024, at least 2024, the main contributor to new patients, or at least revenue from new patients, is still going to be intensive insulin. So, type one and type two.

Speaker Change: Yes, I mean, if you think about 2020 for at least 2024, the main contributor to new patients or at least revenue from new patients is still going to sit in the intensive insulin type one in the type two <unk>.

Jeremy Sylvain: Insulin-intensive patients, and that still is where the combination of those two makes up a majority of new revenue over the course of the year. Basel's catching up, and Basel's doing a nice job of catching up, but those are still part of our core business. It's still driving the underlying business.

Speaker Change: Insulin intensive patients and Thats still is where the.

Speaker Change: The combination of those two makes up a majority of the new new revenue over the course of the year Basil is catching up and bagel is doing a nice job of catching up but those those and still part of our core business is still actually driving the underlying business.

Jeremy Sylvain: Now, over time, we do expect Basel, given it's a larger population, to do very, very well. We'll have to give you more of an update as we get closer to 2025. So, I am incredibly bullish on the long-term opportunity there with Basel, but think about at least 2024. Our core business is actually still driving a lot of the growth, with, obviously, longer-term opportunities in Basel. And then, to your point, Hypo, which is, quite frankly, still a low contributor.

Speaker Change: Now over time, we do expect basal giving us a larger population to do to do very very well.

Speaker Change: I'll have to give you more of an update as we get into 2025 and beyond as we get closer to that.

So incredibly bullish on the long term opportunity there with Basil but think about at least 2020 for our core business is actually still driving a lot of the growth with obviously longer term opportunities in basal and then to your point Hypo, which is quite frankly still a low contributor and then with Stello kind of coming online as well all of those are real.

Kevin Ronald Sayer: And then, with Stello kind of coming online as well, all of those are real opportunities in 2025. We will take our next question from Michael Polark with Wolf Research. Your line is open. Good afternoon, thank you.

Speaker Change: Opportunities in 2025 and beyond.

Speaker Change: Okay.

Speaker Change: We will take our next question from Michael <unk> with Wolfe Research. Your line is open.

Michael: Hey, good afternoon. Thank you I want to ask a follow up on.

Michael K. Polark: I want to ask a follow-up question on Kevin, your response to the prior question on the 15-day and timing. I heard we won't provide a lot of color until we're filed and see a path to approval. There kind of had been, it seemed like there was a thought that Stella was kind of the appetizer this year for 15-day and maybe a broader rollout in 2025. And I don't want to, I'm not asking you to pin down timing, but... 2025, a year where, you know, a broader transition to 15-day could be affected? Or, you know, might all this testing and innovation take a little We would like to go as fast as possible. If it were on my time frame, it'd be yesterday.

Kevin Your response to the prior question on 15 day and timing.

Michael: I heard we won't provide a lot of color until are filed and see a path to approval.

Michael: They're kind of had been it seemed like there was a thought that <unk> was kind of the appetizer. This year for 15 day, and maybe a broader rollout.

Michael: In 2025, and I don't want to.

Speaker Change: I'm not asking you to pin down timing, but.

Speaker Change: It's 2025.

Speaker Change: A year, where a broader transition to 15 day could be affected or might all this testing and innovation take a little longer.

Speaker Change: We would like to go as fast as possible.

Speaker Change: We're on my timeframe that it would be it would be yesterday stello at 15 days is a primer for that so we can learn and gather data from those users as they use it particularly with our current sensor configuration as we go through the technology changes that we're making as we dial in on those features that we're going to put in the final product will get a pivotal trial.

Kevin Ronald Sayer: Stella with 15 days is a primer for that, so we can learn and gather data from those users as they use it, particularly with our current sensor configuration. As we go through the technology changes that we're making, as we dial in on those features that we're going to put in the final product, we'll get a pivotal trial started, and we'll go, but we're learning each and every day. We are not in a position like we were with G7 where we're submitting an entire new system with completely new hardware and new features and new manufacturing lines, new suppliers, new everything. This 15-day product we built on the same platform our current G7 is built on. So the time from finishing and pivotal to filing is not going to be nearly as intense and difficult as it was with the last product, things such as security and Bluetooth and stuff. We've worked through all those issues already. So right now, it's really refining the science and getting to 15 days and getting that reliability and quality level that our patients expect from us. We don't view this as an extremely...

Speaker Change: I'll start it and we will go but we're learning each and every day.

Speaker Change: We are not in a position like we were at <unk>, seven where we're submitting an entire new system with completely new hardware and new features and new manufacturing lines, new suppliers, new everything. This 15 day product we built on the same platform our currency seven as bill so at the time from finishing a pivotal the filing is not going to be near as intense and difficult is it.

Speaker Change: With the last product things, such as security and Bluetooth and stuff. We worked through all those issues already so right now it's really refining the science of getting to 15 days and getting that reliability and quality level that our patients expect from us.

Speaker Change: Don't view this as an extremely.

Kevin Ronald Sayer: I think 25 is a reasonable assumption, but I'm not going to give you an end date as to when because there are too many variables. But we're certainly headed down a path at that type of speed, and then we'll see where we land and give you more updates along the way. I just, you know, filing things away or starting things. What's important to us is getting things done. And those should be your milestones as well.

Speaker Change: I think 25 is a reasonable assumption, but I'm not going to give you an end date.

Speaker Change: To win because there's too many variables, but we're certainly headed down a path along that type of speed and then we'll see where we land and give you more updates.

Speaker Change: Along the way I just you know.

Speaker Change: Filing things are starting things, what's important to us is getting things done and those should be your milestones as well so.

Kevin Ronald Sayer: So, uh, we'll keep you posted, but that's where we are. We will take our next question from Chris Pasquale with Nefron. Your line is open. Thanks, Cynthia. That's on the quarter.

Speaker Change: We will keep you posted but thats, where we are.

Speaker Change: We will take our next question from Chris Pasquale with Nephron. Your line is open.

Chris Cooley: Thanks, and congrats on the quarter I wanted to ask a couple of questions about <unk> and the.

Chris Cooley: I wanted to ask a couple questions about DexCom 1 and the progress there. I think you had said you expected it to account for about 30 percent of international new patient starts in 23. Curious if that's where you ended up and what portion of New Patients Starts you expected it to be in 24. Sure, Chris, thanks for the question.

Chris Cooley: Progress there I think you had said you expected it to account for about 30% of international New patient starts in 'twenty three.

Chris Cooley: Curious, if that's where you ended up and what portion of new patient starts do you expect it to be in 2004.

Speaker Change: Sure Chris Thanks for the question, Yes, we did we thought it was gonna be about a third of patient starts in 2023 outside the U S. It was closer to about a quarter of new patient starts so a little bit behind there is some of the tenders took a little bit more time to get on and.

Jeremy Sylvain: Yeah, you know, we thought it was gonna be about a third of patient starts in 2023 outside the U.S. It was closer to about a quarter of new patient starts, so a little bit behind there. Some of the tenders took a little bit more time to get on.

Jeremy Sylvain: And, you know, so it was still a really good year for us, but a little bit behind where we had started the year, at least in the expectations. This year, we expect it to be more and a bigger contributor as a percentage. So if you think about last year, that was certainly the case. That was on the G6 form factor.

Speaker Change: So it was it was still a really good year for us, but a little bit behind.

Speaker Change: Where we had started the year at least in the expectations.

Speaker Change: This year, we expect it to be more in a bigger contributor as a percentage. So if you think about last year that was certainly the case that was on the <unk> form factor very excited about obviously coming out here on the G. Seven form factor here in 2024, and the four countries that we already launched and so.

Jeremy Sylvain: Very excited about, obviously, coming out here on the G7 forum here in 2024 and the four countries that we have already launched in. So our expectation is it's a bigger percentage. While we haven't necessarily given that number, expect it to be bigger, and the team wants it to be bigger as a percentage of new patients outside the U.S. in 2023. Now, we will take our next question from Josh Jennings with TD Cowan. Your line is open. Yeah, no, it's... Yeah, thanks, Josh. It's an area that, in all candor, is gone.

Speaker Change: Our expectation is as a bigger percentage, while we haven't necessarily given that number expected to be bigger than the team wants it to be bigger as.

Speaker Change: As a percentage of new patients outside of the U S. In 2024.

Speaker Change: Okay.

Speaker Change: We will take our next question from Josh Jennings with TD Cowen Your line is open.

Josh Jennings: Hi, good evening, thanks for taking the questions I was hoping to.

Josh Jennings: Just ask a follow up on that type two hypo.

On hypo indication.

Josh Jennings: Average.

Speaker Change: We didn't think.

Speaker Change: Move as fast and as type two basal.

Speaker Change: <unk> talked about a bigger patient opportunity.

Speaker Change: Decent opportunity.

Speaker Change: Anything that that's been a bottleneck in terms of penetrating that indication.

Speaker Change: How do you see a deeper penetration.

Speaker Change: Going forward, yes, no the 'twenty 'twenty four 'twenty five 'twenty six thanks a lot.

Speaker Change: Yeah. Thanks, Josh its an area that in all candor, it's gone and we knew this was going to be a bit of a challenge as a big opportunity, but it's going to take a little bit more time on awareness and getting in front of physicians and we're letting folks know that hey look if you've had a hypo event you do qualify and by the way here's how to document. It. So it has been it has been certainly slow.

Josh Jennings: And we knew this was going to be a bit of a challenge. It's a big opportunity, but it's going to take a little bit of more time for awareness and getting in front of physicians and letting folks know that, hey, look, if you've had a hypo event, you do qualify. And by the way, here's how to document. So it has certainly been slower than Basel.

Speaker Change: Sure then Basil.

Jeremy Sylvain: It's not been a real material contributor in 2023. What we do know, however, is that Terry, our chief commercial officer, and her team are very, very focused on getting the word out, and making sure that folks understand if they are suffering from hypo events. This technology can help, and it can help change that, and they do qualify, and there is reimbursement out there. And so it's working on that messaging and making sure that we get out there and understand where those events are taking place. That is, believe it or not, it is a challenge in understanding how to identify when those events have taken place so that we can get out in front of those folks, but we are working on it.

Speaker Change: It's not been a real all that material contributor in 2023.

Speaker Change: What we do know however is Terry our chief commercial officer and her team are very very focused in getting the word out and.

Speaker Change: And making sure that folks understand if they if they are suffering with hypo events.

Speaker Change: This technology can help and they can help change that and they do qualify in there is reimbursement out there and so it is working on that messaging and making sure that we get out there and understand where those events are taking place.

Speaker Change: That is believe it or not it is a challenge in understanding how to identify when those have took place. So that we can get out in front of those folks, but we are working on it and we have good data around that and then making sure. We're making those physicians that are then serving those patients aware of what the requirements are for documentation. So that they can qualify for reimbursement. So there's some work to be done, but there is a team where.

Kevin Ronald Sayer: We have good data around that, and we're making sure that those physicians that are serving those patients aware of what the requirements are for documentation so that they can qualify for reimbursement. So, there's some work to be done, but there's a team working very, very intently on it and making sure that we do arm our sales force and then arm the community with the information needed to help it grow faster. I think it's a big opportunity for us, but I think it's an opportunity that's going to take a little bit longer to penetrate. So, to your point, I think it's a driver a little bit here in 2024, certainly an opportunity in 2024, but I think it's going to continue to slowly roll out, but over the longer haul, we do think this is a contributor over time. I just add to that, it feeds into the sales force investment we're making in the states. We need to educate physicians and patients, and once you get a population of people who have positive outcomes in this space, and they go back to their doctors, and those conversations start taking place, this becomes easier.

Speaker Change: <unk> very very intently on it and making sure that we do RMR Salesforce and then arm the community with the information needed to help it grow faster I think it is a big opportunity for us.

Speaker Change: It's an opportunity that's going to take a little bit longer to penetrate so to your point I think it's a driver it's a driver a little bit here in 2024 is certainly an opportunity in 2024, but I think it's going to continue to slow roll, but over the longer haul. We do think this is a contributor over time that can be meaningful.

Speaker Change: I'd just add to that it feeds to the Salesforce investment, we're making in the states, we need to educate physicians and patients and once you get a population of people who have positive outcomes in this space and they go back to their doctors and those conversations start taking place this becomes easier, but theres a lot of seating that we have to do to do it and we needed more.

Mike Krapke: But there's a lot of seeding that we have to do to do that, and we needed more feet on the street to do that. We will take our next question from Mike Krapke with Variant Partners. Your line is open. Hi, everyone. Thanks for taking our questions. One clarifying question on basal.

Speaker Change: Our feet on the street to do that.

Speaker Change: And we will take our next question from Mike Kratky with Leerink Partners. Your line is open.

Michael Weinstein: Hi, everyone. Thanks for taking our questions one clarifying one on diesel.

Jeremy Sylvain: You've previously talked about framing the penetration within the basal population relative to the trajectory you saw in influent-intensive type 2 patients. How would you characterize that comparison based on where you are today and also as you're looking out over the next year? Sure, yeah. So in our long-term guide, we talked about basal effectively being about six to seven points of adoption as a percentage of the total population here in the U.S. And I'll start with the U.S. because internationally, you know, there's coverage.

Michael Weinstein: We talked about framing the penetration within basal population relative to the trajectory you saw an inflow and intensive type two patients.

Michael Weinstein: Or would you characterize that comparison based on where you are today and also as Youre looking out over the next few years.

Speaker Change: Sure Yeah. So in our long term guide, we had talked about basal effectively being about six to seven points of adoption as a percentage of the total population here in the U S and I'll start with the U S because internationally.

Jeremy Sylvain: As we work through coverage there, there are opportunities, but we had talked about that in our 2025 LRP. In our first couple of quarters, we saw it mirror that to your question, to your point, I should say, that it was mirroring the type 2 intensive, which was about a 9 to 10 percent penetration rate. Our guide, at least for 2024, assumes the middle between those two. We've got a couple quarters under our belts.

Speaker Change: Coverage as we work through coverage there there's opportunities, but we had talked about that in our $2025 eight.

Speaker Change: In our in our first couple of quarters, we saw it mirror that to your question to your point I should say that it was nearing the type two intensive which was about a 9% to 10% penetration rate.

Speaker Change: Our guide at least for 2024 assumes the middle between those two 8% we've got a couple of quarters under our belt is very very positive, but we also want to make sure. We're prudent when it comes to guidance and so that's why we've assumed about an 8% penetration rate over the course of 2024, obviously, if it mirrors that which we saw in the back half of 2023 theres opportunities to outperform.

Jeremy Sylvain: It's very, very positive, but we also want to make sure we're prudent when it comes to guidance. And so that's why we've assumed about an 8% penetration rate over the course of 2024. Obviously, if it mirrors that which we saw in the back half of 2023, there are opportunities to outperform. And clearly, we're tracking ahead of our LRP, which I think is both a positive signal, I think, for the business in total. But again, our guidance has been 8% as a percent of penetration. Hopefully, that helps you. We will take our next question from Steve Lichtman with Oppenheimer. Your line is open. Thank you. Evening, guys.

Speaker Change: And clearly we're tracking ahead of our <unk>, which I think is both positive signals I think for the business in total, but we again our guidance has been 8% as a percent of penetration hopefully that helps you.

Speaker Change: Okay.

Speaker Change: We will take our next question from Steve Lichtman with Oppenheimer. Your line is open.

Steve Lichtman: Okay. Thank you guys.

Kevin Ronald Sayer: Kevin, you mentioned in an earlier question different business models for Estello. How should we think about what the go-to-market could look like? Does it have a DexCom 1 more direct-to-patient feel?

Steve Lichtman: Kevin you mentioned to an earlier question different business models for CLO.

Steve Lichtman: Should we think what the go to market could look like.

They'd have a dicks com one more direct to patient feel and do you need to make any significant investments in back office support as the denominator really expand as you go after this large non insulin group.

Kevin Ronald Sayer: And do you need to make any significant investments in back-office support as the denominator really expands as you go after this large non-insulin group? That is a great question, and that is a very pertinent topic of discussion and meetings here within the walls of our company. We are very much evaluating very efficient ways to serve such a large patient group and a patient group that may interact differently with us than those who've been on insulin over time as we build those models out. So we're looking at distribution models that appear different than what we're doing today. So we can most efficiently get that product to people. And again, starting with cash pay gives us some opportunities to do things a little differently than we've done in the past. And so you'll have to stay tuned for that. It's a very thoughtful question and very much in line with everything that's going on here every day.

Kevin Ronald Sayer: And it's a great question and that is a very.

Kevin Ronald Sayer: Very pertinent topic of discussion and meeting here within the walls of our company. We are very much evaluating very efficient ways to serve such a large patient group and a patient group that may interact differently with us than those who have been on insulin over time as we build those models out. So we are looking at distribution models that appear different than what we are.

Kevin Ronald Sayer: Are doing today.

Kevin Ronald Sayer: So we can most efficiently get that product to people and again, starting with cash pay gives us some opportunities to do things a little different than we've done in the past and so you'll have to stay tuned for that and it's a very thoughtful question and very much in line with everything that's going on here every day.

Kevin Ronald Sayer: And we will take our final question from Matt Miksic with Barclays. Your line is open. Great, thanks so much for fitting in. So one follow up on margins and kind of mix as you drive G7 to be a bigger part of your business. You mentioned before, I think we understand the ramping G7 volumes, improving gross margin profitability of that product line over time. I'm wondering if you could share maybe how we should think about the long term, like, in other words, G7 is more profitable now, G6 is more profitable now, rather, just maturity of those lines, does G7 exceed that, does Stello trail G7, You know, does DexCom 1 with G7 kind of trail Thanks so much.

Kevin Ronald Sayer: And we will take our final question from Matt <unk> with Barclays. Your line is open.

Kevin Ronald Sayer: Okay.

Matthew Charles Taylor: Thanks, so much for fitting me in.

Matthew Charles Taylor: Yes.

Matthew Charles Taylor: One follow up on.

Matthew Charles Taylor: On margins.

Matthew Charles Taylor: Mix as you do.

Matthew Charles Taylor: G seven to be a bigger part of your business.

Speaker Change: You mentioned before I think we understand.

Speaker Change: Thank you seven volumes improving.

Speaker Change: Gross margin profitability of that product line over time.

Speaker Change: Just wondering if you.

Speaker Change: Sure and maybe how we should think about long term.

Speaker Change: G. Seven is more profitable now just.

Speaker Change: Six more profit rather than just maturity of those lines.

Speaker Change: That would exceed that.

Speaker Change: Stello Trail <unk>.

Speaker Change: Sure.

Speaker Change: Just have one with <unk> shale that maybe just some sense directionally.

Speaker Change: Where those are headed.

Speaker Change: Over the intermediate and longer term would be super helpful. Thank you.

Speaker Change: These volumes thanks, so much.

Jeremy Sylvain: Yeah, so maybe what I'll talk about is how we think about the cost of the product. And then I think from there, we can kind of make some calls on how we think about margin. From that perspective, and I'll maybe comment a little bit on the service model, which I think is also important, because that'll help from the operating margin. So as you think about the G7, just the product itself, as of today, it costs more than G6. And so that'll eventually, we expect over the course of this year, flip.

Speaker Change: Yes, so maybe what I'll talk about is how we're thinking about the cost of the product and then I think from there we can kind of make some calls on how we think about margin.

Speaker Change: From that perspective.

Speaker Change: And I'll, maybe comment a little bit on the on the service model, which I think is also important because that'll help from the opera operating margin. So as you think about the G. Seven just the product itself.

Speaker Change: As of today it costs more than <unk> six.

Speaker Change: And so that will eventually we expect over the course of this year flipped.

Jeremy Sylvain: And, you know, as you kind of get your model kind of bent out and kind of laid out, we expect to get down to a $10 sensor, irrespective of whether it's 10 or 15 days as we exit the 2025 LRP into early, so that gives you some kind of feel for where we'll get to the cost of each sensor. Now, each sensor, the hardware, is about the same cost, whether it's Stello, whether it's DexCom1, or whether it's the G-Series. It's the support models, the software, the support, the R&D, the investment in it, and then, of course, the service models that ultimately change it. So as you think about all of the work that we put into the G-Series, the G-Series will have the highest reimbursement, but it'll also have the highest service model, and then the most investment in software and otherwise.

Speaker Change: And as you kind of get your models kind of bent out into kind of laid out we expect to get down to a $10 sensor irrespective of whether it's 10 or 15 day as.

Speaker Change: As we exit the 2025 MRP into early 2026, so that gives you some kind of feel for where it will get to the cost of each sensor now each sensor. The hardware is about the same cost whether it's stello, whether it's <unk> one or <unk>.

Speaker Change: Whether it's the G series.

Speaker Change: The support models the software the support the R&D investment and then of course the service models that ultimately then change it and so as you think about all of the work that we put into the G series. The G series will have the highest reimbursement, but it will also have the highest service model and then the most investment in software and otherwise <unk>.

Jeremy Sylvain: DexCom1 is a little bit more of a different service model, and thus, you know, we are able to reduce the burden associated with some of the warranty and then the support costs that play into that. And then Stello is in a 15-day form factor, and so that's helpful from a gross margin perspective as you think through that over time. So I think that's the way to think about the cost profile. We haven't launched the price of Stello at this point, so we can't necessarily give you the specific margin at this point.

Speaker Change: One is a little bit more of a different service model and thus we are able to reduce the burden associated with some of the warranty and then the support cost.

Speaker Change: And then stellar is the 15 day form factor and so that's helpful from a gross margin perspective, as you think through.

That over time, so I think that's the way to think about the cost profile, we havent launched the price of stellar at this point. So we can't necessarily give you the specific margin at this point otherwise it'd be pretty obvious how we're thinking about it but over time as that comes out I think it will help align the models and I think theres real opportunities here as you think about <unk> 15.

Jeremy Sylvain: Otherwise, it'd be pretty obvious how we're thinking about it. But over time, as that comes out, I think it'll help align the models. And I think there are real opportunities here as you think about a 15-day product starting with Stello, but as that then makes its way through DexCom1 and the G-Series over time, again, more levers there where there are some real opportunities in those product lines to continue to drive profitability. So I think there are levers across all of these.

Speaker Change: Dave.

Speaker Change: 15 day product.

Speaker Change: Starting with Stello, but as that then makes its way through decks com, one and the G series over time again more levers, there where theres some real opportunities in those product lines to continue to drive profitability.

Speaker Change: There's levers across all of these I hope that gives you some context I realize I'm not giving you a P&L for each one of them, but at least it gives you some context at the hardware costs and we differentiate on the Opex cost and service models and then of course the days of wear.

Jeremy Sylvain: I hope that gives you some context. I realize I'm not giving you a P&L for each one of them, but at least it gives you some context for the hardware costs, and we differentiate between the OPEX costs and service models, and then, of course, the days of wear and tear.

Kevin Ronald Sayer: And ladies and gentlemen, at this time, I would like to turn the call back to Mr. Kevin Sayer for closing remarks. Thank you very much. You know, it's very easy during these earnings calls to talk about percentages and margins and future technologies, financial guidance, and competitors.

Speaker Change: And ladies and gentlemen at this time I would like to turn the call back to Mr. Kevin Sayer for closing remarks.

Kevin Ronald Sayer: Thank you very much.

Kevin Ronald Sayer: Ari easy during these earnings calls to talk about percentages and margins in future technologies financial guidance competitors.

Kevin Ronald Sayer: A whole host of important and engaging topics, but as we wrap up today, I really want to focus on 2023, which is truly the most remarkable year in our history. Let's review these numbers again. $700 million in organic revenue growth, more than a billion dollars in EBITDA, 600,000 new customers in our active user base, standing up a plant in Asia without missing a beat, and, of course, launching our G7 product all over the world. While best-in-class technology is foundational to these types of accomplishments, they don't happen without exceptional people going above and beyond.

Kevin Ronald Sayer: All host of important and engaging topics, but as we wrap up today I really want to focus on 2023, which is truly the most remarkable year in our history.

Kevin Ronald Sayer: Let's review these numbers again $700 million in organic revenue growth more than $1 billion and EBITDA of 600000, new customers interactive user base standing up a plant in Asia without missing a beat and of course launching our <unk> product all over the world.

Kevin Ronald Sayer: <unk> best in class technology is foundational and fundamentally these types of accomplishment it doesn't happen without exceptional people going above and beyond so so it calls out <unk>.

Kevin Ronald Sayer: So, as we close out 2023, I want to thank our, I guess we are, we're now more than 10,000 DexCom employees around the world. Incredibly well done. Thanks, everybody.... And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Kevin Ronald Sayer: 23.

Kevin Ronald Sayer: I want to thank our I guess, we are now more than 10000, <unk> <unk> employees around the world incredibly well done thanks, everybody.

Speaker Change: Ladies and gentlemen, this concludes today's call and we thank you for your participation you may now disconnect.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Yeah.